Today on Daily Kos, there was very haunting and sad post about Dayton, Ohio. Dayton, the home of the first flight and the first cash register is the empitome of what has happened to many small and mid-sized cities whose middle class was created through the promise of hard, but good paying work at factories.
Here is the link to the pictoral tour of modern Dayton. Speechless.
Categories: 1
Tagged: economic development, foreclosure, neighborhood revitalization
So, over the last two weeks I have been playing catch up with my reading. Ever since I left behind my beloved (in hindsight) PATH and Subway commute in NY/NJ and traded it in for a 30 mile one-way 40 minute trip in the car, I have been slipping. One of things I have been missing out on is reading my favorite business rag–Fast Company, which describes itself as a place ”Where People and Ideas Meet”.
As I was skimming over the covers of the issues from the last four months, lo and behold, what did I find but one of my favorite actors (and secret crush though he’s a bit on the short side for me) Ed Norton and reference to his “$9 billion dollar housing project”. * Being as keenly in tune with housing as I am (or purport to be) I knew the statement could only be about Enterprise Community Partners (Eprise)–his family’s business. (You see ’ole Ed is the grandson of Enterprise’s founders the late Jim Rouse and is dynamic and wonderful and very much living wife Patty,)
So, as you have probably guessed, I put the article about the fastest growing dating service in another issue aside to read the article. I have to tell you, seeing all the things Eprise does to “git ‘er done” when it comes to community revitalization–and housing specifically is astounding. And since I am such a nice person, I thought I’d break some of the coolest stuff down for you and include some nifty links that will keep you occupied for hours.
It May Not be Easy Being Green–but they sure try!
With the first nation-wide green criteria for building residential units, Eprise was ahead of the curve. Green Communities not only helps developers figure out how to build green but also encourages it by providing small grants as well.
Through the Solar Neighbors Program with BP, famous folk and others who are interested have installed solar power systems on their homes and for each installed system BP donates a system to a low or moderate income homeowner.
And of course no Green outreach is complete without a Carbon Footprint Counter (as you would guess, mine is not small–I wish I could get someone I know to encourage telecommuting–but that’s for another day).
And if you want more, Enterprise purports that its National Conference earlier this fall was carbon neutral. (though I am quite unsure of how that is possible.)
Holding the Hill’s Feet to the Fire
None of the Green Communities stuff, or the various financial tools (like did you know that the former Chairperson Bart Harvey was instrumental in bringing the Low-Income Housing Tax Credit to life) if Enterprise did not consistantly rally the troops and lobby the Hill (which for you non-political types is Capital Hill). The past 8 years has not been for the faint of heart in this business–and Enterprise has demonstrated its “Terminator” like strength frequently. With the prowess of its public policy team, and the leadership of the affable and “way smarter than your average bear”, Doris Koo, Enterprise has fought the good fight–and often won. From Ms. Koo’s testimony and presentation of a $10 billion dollar request as a part of the Housing and Economic Recovery act to fund a program to help stabilze communties rampaged by foreclosure, came the $3.9 billion dollar Neighborhood Stabilization Fund. (How it will work is a conversation for another day) And with a change in the wind, Enterprise is poised to go back and ask for that $6.1 billion that was left off the table.
Here’s hoping they can get some fixes to Low-Income Housing Tax Credit or who knows if any affordable housing projects will get done!
As a matter of fact, how ’bout we all write are Congress person or Senator and help them out?
Innovation Station
These days, whenever I here the term “innovation”, all I see is the dude dressed up like a superhero with an “I“ on his chest.
Eprise might as well be a hyper 18-year old with an iPhone and Mac Powerbook in its messenger bag. If you want to know what’s up with Eprise, not a problem.
They Twitter.
They FaceBook.
But Three Times. (In three different ways)
They are LinkedIN.
They Podcast from time to time on the nonprofit channel (you have to check out the podcast of Donna Brazille–brilliant!)
And whatever “Squiddo” is? They do that too.
Wheew! That made me tired. They’re a busy little bunch aren’t they?
Now, go forth and be productive…or don’t and spend some time fiddling with the links I just gave you!
* K Nicole is an employee of Enterprise-but she is not writing this for her job. She just thinks they are cool! ( Most of the time!)
Categories: News · References
Tagged: foreclosure, Green building, Housing Finance, Innovation, Neighborhood Stabilization Fund, Social Media
by Guest Blogger: Kenneth Stewart
If it is true that the housing bubble was the root cause of the financial crisis, it seems an obvious solution would be to delay an immediate devaluation of housing stock, based on the premise that home values could recover nicely over time if corrective housing policies are put into place. Financial institutions are being hit by the double-whammy of mortgage foreclosures, and expectations that future foreclosure rates will be even worse, which devalues a wide range of real estate-related assets. As the foreclosure scenario plays out, home values take another hit, and a vicious cycle is perpetuated. The answer to the question of how to halt this vicious cycle may lie in a commonly used tool in the affordable housing field: low-interest rate, deferred second mortgages.
The mortgage program would work as follows. A homeowner with a mortgage they can no longer afford would go to their lender with a proposal: refinance my loan at a principle balance and interest rate I can afford, and I will get a second mortgage from my local government/nonprofit program administrator such that the combined refinancing proceeds will equal 90% of the current outstanding balance. In other words, take a 10% loss and convert your asset from a non-performing loan to a well-underwritten conventional mortgage. Localities have already been granted funding in the recently enacted Housing Bill that can be used to fund second mortgages. The Treasury Department would be well-advised to dump a significant portion of the Wall Street bailout package ($250 billion would be helpful) into this kind of initiative. The government would be directly investing in citizens and communities, as opposed to risky, complex securities, and banks and financial institutions would be clear indirect beneficiaries by limiting the loss of loan principal.
The program would have to be limited to homeowners who could afford a conventional first mortgage of at least 60 percent of their current balance. If they are unable to afford that minimum, it means they could never afford the home in the first place. The government should not attempt to provide a stop-loss for such poor decision making, and possible fraud, on the part of the parties involved. Where the program is applied, lenders would still face a write-down in various residential assets–albeit smaller at 10% write down — plus the loss of any prepayment penalties that would compensate them for the loss of future up-ward adjusting interest rates. If we couple this with some type of moratorium on the amount of commission that can be earned by realtors and appraisers involved in the sale of foreclosed properties, then the parties who came together to create the mess will have to share in the pain of correcting their mistakes. A salary cap for the executive leadership of participating financial institutions would complete the circle.
As tempting as it may be to leave those responsible for the housing bubble at the mercy of the market, the best approach would be a program that targets the root cause of the current crisis, through direct investments in the hardest-hit communities. A well-structured nationwide second mortgage program could achieve many important results. Banks would benefit from having hundreds of thousands of loans refinanced with the lowest possible loss of principle, cities would stabilize neighborhoods and protect their tax base by keeping homeowners in place and avoiding foreclosure sales that would drive market values down even further, homeowners would benefit by keeping their home and getting some protection as related to their equity position, and local housing agencies and their nonprofit partners would benefit from having a role in closing and servicing second mortgages that would give them a new source of revenue, as well as a vested interest in getting home values back up to maximize recovery of funds invested for the second mortgages. Such a program would still require billions of dollars in federal outlays, but it would be through a mechanism that allocates the pain as well as the benefits as broadly as possible, while focusing efforts on stabilizing home values – which is the root cause of the problem.
Mr. Stewart currently underwrites equity investments in affordable housing projects for Enterprise Community Investments in Columbia, MD. Prior to going to Enterprise, he was with the Prince George’s County Department of Housing and Community Development (DHCD), serving first as Deputy Director for Capital Markets, and later as the Deputy Director of the Redevelopment Authority, where he had primary responsibility for the tax-exempt bond,, homeownership, and the federal HOME block grant programs. Prior to his appointment at PG-DHCD, Mr. Stewart served as Director of Public Finance for the D.C. Housing Finance Agency, where he was responsible for processing, underwriting, structuring and closing transactions involving the issuance of over $300 million in tax-exempt bonds. He holds a B.A. from the University of Denver, (Denver, Colorado), and a Master of Arts in Public Administration from Howard University, (Washington, D.C.).
Categories: Finance · Public Policy
Tagged: Bailout, foreclosure, mortgages, shared equity
There has been a lot of weeping and nashing of the teeth about the current state of capital markets–rightfully so. And as we know, a lot of the blame can be spread around, lenders, investors, underwriters, brokers, and consumers all got a little to euphoric over the belief that the while the market might plateau, fall it would not. Of course, not the case.
District of Columbia. HOT! market from 2002-2007 now has significant condo inventory not moving and one of the highest declines in home values in the nation.
Same can be said for Miami.
San Diego
Los Angeles
But supposedly not for New York.
Ah, let me be one of those folks getting in line to say, yes New York too. Now don’t get me wrong NY by no means has the same level of problem as so many other markets in the US. Decline in NY is nominal. But any decline at all is telling of what means it ain’t getting better.
Anecdotally, looking at apartment listing on Craigslist made me wonder if the New York market was springing a slow leak. I noticed words like “Negotiable” in lots of ads. Negotiable brokers fees, negotiable lease terms, even negotiable rent. A couple of people were even giving “$100 off” rent concessions. Never in my adult lifetime have I ever seen anything like that. So many times I have gone to look at a “cozy one bedroom” to find out it was a studio with an extra wall and then watched the apartment get snapped up while I am standing there trying to decide if I can live in a cave with a toaster oven next to a crack house for the low low price of $1200+. Now, I am a smart saavy NY girl with technology in the palm of my hand, and I was surprised to see that many of these places were in fairly decent to nice neighborhoods.
What is really going on?
But statistically, the number of multi-family buildings and condominiums compared to second quarter 2007 has declined steadily because of capital market constraints. That means lots of folks are out of the market–even in New York where it seems like no matter what the cost, someone is always in.
And then, of course, there is the unsettling up tick in the number of foreclosures in Manhattan. (which will probably be saved by quick sell…of course)
Now, this might simply be a blip on the radar screen, but after the dismal mid-year meeting I just sat in, the news for some of the biggest banks continue to worsen. And as Mayor Bloomberg often says, New York is way to dependent on the presence of Wall Street.
Categories: Finance · News
Tagged: foreclosure, homeownership
Back in 2002, President Bush reiterated his goal to make America a “nation of Homeowners”. In a summer 2002 press conference, the President pushed the goal of 5.5 million homeowners by 2010. By 2006, homeownership rates reached a record high–68.5%–and the President’s dream was on the horizon.
But not today, my friends. That train has left the station, and the President is still wondering how the train switched tracks. According to June 22’s NY Times:
The percentage of homes headed by homeowners dropped from 69.1% to 67.8% this year, which sounds modest, but is, in fact, the biggest decline in 20 years…By extension, the percentage of households headed by renters increased to 32.2 percent, from 30.9 percent.
Clearly, The goal failed. And perhaps, rightfully so. Not everyone wants to nor should be a homeowner. (One day I will get to this topic as well)
But why?
In my opinion, speculation has the most to do with this mess. In 2002, the country began to recover from the economic downturn of 2001 fueled by 911. But, places like NYC, DC, and Southern California, began to realize an outrageous boom. Some places, like Las Vegas and the Denver area saw appreciation of 80% in a 5 year period (2002-2007). That boom fueled a manic race to by a home in these areas. The rate of appreciation gave way to the “get rich quick” model–as more people bought homes for back end gains than for the purpose of living the homeownership dream.
For the last decade, House=Investment. House has not not equaled Home. Yield of cash invested. That’s what has been all about. Look at the popularity of shows like Flip this House. Everybody, thought they could get rich and fast. And what do we have to show for it? Like I and many others have been saying for the past 6 years, just what was to be expected–a shredded real estate market, and a number of communities reeling from vacancies.
Yet it was not so long ago that a house was a home first, and a nest egg second. It seems that this sort of idea remained more or less the case in soft markets. Like my friend and mentor, John Schoeniger, says about soft markets ”the bubble passed [the soft markets] by… You take your 3% appreciation , you just pay down your mortgage to 0.” In these places like Cleveland, Detroit and Pittsburgh (foreclosure there has had a lot more to do with economy and less so with speculation though still a factor), the goal is to pay off your mortgage. Its a long term investment. You raise your kids there. You pass it on to someone when you pass. In most cases, your house is not your bank, unless its a last resort. Perhaps, there is a little lesson to learn there–because more times than not the profit margin on your home won’t be a windfall.
Maybe it was a baby boomer and WWII thing to believe that house was a home. After all it was the GI bill that steered many to homeownership post war. You were purchasing a home back then. Not a bank.
Maybe, now that the glamoritization of homeownership is coming to an end, people will see that owning real estate is a much more complicated undertaking than the latest Ditech or Countrywide commercial makes it. And that, in most cases you have to be willing to be in it for the long haul.
Categories: A Cacophony Of Community Issues
Tagged: foreclosure, homeownership, mortgages
2008 has been incredibly interesting, challenging, and down right frustrating in many rhelms. We are on the verge of a historical presidential election. The 8 year sentence is almost up. And, well, the economy, is…well sputtering along even if you didn’t use your stimulus check to go buy a big flat screen TV.
But all of these challenges, might actually be a blessing in disguise for those in real estate–especially for those in affordable housing development, advocacy, or policy. It’s requires a moment of pause, reflection, and an evaluation of the direction the real estate boom/bust has taken all of us–market rate or not.
And it seems between scrambling to save face, averting another financial “crisis”, or trying to figure out how to get deals done in one of the most challenging environments ever–well the actions have been interesting to save the least.
Let’s take a looksee, shall we?
Categories: Finance · News
Tagged: foreclosure
