Category Archives: Housing news

A Million Dollar Wasteland or Better Servicing?

Below is a testimony given by an HPAP recipient at last week’s Homeownership Roundtable at City Council:

I a homeowner in Ward 1 and a grateful recipient of a HPAP loan.

A few months ago, I read an article in the Washington Post about the high level of defaults with HPAP. Like many who read it, I was shocked and thought how awful it was that such a good program was being smeared by some bad apples.

Unfortunately, and unbeknownst to me, I was one of these bad apples. The month before our fifth year anniversary of our HPAP loan, when we were scheduled to begin payments toward the loan, we received notification by e-mail from Ameriprise Community Services.

We made our first payment on time and immediately scheduled monthly automatic deductions.  At the same time, we decided to begin the process to refinance. It wasn’t until our agent pulled our credit report that we discovered that Ameriprise Community Services had notified the credit agencies six months prior to when we supposed to begin payments and indicated to them that we were delinquent in our payments, thus negatively affecting our credit score.  We contacted their collections department, explaining their error, and they sent a letter to the credit agencies, copying us, telling them to remove those false delinquencies from our credit report. By then, we were already part of the statistics mentioned in the article and now I question the accuracy of the HPAP repayment process.  It was the servicer who had it wrong, not me and with a 2% foreclosure rate in the HPAP history, I think not the overwhelming majority of those recipients as well.

HPAP was fundamental for me to make the decision and have the possibility to buy a roof for my family.  A better, more transparent process is needed, not a demonization of the program and the families who need it.

by Pablo

The Fallacy of the Fallout

During a recent lunch with a friend and the inevitable discussion about affordable housing in the District, he mentioned that the District has done too much already for affordable housing and that it was poor policies that resulted in the mortgage meltdown and the financial crisis that ensued. My policy wonk hat turned, I countered by citing hard data about the history of restrictive covenants, redlining, and the inner-workings of the subprime industry. He seemed genuinely surprised by this and it registered to me that many people, even very smart people like my friend, simply did not know the truth. A few sensational headlines that trade ill-researched positions seem to be all you need to convince the masses.

A very informative video of the history of restrictive practices in housing can be found here: http://hatdc.org/?p=599.

As for the subprime meltdown, while fishing through dozens of articles has illuminated much for me, the most impactful piece I’ve found is a demographic study done by Maurice Jourdain-Earl, the founder of a company called ComplianceTech. The full report can be found here: http://www.mortgagebankers.org/files/Conferences/2008/RegulatoryComplianceConference08/RC08SEPT24HMDAMauriceJordain.pdf

What’s interesting is for starters the majority of Subprime borrowers were not low income household, but rather middle and upper income white households. Many of these borrowers were not first-time buyers either. The overwhelming majority of subprime borrowing occurred when existing homeowners pulled out home equity through refinancing. Equity stripping became the practice that fueled the subprime boom and is directly attributable as the reason why so many families are “under water” on their mortgages today.

Even though the majority of borrowers were middle and upper-income White households, the most unfortunate part was that Black and other minority households were disproportionately targeted for these toxic products, even in instances where they would qualify for “good” loans.

This study is really important because it not only proves that low and moderate-income Minority households were not to blame for the crisis, but also in figuring out a realistic solution for the existing problem.

According to Maurice Jourdain-Earl:

The problem with portraying the foreclosure crisis as a minority and low-income problem is that it affects how solutions will be approached. If, on one hand, it is believed that subprime rate loans were predominately made to marginal segments of society (Black, Hispanic or low-income) housing policymakers may approach solutions with bias assumptions about minorities and minority qualifications (low education, bad credit, and low-paying jobs, etc.). Thus, there may a tendency to write-off the subprime lending debacle as a type of affirmative action gone bad. On the other hand, if it is believed that the foreclosure crisis affects broader and more demographically diverse segments of society then a more politically responsible approach is likely, thereby changing the tone, climate and context of how solutions are crafted.

DCʼs Home Purchase Assistance Program (HPAP)

What is it?

HPAP, the Districtʼs homegrown downpayment assistance program, provides up to
$44,000 for first-time, low and moderate income home buyers. Downpayment
assistance is critical for low and moderate income DC residents as saving enough for a
downpayment, especially in DCʼs expensive housing market, is one of the largest
impediments becoming a homeowner.
In addition to the financial assistance, HPAP recipients also receive intensive financial
and home buyers education, preparing them for the responsibilities and challenges of
homeownership.
HPAP acts as a second mortgage. Recipients begin paying it down starting in year six
of owning their home and make monthly payments over a 40 year period, thus making
the payments affordable. Some recipients pay back their HPAP loan much quicker.

What it provides

HPAP has helped 13,000 DC residents move out of systems of dependency and
ongoing subsidy, and currently generates $2 million in repayment every year. Even
through the housing crisis, HPAP recipients have only a 2% foreclosure rate.
Homeownership offers a way for prepared families to build wealth through the equity in
their home, helps reduce crime in neighborhoods, and improves childrenʼs educational
performance.
At a time when it is cheaper to own than rent in the DC and with historically low interest
rates, the DC government should be increasing HPAP rather than letting it dwindle (see
the chart below). Providing homeownership opportunities to low and moderate income
people also allows room for other DC residents to benefit from other essential affordable
housing programs – creating a dynamic continuum of housing that moves people out of
poverty.

See a recent article about the program and budget cuts at http://greatergreaterwashington.org/post/14648/cuts-threaten-successful-homeownership-program/

Testifying at City Council!

Future affordable homeowners and HPAP recipients give testimony at City Council.

Yesterday, the DC City Council Committee on Housing & Workforce Development held its annual budget hearing for fiscal year 2013. As affordable housing for District residents remains distant from Mayor Gray’s vision for the city, cuts were made to two essential city housing programs: the Home Purchase Assistance Program (HPAP) totaling $5 million and the Housing Production Trust Fund (HPTF) totaling $20 million (for more information, see http://housingforallblog.org/2012/03/so-what-happened-in-the-mayors-budget/).

Along with numerous housing advocates and non-profits, 19 past and future recipients of HPAP loans, along with Manna, Inc. staff, submitted testimony before the Committee Chairman and At-Large City Councilman Michael Brown to the positive effect that homeownership purchased through HPAP has had on their lives.

Bernice Joseph, a mother of 4 and homeowner in Ward 2 since 2002 said, “Without this program I do not know where I would be. But I do know I would not be in my neighborhood, the one that is so dear to my heart, the one where I put down roots, the one where I have lived for the past 21 years… Without the stable price of my mortgage, I would not be able to afford to go back to school; I definitely could not afford my classes if I had to pay market-rate rent.”

Robert Cooke, a recent homeowner in Ward 5 said, “My story, and the story of some of the members on this very Council, is only possible with the HPAP. HPAP is one of the best investments that the City makes. It just doesn’t make sense that the Mayor is cutting back on this program, while there is an ongoing housing crisis in this city. I will pay back my HPAP assistance so others can become homeowners, too, and I will contribute to the City through property taxes. Where else would this be possible for a person on disability?”

Finally, Willamena Samuels, homeowner in Ward 2 and Director of Manna’s Homebuyers Club said, “HPAP has helped to break the cycle of poverty and allowed families to build wealth and live the American dream of homeownership. Although I own a home in DC and have no thoughts of moving, it pains me to think that the future of the District of Columbia would be one that doesn’t give people opportunities to stay in the city they grew up in and love. If you cut HPAP funds, you limit homeownership to only the very rich.”

After the council hearing many testifiers, concerned residents and housing advocates held a rally in support of full restoration to the housing budget. Ralliers heard from affordable practitioners, advocates and recipients alike, including Jubilee Housing affordable renter Brian Adams, Coalition for Non-Profit Housing and Economic Development organizer Elizabeth Falcon, and Manna affordable homeowner Robert Cooke. Together their words testified to the fact that DC residents need a diverse continuum of affordable housing to move low-income residents up and out of poverty and full funding from the city government to make that possible.

Though the testimony heard before the council and at the rally has been stirringly emotional and persuasive, the fight to restore HPAP and HPTF funding is far from finished. And though those at the rally also heard support for affordable housing needs from Councilmembers Michael Brown, Yvette Alexander, Jim Graham, and Marion Barry, full budget restoration can only happen with majority support from the council.

The hearing and rally are over. It is now up to all housing advocates to continue the fight and steadfastly plead to their Councilmembers for full restoration and funding to these vital housing programs. There is only a short time remaining for action before the Committee of the Whole will cast its final vote on the Mayor’s budget. Go forth and act on this issue today.

For more about the rally and excerpts from speeches given visit the Coalition for Non-Profit Housing and Economic Development website at:
http://housingforallblog.org/2012/04/residents-rally-stop-making-affordable-housing-programs-disappear/

Don’t treat America’s homeless as criminals

Braving America without a home has always been hard. Now it’s becoming a crime. A recent survey of 234 cities by the National Law Center on Homelessness and Poverty found that on nearly every front, municipalities are cracking down on the homeless: 24% prohibit begging, 22% prohibit loitering and 16% say it’s illegal to sleep in public places.

Full Article here: http://www.usatoday.com/news/opinion/forum/story/2012-02-14/homelessness-poverty-criminalize/53094736/1

Peculiar Problem in the District as well, where homelessness is up 20%:  http://www.washingtoncitypaper.com/blogs/citydesk/2012/02/22/homeless-families-up-20-percent/

HPAP- DC’s Homegrown Tool

In a recent Washington Post Article “In D.C. loan program, mortgage defaults abound”, the District’s homegrown down payment loan program, HPAP, was painted a massive failure that purposely sets low-income residents up for failure.  This couldn’t be further from the truth. The article takes the facts about high delinquency rates out of the context, comparing the rates for small down payment loans (historically and expectedly high compared to first trust delinquency rates), as its evidence that the program is a ‘wasteland’ and the District is putting families in ‘loans buyers can’t afford’.  However the true measure of the program, a1.8% foreclosure rate, gets dismissed.

Ms. Cenziper isolates a few instances where purchasers paid too much for their homes and are facing problems staying current on their mortgages.  Ms. Cenziper contacted Manna in her research and the following was shared to her, none of which appears in her article.  A typical HPAP recipient goes through an intake session, a home purchase counseling program, two levels of underwriting for credit and income worthiness, and the professionalism of the program management.  The end result is a buyer educated on the risks and responsibilities of being a homeowner.

Manna has been producing affordable homeownership housing for almost 30 years now and we know what a ‘Wasteland’ looks like.  The down payment loan program provides a responsible, successful approach for lending money that is repaid and recycled.

Sensationalizing the facts to fit the headline contributes to the misinformation about affordable homeownership housing.  With a less than 2% foreclosure rate, it’s hard to make sense of the article.   The program has successfully contributed to assisting thousands of low and moderate income people become homeowners in the District.  This should be celebrated instead of scapegoated.

Washington Post article on Affordable Condo issue

An article came out yesterday in the Washington Post about the Affordable Condo issue (rising condo fees coupled with 20 year resale/rental restrictions in market-rate condo buildings) that all of you have been involved in since Fall 2011. Please read the article at http://www.washingtonpost.com/local/affordable-housing-zones-rules-are-an-affront-to-kings-dream/2012/01/15/gIQABEsq1P_story.html. You’ll notice that there is a storm of varying opinions in the comments section, some that are quite disparaging to the situation that many Affordable Condo owners, many of you, are going through.
Please send the article around to your friends, family and Councilmember, and comment on the article yourself. It is important that your voices are heard, that affordable owners going through this situation are humanized and that solutions are lifted up.
We believe a few things are important for residents of our City to note:
1. These affordable owners are not trying to game the system; they qualified for their mortgages like any other homeowner but have fallen prey to policies that unfortunately have financially burdened them and do not account for normal life circumstances. These policies will also adversely affect market-rate owners.
2. There is a way to provide relief to those in trouble: allowing owners to sell to buyers in higher income categories, allowing owners to rent out at a price that covers their monthly unit costs, creating a fund for condo fees using an affordable owners’ restricted equity, etc.
3. There is another way to structure the Affordable Dwelling Unit program – one that doesn’t allow for windfall profits, but that allows affordable owners to gain equity like any other homeowner and recaptures funds for the District to produce more affordable housing (see http://hatdc.org/?p=428).
Lift your voice for yourselves and your neighbors! We are all in this together.

WAMU Coverage of Affordable Condo Issue

WAMU reporter Elahe Izadi wrote today about the situation of affordable condo owners who were integrated into market-rate condo buildings and the current issue of escalating condo fees that are making their units unaffordable, and the City-imposed resale and rental restrictions that are locking some of these owners in their units. One thing not covered in the article are solutions that have been presented to the City Council, which include:

1.      Allowing ADU owners to resell to buyers in higher income categories

2.      Allowing ADU owners to rent out their units at a price that covers the monthly costs of the unit.

3.      Creating an Excessive Condo Fee Loan program by utilizing the restricted equity of the ADU units

While it is understandable that the City, as Councilmember Jim Graham says in the WAMU article, “need[s] to understand how widespread [high condo fees are], what kind of impact this is having on people,” the City also needs to work quickly to help owners who are at a breaking point and owners who will get there soon. This is not what the City intended, this issue is only going to get worse, and the City can work efficiently and speedily to address it.

A Continuum of Housing Story

The Continuum of Housing, a campaign of the Coalition for Nonprofit Housing and Development, encompasses a full range of housing options, from supportive housing for the homeless to affordable homeownership and everything in-between. As the market does not provide the type of housing needed at a cost that many can afford, the campaign brings together nonprofits and others along the Continuum to work together and with the DC Government to ensure city housing policies and funding priorities that provide housing options for all DC residents, offering people support and stability as they live and work in the city and helping people to climb up the economic ladder and out of poverty and dependence. Listen below to  long-time DC resident, Billy Hart, share his Continuum of Housing story and join us at the December 10th Housing for All/Continuum rally at the MLK Library from 12-2pm to support an inclusive and prosperous city.

Video created by HAT.

Affordable condo issue in San Francisco mirrors DC

In 2007, the same issue that HAT is currently focused on in DC of rising condo fees facing affordable owners who were integrated into market-rate buildings became a concern in San Francisco. This article highlights affordable owners dealing with doubling condo fees and enormous special assessments that the City did not foresee and could not regulate once the condo associations took control of various buildings. These fees were making the units unaffordable for the affordable owners (who were no more than 15% of the buildings), while the market-rate owners could more easily deal with and were more likely to support the increases. The author highlights the need for the City of San Francisco to set up a fund to help pay for the condo fees, support only all-affordable projects where fee increases like this would not take place, or devise more careful plans to truly integrate affordable owners into luxury condo buildings (though the author doubts this is possible). Stay tuned for ways you can advocate for solutions for current affordable condo owners dealing with these issues in DC!

An area in San Francisco where affordable units/owners were integrated into market-rate condo buildings.