Communities Lose When HUD Sells Loans to Wall Street
The Hill - October 2, 2014, Rachel Laforest & Keven Whelan -James Cheeseman and his mother, Constance, have lived...
The Hill - October 2, 2014, Rachel Laforest & Keven Whelan -James Cheeseman and his mother, Constance, have lived in their Rosedale, New York home for the past five years. Like many Americans, they struggled during the recent economic downturn and have been trying to get a modification on their mortgage.
The bank that held their mortgage JPMorgan Chase, agreed to provide borrowers like them relief under a multi-billion dollar settlement with the Justice Department last year. But the Cheesemans' mortgage was insured by the Federal Housing Administration (FHA), part of the U.S. Department of Housing and Urban Development (HUD). And before they could work out a deal with Chase, the bank had the FHA sell their loan to a new investor as part of a program, called the Distressed Asset Stabilization Program or DASP.
The program is supposed to have a dual purpose. First, the federal agency hopes to be able to use the funds received by DASP to right the balance sheet of the Federal Housing Authority’s mortgage insurance program. Second, the program is intended to “encourage public/private partnership to stabilize neighborhoods and home values in critical markets.”
According to HUD’s own data and reports, DASP is meeting the first objective and failing miserably at the second. Almost all loans sold through the DASP program went to for-profit firms and only a tiny handful (around 3 percent) of families whose loans were sold ended up with deals that kept them in their homes.
For homeowners like the Cheesemans, that failure has real-life consequences. When HUD, through DASP, sold their mortgage to another servicer, the Cheesemans lost their protections under the FHA program mandating an effort to modify the mortgage. Their new servicer, BSI Financial, was under no requirement to consider a mortgage modification. BSI doesn’t even participate in HAMP, a post-bailout program for major banks that facilitates loan modifications to keep families in their homes. The result? The Cheesemans and thousands of other homeowners throughout the country are at serious risk of losing their home.
A recent report, Vulture Capital Hits Home: How HUD is Helping Wall Street and Hurting Our Communities, published by the Right to the City Alliance and Center for Popular Democracy cited serious problems with DASP. First, the current structure of most DASP auctions considers only the highest bid without weighting the bidder’s track record of good outcomes for homeowners and communities. Secondly, the groups found that the current outcome requirements and reporting structure fail to hold purchasers accountable. Third, the current pre-sale certification phase does not ensure that the FHA modification process has been followed.
Organizations called “Community Development Financial Institutions” with a track record of helping consumers stay in their homes stand ready to be a part of an improved version of this program. If a reformed DASP program incentivized it, investors with a social purpose could also make money by negotiating win-win, sustainable mortgage modifications with homeowners.
But community-friendly organizations can’t even get to the table with the auction overheated by well-heeled Wall Street firms and private equity “vulture capital” firms.
When the highest bidder places profits first, homeowners and neighborhoods come last. The result: more and more American homeowners losing their homes to unnecessary foreclosures and more and more corporate landlords leasing homes at rates few of these former homeowners, let alone anyone else, can afford.
All of this is the consequence of a program developed and managed by HUD, a federal agency with a stated mission to advance affordable housing and sustainable communities.
This week, HUD plans to sell off another 15,000 American homes to Wall Street investors. These are 15,000 families, 15,000 neighbors and 15,000 futures. Many if not all of these homeowners will lose their share of the American dream as a result of these auctions.
HUD can and should halt this week’s sale and must implement the necessary reforms that have been proposed by a range of community and advocacy groups.
As we consider the results of the economic collapse and what has been called by some a recovery, it is important to note once again that many neighborhoods, especially in communities of color, haven’t bounced back.
Too often our government has put the interests of Wall Street above the needs of struggling families. HUD can do better by fixing the “Distressed Assets” program now.
Laforest is executive director of the Right To The City Alliance, based in New York City. Whelan is National Campaign director of the Home Defenders League. He lives in Minneapolis.
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Luchando por los inmigrantes el 4 de Julio
Luchando por los inmigrantes el 4 de Julio
Al congregarnos el 4 de Julio para conmemorar nuestro primer paso hacia la libertad, debemos reconocer los valiosos...
Al congregarnos el 4 de Julio para conmemorar nuestro primer paso hacia la libertad, debemos reconocer los valiosos aportes de los inmigrantes a nuestra nación. Es la historia de nuestro país. Es una parte intrínseca de nuestro carácter nacional, de nuestra grandeza. Como nación, debemos invitar a todas las personas elegibles a dar su primer paso hacia la libertad y convertirse en ciudadanos.
Lea el artículo completo aquí.
Seattle passes scaled-back tax on Amazon, big companies
Seattle passes scaled-back tax on Amazon, big companies
On Monday, about 40 elected officials from across the United States, some representing local governments in the running...
On Monday, about 40 elected officials from across the United States, some representing local governments in the running to host Amazon’s second headquarters, published an open letter to Seattle in support of the head tax and expressing concern that Amazon opposed the measure. “By threatening Seattle over this tax, Amazon is sending a message to all of our cities: we play by our own rules,” the officials wrote.
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Inside the Avengers Cast’s One-Night-Only Performance of Our Town
Inside the Avengers Cast’s One-Night-Only Performance of Our Town
The Avengers, and friends, assembled in Atlanta on Monday night, though without their usual armor, shields, and...
The Avengers, and friends, assembled in Atlanta on Monday night, though without their usual armor, shields, and superpowers. The event, dreamed up by Scarlett Johansson, brought together some of the Marvel Cinematic Universe’s biggest stars—all in town filming Avengers: Infinity War at Atlanta’s Pinewood Studios—for a stage reading of Thornton Wilder’s theater classic Our Town, a benefit for hurricane relief in Puerto Rico.
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Protesters backing undocumented immigrants locked out of Bank of America HQ
Protesters backing undocumented immigrants locked out of Bank of America HQ
The south doors of Bank America’s corporate headquarters were locked at 10:30 a.m. Monday, to keep out a immigrant...
The south doors of Bank America’s corporate headquarters were locked at 10:30 a.m. Monday, to keep out a immigrant advocates who tried to enter the building to advocate for undocumented immigrants.
A dozen protesters sought to enter a branch on the building’s first floor, to present staff with a letter asking that Bank of America distance itself from elected officials who support the immigration policies of President Donald Trump.
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Host of issues converge to bring about scrutiny of NY Fed pick
Host of issues converge to bring about scrutiny of NY Fed pick
Progressive groups focus on unemployment. The "Fed Up" campaign has advocated keeping monetary policy stimulus in place...
Progressive groups focus on unemployment. The "Fed Up" campaign has advocated keeping monetary policy stimulus in place longer to drive unemployment lower. Fed officials, including John Williams, have favored raising the federal funds rate in small steps to avoid stimulating the economy too much and generating a large burst of inflation that could prove difficult to control.
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Chicago Activists, Lawmakers Deliver Petitions To SEC For Action On 'Toxic' Interest Rate Swaps (VIDEO)
Chicago Activists, Lawmakers Deliver Petitions To SEC For Action On 'Toxic' Interest Rate Swaps (VIDEO)
Chicago community activists and local elected officials delivered 88,000 petition signatures to the U.S. Securities and...
Chicago community activists and local elected officials delivered 88,000 petition signatures to the U.S. Securities and Exchange Commission's (SEC) regional office Thursday morning, urging the agency to investigate complex financial agreements called interest rate swaps.
Those who delivered the petition signatures, collected online by the Grassroots Collaborative and several other organizations, say cash-strapped local and state governments are being squeezed by the "toxic swaps" they entered into with banks before the Great Recession. The complicated deals, which come with hefty penalties and termination fees, were intended to save taxpayer-backed organizations money, but they backfired when the economy crashed.
"These are the same toxic swaps that have drained millions of dollars out of our city, state and (Chicago Public Schools) budgets and are hurting cities and states across the country," Saqib Bhatti, director of the ReFund America Project, said outside the SEC's Chicago regional office, 175 W. Jackson Boulevard.
Illinois State Reps. Robert Martwick (D-Chicago), Emanuel "Chris" Welch (D-Westchester) and Chicago Ald. Carlos Ramirez-Rosa (35th Ward) joined activists at the petition delivery.
Petitioners want the SEC to "investigate the 'toxic swaps' Wall Street is using to impoverish our cities and towns -- and make bankers return all ill-gotten profits from deceptive and fraudulent sales."
The state of Illinois has already paid $684 million for interest rate swaps and could be forced to pay an additional $870 million in November if "the state does not sue or renegotiate these deals," according to the Grassroots Collaborative.
Interest rate swaps, Ramirez-Rosa said, have cost the city of Chicago and CPS over $1 billion in combined payments, plus $600 million in costs associated with terminating the agreements.
"That $600 million in ransom to the banks went to go pad their bottom line," Ramirez-Rosa said. "The banks don't need more money. Our neighborhoods desperately need these funds. ... The SEC can act now to recuperate some of that money for the city of Chicago and the Chicago Public Schools, and they can act now to defend the state of Illinois from further payments, from paying a larger ransom, to these banks."
Welch said he is "disgusted" that "big banks continue to profit at the expense of our most vulnerable." He urged Illinois Gov. Bruce Rauner, Chicago Mayor Rahm Emanuel and CPS CEO Forrest Claypool to join the push for an SEC investigation into swap agreements.
"We ask the governor and our leaders in this city to stop putting banks before books," Welch said.
Here's more from the lawmakers at the petition delivery:
Organizers and the elected officials dropped off the petition signatures at the SEC's Chicago office, where a receptionist said she would give the documents to the regional director.
In addition to the Grassroots Collaborative, the online petition was circulated nationwide by Americans for Financial Reform, the Center for Popular Democracy, CREDO Action and Rootstrikers.
Read Progress Illinois' past reporting on how interest rate swaps work and their financial impact on the state, city of Chicago and CPS.
by ELLYN FORTINO
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Bankers and Economists Fear a Spate of Threats to Global Growth
Bankers and Economists Fear a Spate of Threats to Global Growth
GRAND TETON NATIONAL PARK, Wyo. — In the decade since the financial crisis, economic policy makers, professors and...
GRAND TETON NATIONAL PARK, Wyo. — In the decade since the financial crisis, economic policy makers, professors and protesters have gathered here every August to argue about the best ways to return to faster economic growth.
This year, they gave up.
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Former Toys R Us workers to get $20 million in hardship fund
Former Toys R Us workers to get $20 million in hardship fund
Since late summer, Toys R Us workers have been pressuring pension funds to in turn push a group of hedge firms that...
Since late summer, Toys R Us workers have been pressuring pension funds to in turn push a group of hedge firms that owned the retailer’s secured debt in a bid to get the remaining money they say is owed to them...The groups that organized the Toys R Us workers — Organization United for Respect, along with Private Equity Stakeholder Project and the Center for Popular Democracy — say that the hardship fund is being structured to allow the other firms to contribute, paving the way for Solus, Vornado and others to contribute. KKR and Bain said the fund was established in response to the “extraordinary set of circumstances” that led to Toys R Us being shuttered.
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A National Solution
New York Times - June 25, 2014, by Peter Markowitz - For too many years our nation’s discourse around immigration has...
New York Times - June 25, 2014, by Peter Markowitz - For too many years our nation’s discourse around immigration has been distorted by anti-immigrant activists who have advanced bold but regressive state immigration policies. State laws in Arizona and elsewhere have powerfully, but inaccurately, framed the immigration issue through the lenses of criminality and terrorism. While these laws have not generally fared well in court, their impact on our national perception of immigration has impeded federal immigration reform. Meanwhile, states like New York continue to suffer the consequences of our broken immigration laws. Our families continue to be fractured by a torrent of deportations. Our economic growth continues to be impeded by the barriers our immigrant labor force faces. And our democracy continues to be undermined by the exclusion of a broad class of New York residents.
The New York Is Home Act, recently introduced by New York State Senator Gustavo Rivera and Assembly Member Karim Camara, with support from the Center for Popular Democracy and Make the Road New York, charts a path forward on immigration — a path that like-minded states and ultimately the federal government could follow. The legislation would grant state citizenship to noncitizens who can prove three years of residency and tax payment and who demonstrate a commitment to abiding by state laws and the state constitution.
The bill is an ambitious but sensible assertion of a state’s well-established power to define the bounds of its own political community. Unlike the Arizona law, this legislation is carefully crafted to respect the unique province of the federal government. As misguided and brutal as the federal immigration regime is, New York cannot alter federal deportation policy. However, it is absolutely within New York’s power to facilitate the full inclusion of immigrants in our state. By granting state citizenship, we would extend the full bundle of rights a state can deliver — the right to vote in state elections, to drive, to access higher education, among others — and we would define the full range of responsibilities that come along with citizenship, including tax payment, jury service and respect for state law. By reorienting our national conversation on immigration around the more accurate and productive themes of family, economic vitality and political inclusion, this legislation will move us toward a real solution to our nation’s immigration quagmire.
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