Campaign News

New York Times - May 8, 2014, by Peter Dreier - Recently there’s been a lot of happy talk about the nation’s housing recovery. Frequent reports about rising prices suggest that the tens of millions of people whose homes lost value just have to wait until the recovery reaches their neighborhood to lift them out of crisis. But this supposed housing recovery is bypassing many of our cities and towns.

The total value of America’s owner-occupied housing remains $3.2 trillion below 2006 levels. According to Zillow, a real estate database, 9.8 million households still owe more on their mortgages than the market value of their homes. That’s one-fifth of all mortgaged homes. Without government intervention, many of them are at risk of joining the almost five million households that have already suffered through foreclosure since the housing bubble burst in 2007.

With my colleagues Alex Schwartz of the New School and Gregory Squires of George Washington University, I have identified the 15 metropolitan areas, 100 cities and 395 ZIP codes with the highest proportion of underwater mortgages.

How bad is it? More than 10 million Americans, spread across 23 states, live in ZIP codes where between 43 percent and 76 percent of homeowners are under water. The biggest concentrations are in Georgia, Florida, Illinois, Michigan and Ohio. The cities in the worst shape are Las Vegas, Atlanta, Jacksonville, Orlando and Chicago. Places with so many underwater homes are toxic; they depress the value of surrounding homes and undermine local governments’ fiscal health.

The blame for this tragedy lies mostly with banks’ risky, reckless and sometimes illegal lending practices. The story is a familiar one. In the late 1990s and early 2000s, millions of Americans bought or refinanced homes in an overheated market. Mortgage brokers lied or misled borrowers about the terms of these mortgages, often pushing borrowers into high-interest subprime loans, even when they were eligible for conventional mortgages.

They particularly targeted minority areas. In 2006, when subprime lending was at its peak, 54 percent of blacks, 47 percent of Latinos and 18 percent of whites received high-priced loans, according to the Federal Reserve Board.

Not surprisingly, the nation’s worst underwater areas are disproportionately in black and Latino neighborhoods. In almost two-thirds of the hardest-hit ZIP codes, African-Americans and Latinos account for at least half of the residents.

The banks’ risky loans eventually came crashing down, devastating communities and causing financial havoc. The federal government rescued the banks, but nobody came to the rescue of the communities the banks left behind.

The best solution to this quagmire is for banks and other financial institutions to modify underwater mortgages to their current market value, an approach called “principal reduction.” If lenders rewrote the loans to reflect fair-market values, owners would have lower monthly payments, which would free them to put millions of dollars into local economies. Cities would have more stable property tax revenues, and lenders would ultimately benefit by having fewer delinquent loans.

Of course, many banks no longer own the loans they made. They pooled large numbers of subprime loans into private securities and sold them. The companies that service these securities generally refuse to countenance the idea of “principal reduction.” Yes, some homeowners have been able to persuade lenders to reset their loans, but most get the cold shoulder or a bureaucratic runaround.

In some cities, though, nonprofit lenders, like New Jersey Community Capital and Hogar Hispano, have stepped into the void, raising capital and purchasing troubled loans in order to modify them on affordable terms. But too few loan holders have been willing to sell to these homeowner-friendly groups.

In 2012, some of the biggest banks signed a settlement agreement with 49 state attorneys general to modify mortgages, but many of them continue to heap abuse on their customers, and sufficient relief has not reached trapped homeowners.

The Obama administration created several initiatives to help troubled borrowers, but these programs do not require banks to reset loans as a condition of getting federal funds. The government’s Home Affordable Modification Program has helped only one-quarter of the four million homeowners it was supposed to reach.

Worse, the federal government has actually been an obstacle to reform. The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, has refused to allow these two mortgage giants to reduce the principal on underwater mortgages that they own or guarantee. All it would take is for President Obama’s new appointee as F.H.F.A. director, former Representative Melvin Watt, to change the policy, an action that does not require congressional approval. He should do so immediately.

Meanwhile, faced with this predicament, some municipalities have been trying to take matters into their own hands. Late last year, Richmond, Calif., was the first city to develop a plan to use its power of eminent domain to buy underwater mortgages at their current market value and to refinance them, but many other localities are likely to follow. A number of responsible for-profit and nonprofit lenders stand ready to do business with them so that local governments don’t have to use tax dollars to purchase these loans.

Dealing with this problem on a city-by-city basis may not be the most efficient way to confront a national crisis, but in the face of Wall Street intransigence and federal indifference, cities have had to find their own way to restore the lost wealth of their constituents.

Source

El Museo de Arte Moderno (MoMA, por sus siglas en inglés) recibió en su sede en Long Island City a la comunidad artística puertorriqueña, en un esfuerzo de recaudación de fondos organizado por la sociedad civil en apoyo a la comunidad afectada por el huracán María.

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Niccolo Machiavelli would have been proud of the folks who support the American Legislative Exchange Council (ALEC). At the end of September the U.S. Department of Education approved another $245 million in grants to eight states under the federal Charter School Program. That brings to nearly $4 billion in charters in the last two and a half decades.

The Center for Popular Democracy spelled out in its report “Charter School Black Hole” how tax dollars have gone to “ghost schools,” charters that never opened. In the case of schools that did open only to fail, there was no accounting for money spent or assets purchased.

There was no accountability to the school children affected by charter fraud, waste, and incompetence. Virtual charters like the K12 operation performed markedly worse. They are similar to fantasy football games — those that are bet on but are never physically played.

Scores of major companies have abandoned ALEC after protests from their stockholders and clients. Recently the American Federation of State, County & Municipal Employees wrote to the CEO of AARP urging that group to get out of the lobbying group. They asked that the senior citizens group stop “endorsing an organization that brings corporate lobbyists and elected officials from around the country together to write anti-senior, anti-family legislation in a process that locks out the public and subverts our democratic process.” Among other things ALEC has pushed for is repeal of the Affordable Care Act.

Enterprise, the largest car rental company in the world, owns Enterprise Rent-A-Car, National and Alamo, has moved away from the lobbying juggernaut. Part of the push to accomplish that divorce came from a petition by a petition with 89,000 signatures.

The company’s membership in ALEC, which has poured considerable resources into denying and minimizing scientific efforts to quantify climate change, was brought to the Guardian’s attention by the watchdog group the Center for Media and Democracy.

Growing concern about climate change has led many high-tech companies such as eBay, Expedia, Facebook, Google, Microsoft, and Yahoo to abandon the ALEC ship. In 2015, environmental concerns pushed energy-industry giants, Royal Dutch Shell and BP, as well as the American Electric Power and the Canadian National Railway to quit.

A laundry list of model bills proposed in many state legislatures is very long — and very threatening.

For a listing of bills sponsored by ALEC, go to the website for the Center for Media and Democracy: www.alecexposed.org. Download the zip files of ALEC model bills for agriculture, energy, and the environment. Consider one such bill aimed at land use controls.

One bill would repeal all land use planning and zoning in rural counties by both county and state governments. Under the bill property could be put to any use, without regard for single-family, agricultural, or industrial zoning, or environmental land use restrictions. Under that restraint, no one could prevent a nude bar or body shop next to a school. Nor could local government prevent polluting industries from building in their jurisdiction.

If you want more information about the machinations of this cabal, simply contact Senator Josh Harkins and Representative Jim Beckett, who are chairmen of the Mississippi chapter.

In closing, consider these words from the ALEC website: “When states resort to tax carve-outs in a misguided attempt to grow their economies, they are ignoring the bigger problem — an uncompetitive tax climate. More fundamentally, government should budget for outcomes. This means identifying the core functions of state government and measuring results.”

Reviewing their handling of budgets and tax give aways in the past year, one can only wish they had taken their own advice.

TJ Ray is a retired professor of English at Ole Miss.

By Oxford Eagle Contributors

Source

National advocacy groups based mostly in Washington, D.C., and Brooklyn, N.Y., were responsible for $1.8 million of the $2.5 million contributed and loaned to the political action committee leading the effort to mandate paid sick leave for workers in Texas...The other major outside donors include...$95,000, Center for Popular Democracy, Brooklyn, N.Y.

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