Find out what we’re all about as Sterling James from 102.9 KBLX talks to our executive director Maeve Elise Brown, listen here.
San Francisco, CA—Nov.15, 2017— Earlier today, 136 organizations sent a letter to Mel Watt, the director of the Federal Housing Finance Agency (FHFA), urging him to review and possibly end policies that are enabling the widespread displacement of low income people and people of color. FHFA is currently revising its strategic plan and had asked for input, which is why advocates are weighing in with the agency. The letter is signed by nonprofit organizations serving communities in more than 20 states.
“It’s no secret that working families throughout the country are facing high housing costs,” explains Kevin Stein, deputy director of the California Reinvestment Coalition. “What we’re calling attention to with this letter is that FHFA policies are exacerbating this problem. As FHFA updates its strategic plan, it has a key opportunity to change policies and to mitigate this problem of working families and households of color being displaced from their homes and their communities.”
“We know that some of the investments by the GSEs are actually increasing housing costs and the displacement of low income people and people of color. In light of this, FHFA should re-focus its strategic plan to better support homeowners and communities, not Wall Street executives that are buying up our neighborhoods,” adds Maeve Elise Brown, executive director of Housing and Economic Rights Advocates.
“The REO to Rental phenomenon has been a clear disaster for working families,” adds Merika
Regan, a community leader with ACCE in East Oakland. “Renters are experiencing slum-lord conditions, unaffordable rent increases, and are being displaced as a result. There is no compelling reason for Fannie or Freddie to provide financing to companies who are exacerbating the housing crisis in communities across the country.”
In their letter, advocates are outlining how the FHFA, in its role overseeing Fannie Mae, Freddie Mac (the GSEs), and the Federal Home Loan Bank System, is failing low and moderate income households and people of color in 3 important ways:
1) GSEs are Financing Displacement via Investments in REO to Rental REO to Rental, a business model created by some of the same Wall Street actors who caused the housing meltdown, has wreaked havoc on local communities. Potential first time homeowners can’t compete against all-cash investors, meanwhile, long-term tenants are experiencing slum-lord conditions and rapidly rising rents, and/or being displaced. Yet, Fannie Mae recently invested in this harmful practice by guaranteeing a $1 billion loan by Wells Fargo Bank to Blackstone/Invitation Homes. Beyond the harm caused to consumers, the California Reinvestment Coalition also highlighted in a 2014 report how the financing structure for most REO to Rental deals is eerily similar to the financing mechanism that ultimately led to the housing meltdown.
2) Federal Home Loan Bank Funds Used for Questionable Mortgage Purchases: FHLB members are supposed to use their access to FHLB credit in order to finance affordable housing and community development. But, according to media reports, Starwood Property Trust, a Real Estate Investment Trust (REIT), is using relatively cheap funding from the Chicago Federal Home Loan Bank in order to buy non-Qualified Mortgage (QM) loans. These loans do not meet federal ability to repay standards and are therefore riskier for the borrower and the lender. Beyond safety and soundness concerns, advocates are deeply concerned Starwood and similar companies may have a perverse incentive to engage in poor mortgage servicing of these loans in order to foreclose and add more homes to its REO to Rental empire.
3) GSE Affordable Housing Goals Should Consider Gentrification Pressures: FHFA sets important annual affordable housing goals for both Fannie and Freddie that dictate the percentages of loans the GSEs should buy that are made either to low-income consumers or made in low or middle income areas. The Affordable Housing goals are hugely important to efforts to create homeownership for all Americans. But, as gentrification pressures increase, advocates are concerned about the GSEs buying mortgages that were originated to higher-income homeowners in lower income areas or in high-minority census tracts, which could be contributing to gentrification. This is a problem that even FHFA acknowledged, stating that the GSE’s share of loans to wealthier borrowers in low-income census tracts and high-minority census tracts has been increasing. Advocates suggest FHFA consider lowering the “cap” of loans to higher-income people that count for the GSEs (currently at 14%) in order to meet their affordable housing goals. In this way, FHFA would signal to the mortgage and banking industry the need to increase their efforts to serve low-income homebuyers, not just homebuyers who are purchasing in low-income communities.
Advocates are urging Director Watt to review all GSE and FHLB policies with an anti-displacement lens to mitigate the displacement currently happening in low-income communities and communities of color in California and across the US.
1) Prohibit Fannie and Freddie from financing REO to Rental transactions. If FHFA will not do so, it must at the least implement significant protections. If the GSEs intend to continue with these investments, they must include safeguards against first time homebuyers being elbowed out as well as protections for tenants against shoddy maintenance, unnecessary evictions, and unaffordable rent increases.
2) Immediately prohibit REITs from using Federal Home Loan Bank advances for purchasing non-QM loans, distressed loans, or for any investments in REO to Rental that have the effect of destabilizing low and moderate income and of color households and communities.
3) Minimize incentives for lenders to extend mortgages to wealthier homebuyers in low income zip codes. Currently, the GSEs are allowed to “count” as part of its affordable housing goals up to 14% of their mortgage purchases that are to wealthier homebuyers in lower income or high minority census tracts, and FHFA is proposing to increase this to 15%. However, advocates suggest that if FHFA were to lower this “cap,” it would incentivize the GSEs, and the lenders they buy mortgages from, to refocus their efforts on serving low and middle income homebuyers. GSE affordable housing goals are critical and must be strengthened and refocused on low and moderate income and of color borrowers to ensure that all Americans are able to achieve the dream of homeownership and wealth accumulation, especially in communities vulnerable to gentrification pressures.
4) Increase oversight and transparency in regards to GSE foreclosures and note sales to guard against unnecessary foreclosures, especially as it relates to Wall Street and private equity companies buying and servicing mortgages as a result of financing from the GSEs.
In a 2014 report, the California Reinvestment Coalition detailed how REO to Rental companies are depleting affordable housing stock, elbowing out potential first-time homebuyers, and displacing long-term tenants.
See the original press release on CRC’s website here.
by Nisha Kurani as part of the program of professional education at the Goldman School of Public Policy, University of California at Berkeley.
Medical bills and medical debt have a lasting impact on the financial stability for families, particularly vulnerable populations. The uninsured and lower income groups are more likely to experience problems paying medical bills, although people of all socio- economic groups report experiencing problems with medical costs. The Affordable Care Act (ACA) aimed to increase protections for consumers by increasing access to private and public insurance coverage, as wel
l as mandating charity care for low-income, uninsured or underinsured patients in nonprofit hospitals. While uninsured individuals do not have any insurance to help cover costs in the case of medical necessity, underinsured refers to a person who has health insurance but faces high medical costs. This is especially relevant today: recent surveys show that 35% Americans still experience issues with medical costs, and 47% of that group reported that they were unaware of charity care after receiving health care services. While health insurance mitigates the impact of medical bills by providing some protection, medical bills nonetheless remain a problem for millions of insured and uninsured individuals.
This is particularly relevant for the client, Housing and Economic Rights Advocates (HERA), a legal advocacy clinic based in Oakland, California. HERA provides legal services and information to Californians, particularly those most vulnerable, to promote financial security free of economic abuses. They also advocate for stronger consumer protections from debt at the state level. While HERA’s focus in the past has centered around homeownership and protections from mortgage debt, over the past 6 years, HERA has opened its doors to address the vast array of debt and credit concerns experienced by tenants and homeowners alike that are unrelated to housing, while continuing to address housing related concerns for renters and homeowners.
The goal of this report is two-fold. The first is to analyze the current landscape of medical costs, bills, and debt for low-income individuals, with a case study on HERA clients, to understand why medical bills may persist among insurance coverage expansions and charity care policies in California. The second part of this paper examines charity care policies for hospitals in Alameda and Contra Costa counties in the Bay Area, California. California in particular has policy protections in place for low-income uninsured and certain insured individuals, yet data suggests that those policies are underutilized by eligible populations. The paper will conclude with policy recommendations on how to improve charity care and consumer protections in the U.S.
See the full paper here.
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When Vanessa and Richard Bulnes got an eviction notice, it felt sadly ironic. The Bulneses were unable to pay the rent because their corporate landlord took three years to remediate high levels of lead in the backyard soil, which caused Vanessa to lose her business — a family home child care that she had run for more than 20 years.
It was the latest in a string of injustices that happened to the Bulnes family: first, loan modification fraud, then foreclosure, now the threat of eviction. Their story is emblematic of a bigger problem: the disproportionate loss of African-American and Latino wealth during the foreclosure crisis and the obstacles to build up that wealth again. Between 2007 and 2013, so many African-American and Latino homeowners in Oakland were wiped out by foreclosure that entire neighborhoods were transformed. Many of the homes that were lost ended up in the hands of corporate investors, who then rented them out, sometimes to the same families who had lost their own homes. And that put those families, like the Bulneses, at risk of much more loss.
Losing a home often begins this way: A family hits a hard spot, a health crisis or a loss of income. At the time of the stroke, Richard was working at Meals on Wheels. The family lost about $2,000 a month in income, about the same amount as their mortgage payment at the time, which had ballooned after they refinanced. They still had Vanessa’s income from her child care business, but they decided their best option was to try to modify their loan.
The Bulneses, though, were caught up in a bigger web. Oakland and other cities across the country are now suing big banks for targeting African-American and Latino homeowners with loans that had abusive rates. At the same time, many banks weren’t playing fair to help homeowners modify their loans.
“It seemed like at every point, when we got to where we thought we were going to get a modification, they needed another piece of paperwork, they needed another bank statement,” said Vanessa, who is 58. “There was always something else they needed, and when we gave them that, ‘Oh we lost that, could you send something else?’ ”
What Vanessa describes sounds really familiar to Maeve Elise Brown, director of the statewide organization Housing and Economic Rights Advocates. In 2009, President Barack Obama had introduced the Home Affordable Modification Program to help struggling homeowners modify their loans, but homeowner advocates, researchers and news organizations like ProPublica found that banks often broke the rules.
“Mortgage servicers were telling people to turn in paperwork over and over and over again. They weren’t looking at it, they would shred it. They would deny people instantly,” Brown said. “Not everyone qualified, but a whole bunch of people could, but were prevented from accessing that relief by the mortgage servicing companies.”
Latino and African-American neighborhoods, like the Bulneses, were hit the hardest by the foreclosure crisis. These are the same neighborhoods that were redlined decades ago, with residents denied mortgages simply because of where they lived. Across the country, African-American and Latino neighborhoods lost three to four times more homes than white neighborhoods during the recent mortgage crisis, according to Cornell University research. On the Bulnes’ six-block street alone, at least 35 properties were foreclosed between January 2006 and December 2012, according to the website PropertyRadar, which tracks foreclosures.
Read the full article here.