#121 Jan/Feb 2002

Shelter Shorts: Community Development News

Supreme Court Family Values If you live in public housing and a member of your family is using drugs – whether you know about it or not – you could […]

Supreme Court Family Values

If you live in public housing and a member of your family is using drugs – whether you know about it or not – you could soon find yourself on the street.

The Supreme Court ruled in March that a federal drug law allows for the eviction of public housing tenants if a household member or even a visitor uses drugs – even if that drug use occurs outside the apartment. HUD petitioned the court after a federal appeals court in San Francisco ruled that the Anti–Drug Abuse Act of 1988 did not permit the eviction of public housing tenants who were innocent of wrongdoing and unaware of the drug use by other household members or guests.

The higher court ruling now puts four elderly residents at risk of eviction from their apartments in Oakland, CA, including a 79-year-old man who is partly paralyzed. His caregiver was found in his apartment with cocaine. HUD officials called the ruling “a great victory for families in public housing,” adding that “a tenant who cannot control drug related crime by a household member threatens the health and safety of all residents.”

No word yet on whether the ruling would therefore bar the Bush daughters from visiting the White House, or lead to the president’s eviction from his public housing.

LISC Official Indicted Martin W. Turkowitz, a vice president of the Local Initiatives Support Corporation (LISC), has been indicted on charges that he embezzled $1.8 million from the Local Initiatives Managed Asset Corporation, a LISC subsidiary. The New York Times reported in February that Turkowitz, who was also the chief financial officer of the subsidiary company, was charged after a co-worker who had collaborated in the scheme decided to step forward. The indictment also charges Mr. Turkowitz with stealing $160,000 between 1997 and 2000 from the Accountability Project, one of several nonprofit organizations where he volunteered his services. At his arraignment, Turkowitz pleaded not guilty and was released on $150,000 bail.

Post Knocks DC CDCs Though millions of federal dollars have flowed to Washington, DC community development corporations, there is very little to show for it, according to the Washington Post. In March, the paper published the results of a six-month investigation of CDCs that revealed financial mismanagement, political cronyism, and problems with the city’s monitoring system. According to the article, the eight city-designated CDCs have completed only 70 of the 200 projects that received public funds over the last 10 years. Of those 70 more than half have been delayed for years or have triggered lawsuits from buyers and contractors.

Don’t Mess With California Tenants!

A real estate investor in Japan may be the catalyst for a statewide tenants rights movement in California. According to the Sacramento Bee, developer Gensiro Kawamoto sent lease termination notices in February to 570 tenants living in his properties in suburban Sacramento and Santa Rosa, giving some tenants as little as 30 days to vacate.

Following a public outcry, Gov. Davis, Sacramento County supervisors, and state Attorney General Bill Lockyer sent letters to the Japanese government, protesting Kawamoto’s actions. Legislation was introduced in the state assembly that would give tenants in mass lease terminations 90 days to vacate; the bill passed by a 9-1 vote and is now on the floor of the state assembly. ACORN organizers rallied tenants in front of the state capitol within days of the 30-day notices, and filed a lawsuit charging that Kawamoto had violated the state’s Business and Professions Code in trying to remove the tenants.

These efforts led to a major victory for the renters on February 28th when Kawamoto agreed to give all tenants three more months. ACORN board chairman Chris Jones hailed the victory as a product of the community’s “relentless effort,” and said the pressure would continue as the group takes the renters’ cause to the California legislature on a wide variety of issues.

Watchgroup Calling the Kettle “Black?”

FM Watch, a home loan industry group, has criticized Fannie Mae and Freddie Mac, charging that they are not living up to 1992 legislation that says the two Government Sponsored Enterprises should lead the market for affordable and minority lending, according to Reuters. The FM Watch executive committee includes representatives of some of the leading private lending institutions.

The group based its charges on analysis of HUD data, which found that Fannie Mae and Freddie Mac fell short of the private market in financing for black home buyers in 97 out of the 100 largest U.S. metropolitan areas. They also lagged the private market in financing loans to Hispanics in 87 out of the largest 100 U.S. cities, FM Watch said.

Fannie Mae replied that the private industry group’s analysis misleadingly includes the subprime market, in which Fannie Mae has only recently begun to participate. Congressional Black Caucus Chair Eddie Bernice Johnson (D-TX), however, praised Fannie Mae and Freddie Mac for their efforts to increase black homeownership, and said the critics themselves had much to answer for.

Abandoned Properties Con Man Nailed

Rickie Williams was having success where the city of Philadelphia was not. He was able to find owners for 36 low-income houses thought to be abandoned, turning over some properties in a matter of days. But, as the Philadelphia Daily News reported in February, there was one catch: Williams didn’t own the properties he sold.

According to the News, Williams stole the properties through a series of fraudulent deed transfers. The scam ran for nearly three years and involved 20 co-conspirators, who helped Williams obtain copies of the deeds, type up “new” deeds, and transfer properties from real owners to various confederates.

Williams is currently in federal prison on unrelated charges, and will be part of a mass trial in September. And Philadelphia is still looking for a legal way to get those abandoned properties lived in again.

Bankers Take Over FHLB?

The National Congress for Community Economic Development (NCCED) is concerned about the Federal Housing Finance Board’s 36 appointments to the Federal Home Loan Bank (FHLB) system’s board of directors. NCCED President and CEO Roy Priest said the appointment of five bankers as community and public interest directors deepens the influence of the banking industry on the board at the expense of the community economic development field. According to NCCED, only two of the 36 appointed had extensive community economic development expertise. Currently, each bank within the FHLB system already contains eight banking representatives elected by the board members of the individual banks, and six directors appointed by the Federal Housing Finance Board.

NCCED had recommended 17 candidates for the board, including a number of women, minorities, and rural-area representatives. Only one of those candidates, Mike Radway, already FHLB Seattle Chairman, was appointed.

Household Modifies Fee Policies

Household International Inc. is cutting fees and reducing interest rates to address charges that it engages in unfair lending practices, according to the Reuters internet site. The announcement comes in the wake of a class-action suit filed by ACORN in California Superior Court, which accuses Household International and its subsidiaries, Household Finance Corporation of California and Beneficial California, Inc., of a wide range of fraud and misrepresentation. The class for the suit includes all individuals who have entered into secured loan transactions in order to consolidate existing debt during the past four years. ACORN estimates the class size to be in the tens of thousands, and the amount of the loans made during the period to be over $2 billion.

Reuters reported that Household was cutting several types of points and fees that are charged to mortgage borrowers, and would give real estate customers a choice between a lower-rate loan with a prepayment fee, or a higher-rate one without a prepayment fee. Household also said it would put a 5 percent cap on fees and points charged to borrowers.

HUD Housing Budget “Inadequate” Calling the Bush Administration’s $31.5 billion for HUD “tragically inadequate,” the National Housing Conference (NHC) called for an additional $15 billion to meet the need for affordable housing. NHC said the increase would provide affordable housing for more than 500,000 families, spur production of 85,000 new homes, preserve an additional 225,000 homes, and create 250,000 new jobs. The HUD budget proposal earmarks $200 million for a new initiative, the American Dream Downpayment Fund, which aims to help an estimated 40,000 low-income families annually to become first-time homeowners. John F. Bohm, NHC, 202-393-5772 x21; Robin Hamilton, NHC, 202-393-5772 x19


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