Housing advocates: FHFA won’t reduce principal, offers discounted NPLs
Two liberal advocacy groups have published a provocative study accusing the Department of Housing & Urban Development and the Federal Housing Finance Agencyof...
Two liberal advocacy groups have published a provocative study accusing the Department of Housing & Urban Development and the Federal Housing Finance Agencyof helping Wall Street at the expense of low-income communities by selling non-performing loans to investors.
The Center for Popular Democracy and the ACCE Institute’s report “Do Hedge Funds Make Good Neighbors?: How Fannie Mae, Freddie Mac and HUD are Selling Off Our Neighborhoods to Wall Street” is lengthy and accusatory.
The study looks at how HUD has since 2012 auctioned off, at a discount, some 120,000 Non-Performing Loans that they want to get off their books.
They also take into account similar actions by the FHFA through Fannie Mae and Freddie Mac, which have sold over 10,000 mortgages already this year.
The study, which can be read here, notes that nearly all of the roughly 130,000 mortgages have been sold to Wall Street hedge funds and private equities firms, leading to what they call the rise of a new phenomenon in this country – Wall Street as major landlord and neighbor in communities across the country.
“An initial examination into four of the largest purchasers of HUD and FHFA loans has unearthed an array of disturbing business practices, ranging from those that clearly run counter to the goals of homeownership preservation and neighborhood stability to those that break laws, deceive homeowners, and harm taxpayers more generally,” the study claims.
The authors argue that HUD and FHFA should sell these troubled mortgages to entities working to preserve homeownership and create affordable housing, not to Wall Street speculators with a history of defrauding taxpayers and harming homeowners, tenants and neighborhoods.
“Nearly eight years after the start of the global financial crisis, hedge funds and private equity firms have found yet another way to make big profits: distressed housing assets. Often, the very same corporate actors that precipitated the housing crash in the first place are buying and selling off delinquent mortgages and vacant houses that are a product of the crash,” the study says. “Together, these Wall Street entities have raised over $20 billion to buy the notes for as many as 200,000 homes in the United States. The newly consolidated single-family rental market is a lucrative business. A 2014 study estimated that the four largest holders of these assets have seen as much as a 23% rate of return on the properties they purchased in the last three years.”
However, HUD has been making changes to how it deals with distressed assets and NPL sales.
Just two months ago, HUD announced significant changes to its Distressed Asset Stabilization Program. HUD also announced additional improvements to the Neighborhood Stabilization Outcome sales portion of DASP which are aimed at increasing non-profit participation.
Updates include giving non-profits a first look at vacant properties, allowing purchasers to re-sell notes to non-profits, and offering a non-profit only pool.
Previously, loan servicers could foreclose 6 months after they received the loan and were encouraged, though not required to assess a borrower’s qualifications for loss mitigation programs. Purchasers of the geographically targeted neighborhood stabilization pools have always been required to ensure that at least 50% of the loans in a pool achieve outcomes that help areas hardest hit by foreclosure avoid the neighborhood decline associated with numerous vacant properties.
“These changes reflect our desire to make improvements that encourage investors to work with delinquent borrowers to find the right solutions for dealing with the potential loss of their home and encourage greater non-profit participation in our sales,” said Genger Charles, Acting General Deputy Assistant Secretary, Office of Housing, when it was announced. “The improvements not only strengthen the program but help to ensure it continues to serve its intended purposes of supporting the MMI Fund and offering borrowers a second chance at avoiding foreclosure.”
The groups are calling on HUD and FHFA to “establish much higher standards and criteria for the kind of companies that are eligible to purchase delinquent mortgages” and to “prioritize companies that have a clearly defined program to offer permanent modifications with principal reduction and to create affordable housing with vacant properties.” ?
They also want FHFA to “immediately begin to offer principal reduction in their own modification process.”
“Two distinct paths forward are available: the abuses of the biggest purchasers to date of the HUD and FHFA non-performing loans; or, the approach of community development financial institutions with both the ability and the commitment to create affordable housing to better local communities. The status quo benefits the very actors that hastened the financial crisis and actively created the conditions that sucked over half the wealth from millions of American families. These companies profit from new predatory practices and speculative business models that once again take advantage of ordinary people,” the study concludes.
Source: HousingWire
Toys ‘R’ Us Promotes Nostalgic Selfies While Employee Unrest Boils
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Toys ‘R’ Us Promotes Nostalgic Selfies While Employee Unrest Boils
“There are thousands and thousands of retail employees now working at companies owned by Wall Street and private equity firms, and this kind of financial instability in the sector makes it hard...
“There are thousands and thousands of retail employees now working at companies owned by Wall Street and private equity firms, and this kind of financial instability in the sector makes it hard for workers to have sustainable careers,’’ said Carrie Gleason, a director at the Center for Popular Democracy, which is working on the campaign along with Organization United for Respect. “We’re organizing to ensure there’s some accountability for owners who aren’t necessarily running the businesses in good faith."
Read the full article here.
Dream Come True
Alyssa Milano and Ady Barkan attend the Los Angeles Supports a Dream Act Now! protest on Wednesday.
Alyssa Milano and Ady Barkan attend the Los Angeles Supports a Dream Act Now! protest on Wednesday.
See the photo here.
Immigrants, unions march on May Day for rights, against Trump
NEW YORK — Immigrant and union groups will march in cities across the United States on Monday to mark May Day and protest against President Donald Trump's efforts to boost deportations.
...
NEW YORK — Immigrant and union groups will march in cities across the United States on Monday to mark May Day and protest against President Donald Trump's efforts to boost deportations.
Tens of thousands of immigrants and their allies are expected to rally in cities such as New York, Chicago, Seattle and Los Angeles. Demonstrations also are planned for dozens of smaller cities from Ft. Lauderdale, Florida, to Portland, Oregon.
Read full article here.
Report: Black Unemployment in Bay Area More Than Three Times the Average
SF Examiner - March 6, 2014, by Chris Roberts - After 200 unanswered job applications, Ebony Eisler finally landed a $15 an hour position as a medical assistant in Mission Bay. But since she's a...
SF Examiner - March 6, 2014, by Chris Roberts - After 200 unanswered job applications, Ebony Eisler finally landed a $15 an hour position as a medical assistant in Mission Bay. But since she's a temp worker, she earns less than her co-workers, who make $20 to $25 per hour for the same work.
Still, as a black woman in San Francisco, she is fortunate. The unemployment rate for black people in the Bay Area is 19 percent, according to 2013 U.S. Census Bureau data crunched by the Economic Policy Institute.
Blacks are unemployed at more than three times the rate of workers of other races, according to this data. The Bay Area finished 2013 with a 6 percent total unemployment rate, according to the Bureau of Labor Statistics.
In San Francisco, unemployment has dropped rapidly since Mayor Ed Lee took office in January 2011, when the jobless rate was 9.5 percent. The most recent figures from the state Employment Development Department — which does not publish jobless rates by race — pegged The City's unemployment rate at 3.8 percent, by far the rosiest employment figures since the first dot-com boom at the turn of the millennium.
The wide gulf in the jobless rate between ethnic groups living in the same city belies the idea that The City and state have fully recovered from the Great Recession, according to advocates with the leftist Center for Popular Democracy.
The group released the unemployment figures by ethnicity Thursday as part of a national campaign to convince the Federal Reserve Bank to keep interest rates low in order for the economic recovery to trickle down to all workers.
So far, "the recovery is based on white America alone," said Eisler, 36, a Bayview resident who holds an associates degree and a certified nursing assistant license. Her current job, the best she could find, does not cover her $1,800 a month rent, she said.
Statewide, the jobless rate for black people is 14 percent, according to the Economic Policy Institute, compared to 6.1 percent for whites, 8.5 percent for Latinos and 5.9 percent for Asians.
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¿A qué se exponen los dreamers arrestados por desobediencia civil en las protestas por DACA?
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¿A qué se exponen los dreamers arrestados por desobediencia civil en las protestas por DACA?
“Aguilera fue una de cerca de 80 personas que fueron arrestadas el pasado lunes por bloquear las calles alrededor del Congreso, en una gran manifestación para pedir protección permanente para los...
“Aguilera fue una de cerca de 80 personas que fueron arrestadas el pasado lunes por bloquear las calles alrededor del Congreso, en una gran manifestación para pedir protección permanente para los jóvenes indocumentados del país. Unas 900 personas participaron del evento, según cifras dadas por los grupos que la organizaron, entre ellas el Center for Popular Democracy (CPD). "Muchas veces los consejeros legales les recomiendan que no tomen ese riesgo si tienen DACA. Pero muchas veces ellos dicen, ‘Entiendo los riesgos y estoy tomando esta decisión’", asegura Hilary Klein, quien maneja los programas de justicia para inmigrantes del CPD. "Creo que es un ejemplo de cómo los dreamers en esta batalla han liderado el camino con su valentía y su dignidad", agregó.”
Lea el artículo completo aquí.
The ‘Resistance,’ Raising Big Money, Upends Liberal Politics
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The ‘Resistance,’ Raising Big Money, Upends Liberal Politics
WASHINGTON — It started as a scrappy grass-roots protest movement against President Trump, but now the so-called resistance is attracting six- and seven-figure checks from major liberal donors,...
WASHINGTON — It started as a scrappy grass-roots protest movement against President Trump, but now the so-called resistance is attracting six- and seven-figure checks from major liberal donors, posing an insurgent challenge to some of the left’s most venerable institutions — and the Democratic Party itself.
Read the full article here.
City Council group urges JP Morgan Chase to ditch Trump council
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City Council group urges JP Morgan Chase to ditch Trump council
As CEOs flee President Trump’s business advisory councils, the City Council’s Progressive Caucus is calling on JP Morgan Chase to do the same.
The move comes as multiple CEOs have ditched a...
As CEOs flee President Trump’s business advisory councils, the City Council’s Progressive Caucus is calling on JP Morgan Chase to do the same.
The move comes as multiple CEOs have ditched a Trump council on manufacturing business in the wake of a white supremacist rally in Charlottesville, Va., Saturday. Trump did not condemn white supremacists until Monday; on Tuesday he again insisted violence had come from “both sides.” Merck CEO Ken Frazier was first to depart, calling it a “matter of personal conscience” to stand against intolerance.
Read the full article here.
Rockefeller Institute Hands over Final Scaffold Law Report Draft
Times Union - September 3, 2014, by Casey Seiler - SUNY’s Nelson A. Rockefeller Institute of Government has released a second draft of its controversial report on New York’s Scaffold Law....
Times Union - September 3, 2014, by Casey Seiler - SUNY’s Nelson A. Rockefeller Institute of Government has released a second draft of its controversial report on New York’s Scaffold Law. According to the Institute’s Deputy Director for Operations Robert Bullock, it’s the last draft version of the report that was shared with the report’s funder, the state Lawsuit Reform Alliance.
The business-backed group, which opposes Scaffold Law, paid $82,800 to fund the report — sponsorship that has led critics to attack the study as advocacy in the guise of research. Its authors, however, insist the research was conducted in good faith.
Scaffold Law, which places “absolute liability” on employers for gravity-related workplace injuries, is supported by labor unions but opposed by business groups that claim it needlessly drives up construction costs. Opponents would like to see New York follow other states by adopting a “comparative negligence” standard that would make workers proportionately responsible when their actions contribute to an accident.
The Center for Popular Democracy, a labor-backed group that supports Scaffold Law, requested copies of all communications between the Institute and the Lawsuit Reform Alliance. That FOIL request produced a series of emails between researchers and LRA Executive Director Tom Stebbins, including Stebbins’ suggested edits to a June 25, 2013, draft copy of the report that was not initially released by the Institute.
The Center appealed to SUNY’s FOIL officer, who ultimately decided the June 25 draft — which had been appended to an email to Stebbins — should be released. A comparison of the draft and the final report suggested that some of Stebbins’ suggestions were reflected in the final version. Researchers, however, said any changes were the result of their efforts to sharpen their analysis, and not made due to pressure from the funder.
The newly released draft, dated Aug. 7, 2013, closely resembles the final report — which neither proves nor disproves the Center’s charges that the academics buckled under pressure.
Josie Duffy of the Center for Popular Democracy, however, claims the six-week gap between the first and second drafts suggests that the Institute moved quickly to follow the Alliance’s edits.
“When LRANY wanted changes, the report’s authors dutifully made them right away — inflating the report’s findings and taking out a key section that challenged how onerous the Scaffold Safety Law really is,” Duffy said in a statement, alluding to the second draft’s disposal of a two-page section on the construction of the Champlain Bridge that found little or no impact on the project from Scaffold Law.
“SUNY says it has now disclosed everything it has, but given that LRANY and the authors held weekly conference calls to discuss the report’s progress, we may never know the full extent of their influence over the final version,” Duffy said.
In an email, Bullock said the Institute “has been open and honest about its contacts with funders and its research has been and will continue to be immune from influence. It is unfortunate that a research organization known throughout the nation for the quality and character of its work should have to defend itself from accusations leveled by the Center for Popular Democracy, an organization well known for its partisanship.”
Update: Stebbins sent the following statement:
“Reform opponents are so terrified of the data that they can do nothing but attack the method of three researchers at two top universities. The Scaffold Law costs billions and causes injuries. If the Center for Popular Democracy wants to have a real discussion about how many billions wasted and how many injuries caused by the Scaffold Law, I will have that discussion all day.”
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Donald Trump isn't crazy to attack the Fed
Today, as the Federal Reserve meets to set monetary policy, it will also be bracing for another round of attacks from Donald Trump. In one of the many twists of this strange election season, Trump...
Today, as the Federal Reserve meets to set monetary policy, it will also be bracing for another round of attacks from Donald Trump. In one of the many twists of this strange election season, Trump has gone straight after Fed chairwoman Janet Yellen, saying she should be “ashamed” of keeping interest rates low, and accusing the Fed of creating a “false economy” and doing “political things.” If the Fed declines to raise rates today, as is expected, he will likely attack the central bank yet again.
The implication of Trump’s attacks is that the Fed is just another institution rigged against Trump: that Yellen is keeping rates artificially low to help the economy, which helps the Democrats look better and thus helps his opponent, Hillary Clinton.
Economists, and a lot of political observers, have been horrified by Trump’s direct attacks: What seems normal for the pugnacious outsider candidate is a major violation of American political norms. Politicians aren’t supposed to push the Fed one way or the other; it's a point of pride for the Fed, and for the nation overall, that the central bank sets policy independent of political pressure. Economists credit central bank independence as one of the great economic success stories of the 20th century, paving the way for lower inflation and stronger growth.
But how far off is he, really? It's true that the Republican nominee is violating tradition: critiquing individual policy decisions shows that he doesn't respect the line between politics and monetary policy. And there’s an implicit threat that could genuinely damage the Fed’s autonomy: He’s signaling that Fed leaders would be on notice in a Trump administration, and could pay a price for making decisions he didn't like.
But the line between politics and the Fed is far blurrier than the conventional wisdom would have it—and politicians before Trump have crossed it in much more serious ways. Moreover, buried within Trump’s comments is a kernel of truth: The Federal Reserve is, by definition, not independent. Unlike the Supreme Court, the central bank is a creation of Congress and is accountable to lawmakers on Capitol Hill. It can be changed—or abolished—by Congress as well. And to pretend it's not—to treat the Fed as an entity totally removed from American politics—also leaves us powerless to talk about the ways it might be improved.
It's important to point out that Trump's immediate accusations are almost certainly wrong: Economists across the political spectrum reject Trump’s claims that Yellen is declining to raise interest rates to improve Clinton’s election odds. Yellen, who has also firmly rejected Trump’s claims, does not set monetary policy alone; it’s set by the 12 members of the Federal Open Markets Committee. (Currently, it has just ten members.) That means no individual member, or even small group of members, can tip the scales to benefit a certain candidate. And any collusion would also be difficult to hide: Transcripts of FOMC meetings are released publicly (though on a five-year delay), and Yellen testifies before Congress four times a year.
“The fact that I don’t happen to agree with the conduct of policy doesn’t mean that they are being political,” said Glenn Hubbard, the dean of Columbia Business School and former top economist to President George W. Bush, who believes rates should rise faster. “I think that’s very unfortunate.”
A real example of political interference with monetary policy occurred in the early 1970s. Taped recordings of Richard Nixon provide clear evidence that Nixon pressured then-Fed Chair Arthur Burns to adopt expansionary monetary policies to improve his reelection chances. For instance, before Burns was confirmed by Congress, Nixon told him: “I know there’s the myth of the autonomous Fed ... and when you go up for confirmation some senator may ask you about your friendship with the president. Appearances are going to be important, so you can call [Nixon economic advisor John] Ehrlichman to get messages to me, and he’ll call you.” Nixon met with Burns frequently and tacitly pressured the chairman to keep policy loose. The FOMC transcripts indicate that many Fed members had doubts about the policy decisions but voted for them anyways.
Trump’s criticism of the Fed on the campaign trail doesn’t approach Nixon’s actual interference in monetary policy from the White house. But it does raise the broader question of what constitutes "political interference" in the Fed, and what constitutes legitimate criticism. One key distinction: Nixon used his presidential powers to influence Burns, while Trump currently has no such power over Yellen. But Trump, if elected, will also nominate the next Fed chair. That inherently means his criticisms of the central bank veer closer to political interference than critiques from academics like Hubbard.
“The line is blurry,” said Joseph Gagnon, a senior fellow at the Peterson Institute for International Economics who has worked at the Fed intermittently for the past 30 years.
On substance, what constitutes a "political" attack versus a policy criticism isn't immediately clear: Trump’s comments on the Fed often are substantive, such as when he said the Fed’s policy has created “a big, fat, ugly bubble.” But given his penchant for changing positions on the institution—he first said he’d retain Yellen before saying he’d replace her, for instance—many economists have concluded that Trump’s motives are concerned more with his own advantage than any serious policy beliefs.
To some experts, the threat posed by "political" attacks on the Fed has always been overblown. “I don’t get as worked up as some people to do about what politicians say,” Gagnon said. “They are allowed to have their opinions. If they think the Fed should do something differently, they can say it.”
The long tradition of deference to the Fed’s policy independence can even pose a risk: It creates an environment in which any critique of the Fed is seen as out of line, including the idea of reforming how it works. "The Federal Reserve is a crucial public agency, so there are lots of important questions—including the selection of its leaders, the determination of their priorities, and the specific strategy that they're following—that should all be open to public discourse," said Andrew Levin, an economist at Dartmouth who spent two decades working at the Fed, including as a top advisor to Yellen and her predecessor, Ben Bernanke.
Levin has been part of a movement that has put a few cracks in the protective shield around the Fed this year. Earlier this year, he published a set of recommendations for reforming the Fed in conjunction with the Center for Popular Democracy’s Fed Up campaign; the goal is to make the Fed's board members—currently 83 percent white, nearly three-quarters male and nearly 40 percent from financial institutions —more representative of the American public. Although it hasn’t received as much attention as Trump’s attacks on the Fed, Hillary Clinton also quietly criticized the central bank when her campaign said she supported such reforms.
To Ady Barkan, the head of the Fed Up campaign, these efforts do not constitute an unacceptable interference with the Fed’s independence, and neither do Trump’s comments. The Fed’s independence, he said, comes from its structure; its leaders are appointed, not elected, for long terms, which inherently insulates the central bank from political pressure. The Fed must still be accountable to the public though, and one way policymakers fulfill that responsibility is through public comments. For that reason, Barkan added, monetary policy decisions “are appropriate topics for political debate.”
“The main thing about Trump’s comments is that they show real ignorance about how the Fed works,” he said. “I don’t object to the idea that Trump or Hillary would object to what the Fed is doing.”
By Danny Vinik
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