homeownership and housing organizing

[Discussion list for COMM-ORG]

From: Linda Ocasio <linda at geb.net>


Here is an essay I wrote that recently ran in the opinion section of the 
Star-Ledger of New Jersey. If you agree or disagree, I hope you'll 
register your views with a letter to the editor, online or snail mail 
(www.nj.com). It's a good way to let editors know that housing matters. 
Who knows, it may even lead to more housing-related coverage.
 
Homeownership not always the answer
Sunday, October 07, 2007
BY LINDA OCASIO

Lost amid the collapse of the subprime mortgage market and the ensuing 
wave of foreclosures is the role of well-meaning advocates for the poor, 
who, like their clients, cherish home ownership as an inte gral part of 
the American dream.

At the heart of the crisis, of course, are banks and unscrupulous 
lenders who were eager to encourage the engrained dream -- at the cost 
of wildly high interest rates and hidden fees. Low-income customers with 
poor credit histo ries didn't ask -- or didn't know to ask -- the right 
questions, holding fast to their dreams, even when the numbers didn't 
make sense.

But it should not be forgotten that even among housing advo cates and 
foundations, homeow nership as a means of building as sets and a 
necessary ladder into the middle-class was heartily embraced.

Owning a home would make one a better citizen, the reasoning went. A 
homeowner would be more likely to be involved in the schools and other 
local institutions, would take a greater interest in local government, 
and would put down roots. Subprime lending was a necessity, advocates 
said, to ensure credit for those with few other op tions to purchase a 
home, and for whom the dream might never happen.

Over the past five years, as the editor of a housing magazine and a 
writer for the Ford Foundation, I observed how nonprofit agencies 
followed the dream, promoting homeownership in cities across the nation.

Community organizations and institutions that even 20 years ago might 
have articulated a passion and a mission for tenant organizing, 
affordable rental housing and even decent public housing, fell si lent.

Of course, they can't be blamed for the situation, but they can be 
chastised a bit for letting zeal overtake common sense. "People have 
been pushing homeownership, and it's not always in the best interest of 
low-income people," said Sheila Crowley, director of the National Low 
Income Housing Coalition in Washington, D.C., which lobbies for more 
affordable housing. It's made families vulnerable to what Crowley calls 
"bad loans from profit-making loan sharks."

The heart of the problem is that the same market biases and greed that 
prompted banks to redline neighborhoods, refusing to make loans in what 
they considered high- risk areas, also prompted lenders to steer 
minority borrowers toward subprime loans, even if applicants were 
eligible for prime, lower-interest loans.

For example, in New Jersey blacks and Latinos are the primary customers 
for subprime loans. A Star-Ledger analysis of 2005 federal data showed 
that nearly half the mortgages granted to borrowers from these groups 
carried interest rates high enough to be considered subprime. By 
comparison, only 16 percent of loans made to whites and 13 percent made 
to Asians carried subprime terms.

Communities with the highest percentage of minority residents are also 
the places where subprime lending is driving the housing market: The 
highest percentage of New Jersey's subprime loans in 2005 were made in 
Irvington, East Orange and Newark.

Overlooked in the frenzy was the importance of rental and subsi dized 
housing as crucial stepping stones, a safe place for people to build 
assets and security toward the day when they can buy a home. Large 
foundations and long-standing government policy were tilting toward 
homeownership. Funding flowed to groups that were on the same page.

"I would agree there has been an emphasis on homeownership to the 
detriment of affordable rental housing," said Ellen Brown, chief 
operating officer for the New Jersey Institute for Social Justice in 
Newark. "Homeownership is not for everybody and not for everyone in 
every phase of their life."

Affordable rental housing was once the focus of many nonprofit and 
community-based organizations seeking to stabilize low-in come 
neighborhoods, as recently as the 1980s and early 1990s, she said. 
Brown, a former economic development program officer for the Ford 
Foundation in the United States and South Africa, cited the work of 
another former Ford official, Mel Oliver, who examined differences in 
asset accumulation between black people and white people, as a turning 
point.

Oliver found that for every $6 a white family had accumulated in net 
assets, a black family had $1, and the discrepancy had mainly to do with 
owning a home. The larger philanthropic and nonprofit world took notice, 
and government policymakers, already hostile to public housing and 
indifferent to the needs of renters in urban environments, jumped on the 
bandwagon.

That was not all to the good, according to Pablo Eisenberg, a senior 
fellow at Georgetown University's Public Policy Institute and the former 
executive director of the Center for Community Change in Washington, 
D.C. "Political parties pushed for homeownership, and our taxes are 
geared toward it," he said. "We've abandoned freedom of choice in 
housing. There's very little chance for a low-income family to rent 
affordable housing. National policy drives homeowner ship, and it's been 
that way for a long time."

Even government programs such as HOPE VI that were meant to revive 
public housing had the overall effect of reducing the number of units 
available to low-income renters, he noted. High-profile demolitions, 
such as occurred in Newark and other cities, were rarely followed by 
one-to-one replacement of lost apartments in the same communities.

One ray of hope is the movement to establish a National Hous ing Trust 
Fund, dedicated to the production, preservation and rehabilitation of 
1.5 million affordable homes in 10 years. At least 75 percent of the 
funds will be for housing for households that are extremely low income, 
earning less than 30 percent of an area's median in come.

Crowley, whose housing coalition is coordinating the trust fund 
campaign, said the fund would put production dollars into the hands of 
nonprofit groups and public housing agencies that are committed to 
low-cost housing for struggling families. The House of Representatives 
recently passed a bill to modernize the Federal Hous ing Administration 
that includes funding for a future housing trust fund.

Crowley said a bill to establish the fund is going to the floor of the 
House on Wednesday. Draft National Housing Trust Fund legislation, 
similar to a House bill, has been developed in the Senate and is 
expected to be introduced sometime in November or December.

But the housing trust fund has been on the table for more than 20 years. 
Although establishing legislation may be getting some traction, in a 
tough budget crisis, "people push away earmarks," Eisen berg said, 
referring to the budget's special line items that have drawn fire as 
"pork." Yet the urgency for the fund has never been more apparent. "It's 
increasingly difficult to build housing for people who earn under 
$15,000 a year," he noted.

Homeownership may be a dream that few are willing to give up. But until 
housing advocates and other policy leaders revive their interest and 
commitment to other viable choices, that dream will result in even more 
foreclo sures, placing housing security and stability beyond the reach 
of low- income families.