Give the Developments a Chance

A Stalled Housing Development (Image Source: Washington Post)

The Washington Post’s new expose that purports to reveal to the public the widespread incompetence affecting the Department of Housing and Urban Development has engendered much controversy. The series ostensibly addresses only a single program within HUD, the HOME Investment Partnership Program, which administers funding to local government and private entities to develop affordable housing projects. In stentorian fashion, the opening sentence of an article titled, “A trail of stalled or abandoned HUD projects,” (part of the multi-article investigative series titled, “Million Dollar Wasteland”), declares, “ the federal government’s largest housing construction program for the poor has squandered hundreds of millions of dollars…and routinely failed to crack down on derelict property developers or the local housing agencies that funded them.” The Post goes onto report that some 700 projects, totaling “nearly $400 million” have been stalled for years, some even for decades, causing widespread blight. The article then lists widespread deficiencies in oversight and accountability within HUD, contending that the agency doles out cash without properly vetting recipients, that money was delivered when projects were only in an inchoate phase, and that HUD should have imposed more regulations on funding recipients, whether they be housing agencies, non-profit organizations, or the partnered developers. Needless to say, we were surprised.

Perhaps the main reason the article surprised us, however, was what appeared to be the intentional misrepresentations of the available housing statistics, most of which were pointed out lucidly by Secretary Donovan. In a response published on June 10, Donovan rebutted the Post by indicating out that HUD has received numerous acclaim in recent years as well introducing his own stats:

Although HUD provided data and information to The Post for more than a year, the paper has not shared with us the list of projects it generated. So after the articles ran, we conducted our own project-by-project review using The Post’s parameters. We determined that more than half of 797 projects that could have been flagged as “stalled” based on The Post’s criteria are finished.

Of the remaining projects, 97 have been canceled and their funding moved to viable projects, while 154 are progressing toward completion. The final 85 properties are experiencing delays, but in the vast majority of cases there is a simple reason for this: the recession.

Donovan goes on to state the conclusions of HUD’s internal study: only four percent of the more that 5,000 Home projects are “delayed” or “cancelled” (employing the metrics used by the Post). Moreover, the Post misleadingly gives the impression that funds were squandered, when in fact HUD policy stipulates that “[if] there are delays, money can be moved to other viable projects or must be returned if it is not used within five years.” Donovan then goes on to defend the decentralized nature of the HUD grants, which give large discretion to local communities and their governments, by suggesting that this framework is a preferable to a “one-size-fits-all” federal mandate.

In addition to what could be blatant misrepresentations or mistakes, the article is unfair in a number of other respects. For starters, it assumes more regulations and requirements are a solution, while ignoring the fact that these could quite possibly further stifle such developments. Moreover, it completely neglects to contrast the HUD programs with the ways in which the private sector has aimed to deliver affordable housing in recent years. While this phenomenon also resulted from public-private partnerships, namely government policies encouraging homeownership and many private entities vying to advantage from government guarantees by engaging in the lucrative process of securitizing credit, the private sector likewise failed, resulting in the financial crisis. The HUD developments, which involve the government to a greater extent than most other housing developments, are one of the few bright spots of economic creation in the housing industry, which many commentators have pointed out is crucial to broader economic recovery. Let’s keep this in mind, and give the developments a chance.

We at St. Ambrose were also particularly chagrined about the fact that the article seemingly attempts to paint the entire Department of Housing and Urban Development in a negative light. The Post does this in part by implying that HUD is a single-faceted organization aimed at the development of new properties for low-income citizens. While it is true that this area comprises a major part of HUD’s activity, the organization also provides other, far different services, many of which remain crucial to mitigating the widespread financial pain incurred by the current financial crisis. These services include both mortgage and foreclosure prevention counseling—we believe that the former type of assistance needs to be implemented on a large scale, as mortgage counseling is often key to ensuring that families understand their commitments, the terms of their mortgages, and what it will take to keep above water over the long term. As for the latter, we know that foreclosure prevention assistance is paramount in enabling families to stay in their homes longer. Take for example our unique study on foreclosure prevention conducted earlier this month, which among other things found that 70% of homeowners that underwent counseling in 2007 reported positive outcomes, and that homeowners who utilized counseling services were 79% more likely to experience a positive outcome. (More insight on the study will appear here next week).

More than anything, in light of Donovan’s straightforward statistics, which serve to debunk much of the Post’s shocking data, we wonder how the Post could have come up with numbers that contrast so sharply with HUD’s. As far as we know, the Post is yet to respond to Donovan, and on this point we think it may be fair to take a hint from one of Baltimore’s great social critics, David Simon. In Season 5 of The Wire, the city’s local paper runs into some problems with balancing sensationalism with thorough, honest journalism. And while we certainly don’t equate the Post series with Scott Templeton, it’s reasonable to suspect that the Post may be guilty of a similar, all too common imbalance.

Can the Government Help the Housing Crisis?


Rep John Beohner on the CBS program, “Face the Nation” (Image Source: CBS)

Readers of this blog likely know that over the last few years, the government has experimented with several programs that aim to alleviate the mortgage foreclosure crisis and in turn, bolster the housing market and the U.S. economy.  However, it’s no secret that many of the government’s flagship programs, like the Home Affordable Modification Program (HAMP) and similar initiatives administered by various federal agencies, like the Department of Housing and Urban Development, have fallen short of their stated goals.

However, in spite of all of these setbacks, Americans and their elected representatives by and large have maintained a sense of optimism that the housing market and the economy will recover, until recently.  While some skeptics posit that the housing market is permanently beyond its golden days, others address their criticism at the government, as they’ve lost hope in its ability to make a dent in the crisis. 

Take, for example, Republican House leader, John Boehner.  On the CBS Sunday morning program Face the Nation, Boehner stated bluntly that he has given up on the government’s ability to mitigate the crisis.  Boehner said that at the time of their initial approval he was skeptical that any of the federal housing initiatives would succeed.  He went on: “I’m even more skeptical today that there’s anything the government can do to resolve these problems.  Boehner’s skepticism, predictably, comes with a more optimistic caveat:

“Over the last couple years, Congress has really set up four programs to help with those mortgage problems,” Boehner told Harry Smith. “And unfortunately, none of those have worked. And all they’ve really done is dragged out the length of time for the market to clear the problems. Which is unfortunate.”

In addition to suggesting that the government programs have no chance of succeeding, Boehner simultaneously indicates that the market proffers the sole plausible solution to the crisis.  The Republican leader again presents the public with the ubiquitous dichotomy of market vs. government, whereby the two entities are necessarily mutually exclusive.

Contrast Boehner’s view with that of President Obama.  About a month ago, Obama delivered a speech hailed by many as the first comprehensive illustration of his policy vision for the nation.  While cautioning the nation about the increasing deficits, Obama outlined a boldly progressive stance, contending that in addition to utilizing the government to attain a collective set of liberties, like access to healthcare, public schools, and a strong military, “part of this American belief that we are all connected also expresses itself in a conviction that each one of us deserves some basic measure of security.” Does affordable housing constitute a “basic measure of security?”

Here, we see the vivid juxtaposition of two visions of the government’s role in society articulated by two of the nation’s leading public figures.  Moreover, this blog has commented frequently on the government’s housing initiatives.  While St. Ambrose welcomes government programs, we have been clear in pointing out there failures. In our view, many such failures have regulatory in nature, suggesting the need for more government, not less.  Nevertheless, if the economy is rebounding, perhaps this revival in prosperity will trickle back to the housing market, triggering a growing demand, increased properties values, and prosperous communities.

So, we invite readers to comment: can the government fix the housing crisis?

Congress Proposes Cut to Important Foreclosure Counseling Program

A Foreclosed Home on the Market (Image Source: CNN)

We’re a little late commenting on this news, but the proposed cuts in the U.S. Housing and Urban Development Department’s primary program that appropriates funds for foreclosure prevention counseling has caused considerable buzz throughout the community development world.  Needless to say, St. Ambrose, like many other non-profit organizations in Baltimore and around the nation, would take a palpable hit if the measures materialize.

Here is the summary from the New York Times:

[The] proposal for the current fiscal year, which is scheduled for final votes in Congress imminently, cuts $88 million from the Department of Housing and Urban Development’s budget for loan counseling programs, including for reverse mortgages, a HUD spokesman confirmed Thursday. Some $9 million of that total is reserved for reverse mortgage counseling, which helps borrowers understand the benefits, costs and risks, of such loans

HUD’s program, the Housing Counseling Program, has made an enormous impact in the effort to mitigate the foreclosure crisis.  In the last few years, the Housing Counseling Program has delivered individual counseling to more than four million families in the midst of the foreclosure process.  The program has worked to prevent mortgage delinquency for more than two and a half million households, with almost one million avoiding foreclosure altogether.  Is has helped more than half a million renters and homeless individuals resolve landlord-tenant matters and other legal issues.  Finally, hundreds of thousands have benefited from pre-foreclosure counseling, which takes place before proceedings commence, enabling many families to refinance their homes, obtain reverse mortgages, and stave off disaster entirely.

These cuts could be severe, no doubt, and they are the product of a highly politicized Congress obsessed with slashing spending they perceive to be “wasteful.”  Indeed, part of the reason that this proposal has emerged relates to the public’s misunderstanding of foreclosure prevention counseling and its societal significance—a misunderstanding that has arisen because it’s difficult to articulate how this kind of counseling can provide both huge financial and emotional relief to homeowners and families.  And counseling has received poor press because of the failures of programs like HAMP and the government’s inability to regulate lender practices, topics that we have covered extensively in the past.

Despite these setbacks, we at St. Ambrose believe that nationally sponsored foreclosure counseling provides systemic help in alleviating the current crisis.  This is why the state of New York, for instance, has proposed providing not only counseling but guaranteed legal assistance to residents undergoing foreclosure, and several other commentators have pointed out the importance of counseling as well.  Here, we see it working first hand, every day.

If you have been in the foreclosure process and have received counseling or legal aid, please call your Congressperson, tell your friends to call theirs, and feel free to share your experiences here.

HUD’s Transforming Rental Assistance Proposal Stirs Debate

Source: US Department of Housing and Urban Development

A recent proposal from the U.S. Department of Housing and Urban Development (HUD) has attracted both praise and concern among affordable housing advocates. The Transforming Rental Assistance (TRA) initiative—which has yet to become a formal Congressional bill—was recently presented to the House Financial Services Committee. The proposal has three broad goals 1) to streamline and simplify HUD’s numerous rental assistance programs 2) to allow public housing agencies to access private capital by converting to new funding contracts and 3) to promote resident choice regarding their housing’s location.

In his recent testimony before the House Financial Services Committee, HUD Secretary, Shaun Donovan, stressed the importance of the TRA initiative. He noted that the public housing stock “currently has a backlog of unmet capital needs that may exceed $20 billion dollars,” and that 150,000 public housing units have been lost in the last 15 years alone “through demolition or sale.”

Among the proposal’s supporters, Will Fischer, a Senior Policy Analyst with the Center on Budget and Policy Priorities, has called the TRA “the most important new initiative to preserve federally subsidized housing in more than a decade.” Fischer writes that the multi-year, $350 million dollar proposal “would help preserve an estimated 300,000 affordable apartments…in its first year.”

The President of the National Low Income Housing Coalition (NLIHC), Sheila Crowley, while noting that the proposal is “not perfect,” also supports the TRA initiative. “The TRA proposal demonstrates HUD’s dedication to preserving our nation’s underfunded public housing while protecting tenant rights and establishing mechanisms to provide extremely low income people with more housing options,” Crowley said in a statement on the NLIHC website.

However, the TRA proposal has garnered opposition as well. The National Economic and Social Rights Initiative (NESRI), and other housing advocates have questioned the proposal’s potential to lead to the privatization of public housing. With new funding contracts, owners would be able to take out mortgages for much needed building maintenance and repair. Some worry that in the case of a bankruptcy or foreclosure, the properties would fall into private hands, thereby diminishing the stock of affordable properties and undermining the rights that tenants enjoy with public housing.

In a joint publication with National People’s Action, Tiffany M. Gardner, Director of the Human Right to Housing Program at NESRI, has written that converting public housing to project-based section-8 units, “raises many questions and potential dangers, including public housing switching from public to private ownership and decreasing the accountability mechanisms currently available to residents. While both the public housing and project based Section 8 programs play important roles in housing our most vulnerable communities, both have a separate set of strengths and weaknesses and are not substitutes for each other.”

The issue of privatization has also been raised very prominently in a recent series of articles at the Huffington Post, involving Professor of Cognitive Science and Linguistics at the University of California, Berkeley, George Lakoff and HUD Secretary, Shaun Donovan. Lakoff first discussed the TRA proposal and the possibility that foreclosures would lead to privatization, here. Shortly afterwards, Secretary Donovan offered his own explanation and defense of the TRA proposal—stating explicitly that “What this bill won’t do is “privatize” public housing.” Donovan added that:

By allowing public housing properties to voluntarily tap their inherent value to meet their capital needs like owners of other affordable housing are able to do, this legislation levels the playing field – increasing the likelihood that properties will remain publicly owned and affordable to the lowest-income households.

In addition, HUD’s FAQ page on the TRA initiative specifically addresses the issue of foreclosure:

Q: Will there be protections to avoid losing units to foreclosure?

A: Yes. The rental assistance contract for converted properties would remain in place, whether or not the loan is insured by FHA. In the unlikely event that a lender forecloses on a loan, the property must remain affordable when transferred to a new public agency, not-for-profit organization or other owner.

However, questions regarding privatization remain. Following Donovan’s post, Lakoff issued another post of his own, this time drawing upon questions Donovan faced by US Representatives Barney Frank and Maxine Waters at the Financial Services Committee. While Lakoff is reassured that the bill has not yet been taken up by a Committee and “HUD’s attempt to privatize all of America’s public housing has been put on hold—for now,” he expressed concerns that linguistic finessing in the proposal allows HUD to simply define away the problem of privatization.

Damaris Reyes, representing National People’s Action—which describes itself as “a  Network of community power organizations from across the country that work to advance a national economic and racial justice agenda”— has also raised questions about the TRA proposal. In addition to questioning the possibility of privatization, whether units would remain affordable over the long term, and how the proposal would affect resident rights—Reyes has also introduced broader concerns:

The need for repairs and maintenance on this scale is irrefutable, but it is worth taking a moment to reflect on why there is such a massive amount of money needed to make our public housing viable. It is because the current Administration, previous Administrations, and Congress as a whole have failed to act. … We are here today discussing this bill because this country has refused to live up to its responsibility to care for our nation’s most vulnerable, and has starved public housing of the necessary resources. So now we are looking to the private market to save our public assets.

Additional Resources: