#123 May/Jun 2002

Shelter Shorts: Community Development News

Millennial Commission Speaks The much-anticipated Millennial Housing Commission (MHC) report was finally sent to Capitol Hill on May 30th. Sheila Crowley, president of the National Low Income Housing Coalition, lauded […]

Millennial Commission Speaks

The much-anticipated Millennial Housing Commission (MHC) report was finally sent to Capitol Hill on May 30th. Sheila Crowley, president of the National Low Income Housing Coalition, lauded the MHC for recommending the establishment of a capital fund for low-income rental housing production and expansion of the voucher program.

But Crowley expressed concern about two other commission recommendations: lifting affordability requirements and imposing work requirements for housing assistance. “Both of these recommendations place extra burdens on the poor who are helped by federal housing programs that are not shared by the millions of other non-poor households who benefit from federal housing subsidies,” Crowley said.

The commission, chaired by former congresswoman Susan Molinari and New York developer Richard Ravitch, released the report after an extensive 17-month long study that included public hearings held in Atlanta, Chicago, Los Angeles, Oakland, New York, and Washington. The full report can be downloaded at www.mhc.gov. (SF will have coverage of the MHC report and recommendations in the July/August issue.)

A Weak Settlement Proposal from Delta

The Delta Financial Corporation, once described by government agencies and consumer advocates as a symbol of predatory lending, has proposed a $1.65 million settlement in a class-action lawsuit waged on behalf of thousands of borrowers.

The New York Times reported that the Delta proposal—in which the corporation denies any wrongdoing—calls for a 10 percent reduction in the remaining loan balance for some of the 10,000 people in the class-action suit who defaulted early, as well as a 50 percent reduction in the arrears on those loans. The reductions are valued at $1.15 million. Many other class members would get cash payments of varying but apparently small amounts, totaling $500,000.

Advocates were less than pleased with Delta’s proposal. Pamela Sah, a staff attorney with the South Brooklyn Legal Services foreclosure prevention project, said that most of the plaintiffs in the class-action suit would receive only cash payments, rather than reductions in loan balances or arrears. Borrowers would also have to relinquish the right to sue Delta or to defend themselves in foreclosure actions should they default on future payments.

Same Old Same Old

One reason predatory lending is prevalent in black neighborhoods could be because—surprise—conventional banks seem to be neglecting them.

The New York Times recently reported that the office of Sen. Charles Schumer (D-NY) conducted a study of nearly 200,000 home loan applications and found racial disparity in the way loan applications are handled. Banks denied loan applications from blacks at nearly twice the rate for whites—28 percent vs. 15 percent—even when they had similar incomes. However, citing years of mistrust and discrimination, black residents are also reluctant to apply for conventional mortgages, according to the study. Senator Schumer believes that part of the solution would be to bring banks into black communities and match them up with prospective home buyers.

CDCs Haven’t Got IT Most community development organizations have yet to take advantage of information technology (IT) to deliver more innovative, effective and efficient services to the communities they serve. That’s the conclusion of a new Seedco report, The Evolving Role of Information Technology in Community Development Organizations. Seedco found that, although most organizations have computers, few are used for anything beyond e-mail and simple database use. Organizations that have partnered with a university, however, are more likely to have adopted innovative uses of technology. For example, community development organizations in Los Angeles are now able to gather and classify data using a mapping program developed by the Advanced Policy Institute of UCLA to help reduce housing abandonment and predatory lending. The report is available at www.seedco.org.

Stricter Regulations for Fannie and Freddie

The Office of Federal Housing Enterprise Oversight will require Fannie Mae and Freddie Mac to follow guidelines for audit committees that have been proposed by the New York Stock Exchange, according to The New York Times.

The requirement comes on the heels of a request by the federal Office of Management and Budget (OMB) that regulators hold the two finance companies to the same disclosure rules governing other publicly traded companies. The regulatory change is part of a broad response to the Enron debacle.

According to the Associated Press, the OMB request was the first formal indication of the Bush administration’s policy toward the two government-sponsored enterprises (GSEs). The mortgage-financing companies benefit from several government subsidies that save them hundreds of millions of dollars a year, including an exemption from most state and local taxes, which helps the GSEs supply more cash to bankers for home mortgages. Competitors say the government subsidies give Fannie and Freddie an unfair advantage.

Beneath the Paperwork Lies a Landlord Despite changes in Illinois state law designed to hold landlords accountable, many continue to find ways to keep their identities hidden beneath layers of paperwork. The May 2002 edition of The Chicago Reporter (www.chicagoreporter.com) reported on several Chicago properties that have slid downhill over a short period of time; locating the responsible landlord has proven to be a trying task, however. City inspectors and attorneys charged with going after unscrupulous landlords don’t have the time or the technology to investigate repeat offenders, leaving tenants with little protection. The article also noted that tenants are hesitant to exercise their rights as the affordable housing market continues to shrink.


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