[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
THE IMPACT OF THE FORECLOSURE CRISIS
ON PUBLIC AND AFFORDABLE HOUSING
IN THE TWIN CITIES
=======================================================================
FIELD HEARING
BEFORE THE
SUBCOMMITTEE ON
HOUSING AND COMMUNITY OPPORTUNITY
OF THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
JANUARY 23, 2010
__________
Printed for the use of the Committee on Financial Services
Serial No. 111-99
U.S. GOVERNMENT PRINTING OFFICE
55-242 WASHINGTON : 2010
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HOUSE COMMITTEE ON FINANCIAL SERVICES
BARNEY FRANK, Massachusetts, Chairman
PAUL E. KANJORSKI, Pennsylvania SPENCER BACHUS, Alabama
MAXINE WATERS, California MICHAEL N. CASTLE, Delaware
CAROLYN B. MALONEY, New York PETER T. KING, New York
LUIS V. GUTIERREZ, Illinois EDWARD R. ROYCE, California
NYDIA M. VELAZQUEZ, New York FRANK D. LUCAS, Oklahoma
MELVIN L. WATT, North Carolina RON PAUL, Texas
GARY L. ACKERMAN, New York DONALD A. MANZULLO, Illinois
BRAD SHERMAN, California WALTER B. JONES, Jr., North
GREGORY W. MEEKS, New York Carolina
DENNIS MOORE, Kansas JUDY BIGGERT, Illinois
MICHAEL E. CAPUANO, Massachusetts GARY G. MILLER, California
RUBEN HINOJOSA, Texas SHELLEY MOORE CAPITO, West
WM. LACY CLAY, Missouri Virginia
CAROLYN McCARTHY, New York JEB HENSARLING, Texas
JOE BACA, California SCOTT GARRETT, New Jersey
STEPHEN F. LYNCH, Massachusetts J. GRESHAM BARRETT, South Carolina
BRAD MILLER, North Carolina JIM GERLACH, Pennsylvania
DAVID SCOTT, Georgia RANDY NEUGEBAUER, Texas
AL GREEN, Texas TOM PRICE, Georgia
EMANUEL CLEAVER, Missouri PATRICK T. McHENRY, North Carolina
MELISSA L. BEAN, Illinois JOHN CAMPBELL, California
GWEN MOORE, Wisconsin ADAM PUTNAM, Florida
PAUL W. HODES, New Hampshire MICHELE BACHMANN, Minnesota
KEITH ELLISON, Minnesota KENNY MARCHANT, Texas
RON KLEIN, Florida THADDEUS G. McCOTTER, Michigan
CHARLES A. WILSON, Ohio KEVIN McCARTHY, California
ED PERLMUTTER, Colorado BILL POSEY, Florida
JOE DONNELLY, Indiana LYNN JENKINS, Kansas
BILL FOSTER, Illinois CHRISTOPHER LEE, New York
ANDRE CARSON, Indiana ERIK PAULSEN, Minnesota
JACKIE SPEIER, California LEONARD LANCE, New Jersey
TRAVIS CHILDERS, Mississippi
WALT MINNICK, Idaho
JOHN ADLER, New Jersey
MARY JO KILROY, Ohio
STEVE DRIEHAUS, Ohio
SUZANNE KOSMAS, Florida
ALAN GRAYSON, Florida
JIM HIMES, Connecticut
GARY PETERS, Michigan
DAN MAFFEI, New York
Jeanne M. Roslanowick, Staff Director and Chief Counsel
Subcommittee on Housing and Community Opportunity
MAXINE WATERS, California, Chairwoman
NYDIA M. VELAZQUEZ, New York SHELLEY MOORE CAPITO, West
STEPHEN F. LYNCH, Massachusetts Virginia
EMANUEL CLEAVER, Missouri THADDEUS G. McCOTTER, Michigan
AL GREEN, Texas JUDY BIGGERT, Illinois
WM. LACY CLAY, Missouri GARY G. MILLER, California
KEITH ELLISON, Minnesota RANDY NEUGEBAUER, Texas
JOE DONNELLY, Indiana WALTER B. JONES, Jr., North
MICHAEL E. CAPUANO, Massachusetts Carolina
PAUL E. KANJORSKI, Pennsylvania ADAM PUTNAM, Florida
LUIS V. GUTIERREZ, Illinois KENNY MARCHANT, Texas
STEVE DRIEHAUS, Ohio LYNN JENKINS, Kansas
MARY JO KILROY, Ohio CHRISTOPHER LEE, New York
JIM HIMES, Connecticut
DAN MAFFEI, New York
C O N T E N T S
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Page
Hearing held on:
January 23, 2010............................................. 1
Appendix:
January 23, 2010............................................. 51
WITNESSES
Saturday, January 23, 2010
Amos, Richard, Director of Housing Services, St. Stephen's Human
Services, Inc.................................................. 35
Anderson, Marion, constituent, and renter displaced by
foreclosure crisis............................................. 37
Bartholomay, Hon. Daniel M., Commissioner, Minnesota Housing
Finance Agency................................................. 14
Dahl, Michael, Public Policy Director, HOME Line................. 31
Davnie, Hon. Jim, Member of the Minnesota House of
Representatives................................................ 10
Dorfman, Hon. Gail A., Commissioner, Hennepin County, Minnesota.. 11
Halbach, Chip, Executive Director, Minnesota Housing Partnership. 30
Higgins, Hon. Linda, Member of the Minnesota State Senate,
District 58.................................................... 8
Ireland, Mark, Staff Attorney, Housing Preservation Project...... 33
Louden, Christina, constituent, and Section 8 Voucher resident... 39
McCorvey, Cora A., Executive Director/Chief Executive Officer,
Minneapolis Public Housing Authority........................... 28
Poethig, Erika, Deputy Assistant Secretary, Office of Policy
Development and Research, U.S. Department of Housing and Urban
Development.................................................... 6
Streitz, Thomas, Director, Housing Policy and Development,
Minneapolis Department of Community Planning and Economic
Development.................................................... 16
APPENDIX
Prepared statements:
Amos, Richard................................................ 52
Anderson, Marion............................................. 75
Bartholomay, Hon. Daniel M................................... 77
Dahl, Michael................................................ 83
Davnie, Hon. Jim............................................. 87
Dorfman, Hon. Gail A......................................... 92
Halbach, Chip................................................ 95
Higgins, Hon. Linda.......................................... 101
Ireland, Mark................................................ 106
Louden, Christina............................................ 111
McCorvey, Cora A............................................. 115
Poethig, Erika............................................... 127
Streitz, Thomas.............................................. 137
Additional Material Submitted for the Record
Waters, Hon. Maxine:
Written statement of Leslie Parks............................ 149
Written statement of Rebuilding Together Twin Cities......... 151
THE IMPACT OF THE FORECLOSURE CRISIS
ON PUBLIC AND AFFORDABLE HOUSING
IN THE TWIN CITIES
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Saturday, January 23, 2010
U.S. House of Representatives,
Subcommittee on Housing and
Community Opportunity,
Committee on Financial Services,
Washington, D.C.
The subcommittee met, pursuant to notice, at 12 p.m., in
the Minneapolis Central Library, Pohlad Hall, 300 Nicollet
Mall, Minneapolis, Minnesota, Hon. Maxine Waters [chairwoman of
the subcommittee] presiding.
Members present: Representatives Waters and Ellison.
Also present: Representative McCollum.
Chairwoman Waters. This hearing of the Subcommittee on
Housing and Community Opportunity will come to order. Good
morning, ladies and gentlemen.
Audience. Good morning.
Chairwoman Waters. Welcome to the Subcommittee on Housing
and Community Opportunity's Minneapolis field hearing on, ``The
Impact of the Foreclosure Crisis on Public and Affordable
Housing in the Twin Cities.'' I would like to begin by thanking
the Minneapolis Central Library for graciously allowing us to
use this space for today's hearing. I would also like to thank
Congressman Ellison's staff for their effort and assistance to
ensure a successful and productive hearing.
Of course, I must also mention the leadership of
Congressman Keith Ellison, a very engaged member of the Housing
Subcommittee and the Congressional Progressive Caucus. Mr.
Ellison has been a champion for individuals and families
bearing the brunt of this foreclosure crisis, particularly for
renters displaced as a result of foreclosure. As many of you
know, he was the author of the Protecting Tenants at
Foreclosure Act of 2009, which was signed into law by the
President in May. Go ahead, you may applaud. And Mr. Ellison
has been my ally on the subcommittee as we work to preserve
public and assisted housing during this severe economic
downturn, and to rid our housing of the hazards caused by lead
paint. Give him a round of applause for that too.
I would also like to thank Congresswoman Betty McCollum of
the 4th District of Minnesota, a strong supporter of labor and
working families through her role on the very important
Appropriations Committee. Ladies and gentlemen, without her
work on the Appropriations Committee, no matter what we
authorize, we would not be able to get it unless it was funded.
So give her applause for being able to do that. And she is a
Member who has taken the lead in confronting the global AIDS
pandemic. Thank you for making it here to support and engage in
this important discussion. And I would, because we have to do
it according to our procedures, request unanimous consent that
Congresswoman McCollum be considered a member of the
subcommittee for this hearing. Without objection, it is so
ordered.
The foreclosure crisis has devastated neighborhoods all
across the country, from the district I represent in Los
Angeles to here in the Twin Cities. In Hennepin County,
mortgage foreclosure sales have increased by nearly 800 percent
in 2008 compared to 2002. In the next 5 years, the Center for
Responsible Lending predicts that there could be as many as 13
million additional foreclosures nationwide.
Because the foreclosure crisis has created so many vacant
homes, one would think that the silver lining of this horrible
situation would be lower prices for renters. Unfortunately,
this is not the case, primarily for two reasons. First, the
growing number of low-income households far outpaces the amount
of available affordable housing. With long-term unemployment at
its highest levels since 1948, affordable housing production
can't keep up with need.
Second, we know that foreclosed housing doesn't necessarily
become ownership or rental opportunities. Often, banks unload
foreclosed properties for pennies on the dollar to speculators
and flippers, who frequently fail to do basic maintenance or
rehabilitation. As a result, the neighborhoods in which these
homes are located remain blighted, and communities are deprived
of a potential renting housing resource. We have all heard the
stories of boarded-up houses stripped of their piping and
sinks, ignored by their owners and attracting crime to
neighborhoods.
These trends are putting strains on our public and assisted
housing system. I know that in L.A. County, there are about 17
times as many families on the waiting list for public housing
as there are units. This is the case in Minneapolis as well.
One of our witnesses today, Chip Halbach, noted in an article
that 12,000 households applied when the public housing waiting
list was opened in 2008. If our housing resources remained as
they are today, the 12,000th person will not be able to get
assistance until July 2034.
Nearly 2 years ago, I drafted the Neighborhood
Stabilization Act, recognizing that we need to connect the
foreclosure crisis with the lack of affordable public and
assisted housing. After a hard fight with the previous
Administration, I was able to secure $4 billion in Neighborhood
Stabilization Program funds in the summer of 2008. The
following February, we were able to get an additional $2
billion in funds through the economic stimulus bill.
Last week, we were very pleased to announce and to learn
that HUD made their grant announcements for the second round of
NSP, and both the City of Los Angeles and the Twin Cities had
winning grant applications. With over 300 grant applications
scored by HUD, and only 50 or so grants granted or awarded,
it's a testament to both the work of people on the ground, and
to the magnitude of the problem in our communities.
I know that over $100 million in NSP funds were awarded
directly to public housing authorities under the second round
of funding. Other housing authorities are working with their
cities and States to pair NSP funding with other funding
sources such as project-based voucher assistance to expand the
number of units for the most vulnerable citizens.
Besides NSP, we have been fighting to preserve public
housing. In the stimulus bill, we worked to secure $5 billion
in public housing capital funds, which are now being used to
make critical repairs and keep units in the public housing
stock, along with additional homelessness prevention grants and
project-based rental assistance.
We realize this problem isn't over and the need for
resources hasn't been satisfied. That's why Congressman Ellison
and I, along with seven members of the Congressional Black
Caucus who serve on the Financial Services Committee, worked
hard to get an additional $1 billion in Neighborhood
Stabilization Funds in the Wall Street reform bill that passed
the House in December. We also worked to secure $3 billion in
assistance for unemployed homeowners threatened by foreclosure.
We still need to get this bill through the Senate. The fight
isn't over and it won't be easy. But Congressman Ellison and I
will be advocating for this funding over the coming months.
I'm eager to hear more from our witnesses about both the
foreclosure crisis, and the shortage of public and assisted
housing. Again, thank you for welcoming me to Minneapolis
today. I would now like to recognize Congressman Ellison to
make his opening statement. Thank you very much. Congressman?
Mr. Ellison. Chairwoman Waters, let me thank you for coming
to Minneapolis, and let me offer a very hardy and warm welcome
to you and your staff who worked so hard to make this hearing a
reality. Let me also thank you, on behalf of our State and our
Nation, for all the work that you have done, not just in the
area of housing, but on the critical issue of Haiti relief,
which is something you have been working on for many, many
years, and on the issue of Hurricane Katrina relief, which is
something that you have been absolutely relentless on, and also
your work over the years for equal opportunity for women,
communities of color, and all Americans. Thank you very much.
Let me also thank my twin sister from St. Paul,
Congresswoman Betty McCollum, for joining us today as we
address regional efforts to increase affordable housing.
Congresswoman McCollum is an appropriator and on the
Appropriations Committee, and therefore is an essential partner
for us as we move forward to try to make sure that our policy
and our resources match up together to serve community.
Also let me thank State and local leaders, many of whom are
here today, for their excellent work. It's an honor to serve
with you, in partnership with you, and I would like you to know
that over the time that I have been able to serve as a Member
of Congress, your assistance and your information has been
indispensable to our overall program, and so thank you very
much.
I would like everyone to consider also that the advocates
and the citizens who keep us informed are essential players,
and that we think that you are essentially the most important
component of our efforts, and we thank you for coming and all
of the work that you do. Please continue to keep us informed
and please keep your ideas coming; they are essential to our
success.
Please consider this hearing today to be an important
information-gathering hearing, just like any other
congressional hearing you might have on Capitol Hill, but
unique in the sense that it is in our community and gives us an
opportunity to talk about some of the unique challenges that
we're facing as residents of the Twin Cities, but also things
that may apply generally throughout the country. Many ideas
gathered at field hearings make their way into national
legislation, and I hope that we'll be able to honor some of the
important details that can lead us in that direction in this
hearing.
According to data from RealtyTrac, 3 million households
received foreclosure notices in 2009. While the national
foreclosure rate has slightly decreased, Minnesota posted a 56
percent increase in foreclosures from 2008. Last year, 6,000
households in Minneapolis alone received delinquency notices.
These displaced households are looking for help to find safe
and adequate housing that they can afford. That's why
Representative Waters and I fought for increased funding for
the Neighborhood Stabilization Program, to get help for our
communities. And as I indicated earlier, I look forward to
working with all of you to make sure that the legislative
intent of the NSP program gets carried on through right to the
end user, and so I look forward to working with members of the
community and local and State officials to make sure that this
happens.
NSP was created to allow local communities to purchase and
rehabilitate foreclosed property and create affordable
homeownership and rental opportunities. Before the foreclosure
crisis, our communities experienced intolerable rates of
housing insecurity. Now the need has grown even greater.
Federal rental assistance programs are facing unprecedented
requests for help. Shelters are seeing as many as 10 percent of
their clients directly linked to foreclosure displacement as
affordable rentals disappear. Today, we seek input from a broad
range of witnesses on how to promote affordable housing in the
midst of this mortgage foreclosure crisis.
To our witnesses, I would like to extend a hearty welcome
and my appreciation for taking time on a Saturday morning to
come to this committee to testify. I want to thank you each for
your time, and I know we are looking forward to hearing from
each of you.
Chairwoman Waters. Thank you very much, Congressman
Ellison. Now, we will hear from Congresswoman Betty McCollum. I
thank you so very much for joining us today. I know today is a
busy day and you won't be able to stay for the entire hearing,
but we welcome you, and I would like to offer you time for your
opening statement.
Ms. McCollum. Thank you very much, Madam Chairwoman. I am
pleased to have the opportunity to be here with you today, but
I'm really pleased to welcome Congresswoman Maxine Waters to
Minnesota. She can really walk on water when it's hard, as she
found out today, because she wore her boots. So she's smart.
She's a national leader on housing issues and a long-time
advocate for the needs of the most vulnerable in our Nation and
throughout the world. She has been one of the great advocates
in Congress, as Keith pointed out, for American response to the
earthquake in Haiti. She is a woman I admired greatly before
coming to Congress, and I was thrilled that I had the
opportunity to serve with her my first term, and she was a
mentor. But there's a song that says it all, I wish all of our
daughters would be like Maxine Waters.
And it's always great to be with Congressman Ellison. We
work together on a lot of issues, and people see our heads
together on the House Floor with great frequency. We are twins;
I'm the eldest, however.
I'm also a history teacher, social studies, and I think
it's important, in order to move forward positively into a
future, we have to reflect on the past to see where we are in
the present. So our community is doing that, and we're doing
that today in this hearing, like so many other communities
across the country struggling to meet the basic needs of
housing for our neighbors, for our friends, and for our
families. You all know that there's a housing crisis today, and
it's because affordable housing and the needs of low- and
middle-income Americans were neglected for most of the past
decade. The Bush Administration also failed to properly
regulate the housing market, which led to reckless loans and
high-stake gambling on Wall Street. When those bad debts all
started to unravel, American families were left with a housing
crisis, a financial crisis, and the most painful recession
since the 1930's.
The victims of this current crisis are working families and
those families who want to work but have no job opportunities
in this tough economy. We're committed, our party is committed
as Democrats, to work towards solving these problems. We are
fighting in Washington for the attention and the resources this
housing issue deserves.
The Recovery Act, which passed in 2008, was an essential
step toward stabilizing the housing market, but there's much
work to be done, there's much retooling to be done to the
legislation. Many of our panelists this afternoon were
responsible for putting those Federal dollars to work in
Minnesota, and we look forward to hearing about what worked
well and what can work better.
I want to, again, thank Congresswoman Waters and
Congressman Ellison for the opportunity to be with you here
today, even though briefly, because I have to go back to the
other side of the river, but I want you to know that we stand
united in working for you, and Keith and I are putting the
needs of our districts, Minnesota and our country first. Thank
you.
Chairwoman Waters. Thank you very much. And I'm pleased to
welcome our distinguished first panel.
Our first witness will be Ms. Erika Poethig, Deputy
Assistant Secretary, Office of Policy Development and Research,
U.S. Department of Housing and Urban Development.
Our second witness will be the Honorable Linda Higgins,
member of the Minnesota Senate.
Our third witness will be the Honorable Jim Davnie, member
of the Minnesota House of Representatives.
Our fourth witness will be the Honorable Gail Dorfman,
commissioner, Hennepin County, Minnesota.
Our fifth witness will be the Honorable Dan Bartholomay,
commissioner, Minnesota State Housing Finance Agency.
Our sixth witness will be Mr. Tom Streitz, director of
housing policy and development, Minneapolis Department of
Community Planning and Economic Development.
And I would like to say to our panel here, I thank you for
appearing before the subcommittee today, and without objection,
your written statements will be made a part of the record. You
will now be recognized for a 5-minute summary of your
testimony, starting with our very first witness, Ms. Erika
Poethig.
STATEMENT OF ERIKA POETHIG, DEPUTY ASSISTANT SECRETARY, OFFICE
OF POLICY DEVELOPMENT AND RESEARCH, U.S. DEPARTMENT OF HOUSING
AND URBAN DEVELOPMENT
Ms. Poethig. Thank you, Madam Chairwoman, Congressman
Ellison, and Congresswoman McCollum for inviting me to testify
before you today. It's great to be in Minnesota. While I will
focus my testimony on the national housing market and the new
challenges we face as a result of the foreclosure crisis, I
also want to talk about the housing conditions here in the Twin
Cities and Minnesota.
Preserving the affordability of rental housing, especially
for low-income households, is a crucial challenge for the
Nation and its many housing markets. Under Secretary Donovan's
leadership, HUD has reasserted its role as a catalyst for
expanding the availability of decent and affordable rental
housing. If this crisis has taught us anything, it's that the
Nation needs a balanced comprehensive national housing policy,
one that supports homeownership, but also provides affordable
rental opportunities, and ensures nobody falls through the
cracks.
Rental affordability is a key priority of Secretary
Donovan, but HUD also remains focused on restoring stability to
the Nation's homeownership market. In my testimony today, I
will cover three issues based on the questions submitted by the
committee on this important topic. First, I want to cover the
trends in rental affordability across the Nation and here in
the Twin Cities. Second, I will discuss the relationship
between the foreclosure crisis and dynamics in the rental
market and steps that have been taken to address the
displacement of renters. Third, I will highlight HUD's efforts
to stabilize communities affected by the recent foreclosure
crisis.
First, you probably have seen in the press national
indicators citing high vacancy rates in the U.S. rental market.
But I think it's really important to understand that while some
new renters have benefited from this softness, drawing
concessions from distressed property owners that have resulted
in lower rents, many, many more low-income renters, as
Chairwoman Waters pointed out, whose incomes have fallen as a
result of unemployment and lost hours worked, have difficulty
affording their housing. I want to stress that this softness in
the broader rental market has not substantially eased
affordability concerns for low-income renters. So in 2008,
there were 8.7 million renter households paying more than 50
percent of their income for rent. This is up from 8.3 million
households in 2007.
But let me dig under these national statistics and describe
how this plays out at the local level. In tight markets such as
New York, Los Angeles, and San Francisco, constrained supply
and strong demand creates real affordability challenges for
renters up the socioeconomic ladder. In other markets, low- and
moderate-income renters have an easier time finding affordable
options, but they are often located in neighborhoods with high
concentrations of poverty and the least opportunity.
A shortage of rental housing affordable to extremely low-
income renters is a problem across virtually all housing
markets. The American Housing Survey indicates that for every
100 extremely low-income renters in the United States, there
are only 44 units affordable and available to them.
In the Minneapolis/St. Paul metro area, extremely low-
income households--households earning approximately $25,000 for
a family of 4--face a similar challenge. However, for low- and
moderate-income renters, the Minneapolis region does remain
considerably more affordable than similarly sized coastal
metros, which brings me to my second point, and the central
focus of this hearing, what is the impact of the foreclosure
crisis on the access to affordable rental housing in the Twin
Cities region?
Although it is really difficult to untangle, there is
anecdotal and some quantitative evidence suggesting that
families are doubling-up with friends or relatives, which has
depressed demand for the rental market and contributes to some
rising vacancies. The impact of the foreclosure crisis on the
rental stock is still unclear. In the same way that the
foreclosure crisis has taken single-family properties off the
market, foreclosures on multifamily properties have also
removed rental housing from the available supply. At the same
time, though, there have been some additions to the rental
inventory because newly built multifamily units that were
intended to be condominiums are now converting back to rental
housing.
This problem of displaced renters from foreclosed
properties is particularly acute in the Twin Cities area, where
20 percent of the rental stock is in single-family homes and
another 12 percent is in 2- to 4-unit buildings. Research from
the Humphrey Center at the University of Minnesota suggests
that in Minneapolis, nearly 60 percent of foreclosed buildings
in 2006 and 2007 were renter-occupied, nearly 60 percent.
Recognizing the tumultuous experience these renters faced
during foreclosure, Congressman Ellison introduced, and
President Obama signed, as Congresswoman Waters said, the
Protecting Tenants at Foreclosure Act in 2009. This Act
protects renters in foreclosed properties by allowing them to
fulfill their lease unless the property is sold to someone who
will be the primary resident, and importantly, requires that
tenants receive 90 days' notice before eviction.
What is HUD doing to mitigate the impact of the foreclosure
crisis on neighborhoods and renters across the Nation and this
region? Under the first round of the Neighborhood Stabilization
Program funding, jurisdictions in Minnesota received just over
$57 million to buy, rehabilitate or demolish properties and
help homeowners finance the purchase of foreclosed homes. A
quarter of this money must be spent to assist households
earning less than 50 percent. In Minneapolis, about 52 percent
of the units that are expected to be preserved or produced with
this funding will serve very low-income households. Last week,
Secretary Donovan awarded just under $2 billion in the
Neighborhood Stabilization Program funding through this, a
competitive process. The City of Minneapolis was awarded $19.5
million in a consortium agreement with the City of Brooklyn
Park Community Development Department, Hennepin County Housing
Community Works, and the Transit Department. In addition, the
City of St. Paul was awarded $18 million.
This region's approach to neighborhood stabilization is a
model of coordinated, cohesive community development that makes
sufficient use of existing housing development capacity and
sets a high bar for providing jobs and other benefits for
members of the affected communities. Working in partnership
with the Twin Cities Community Land Trust LLC, these
jurisdictions have launched an innovative approach to using NSP
funds. The Land Bank acts as an intermediary to identify,
purchase and coordinate the disposition of foreclosed
properties to a pre-identified group of nonprofit developers.
[The prepared statement of Deputy Assistant Secretary
Poethig can be found on page 127 of the appendix. ]
Chairwoman Waters. Thank you very much. I did want you to
get the part in about how much money they got, that's why I
didn't stop you at 5 minutes, but I'm going to have to move on
to Ms. Higgins now. Thank you very much.
STATEMENT OF THE HONORABLE LINDA HIGGINS, MEMBER OF THE
MINNESOTA STATE SENATE, DISTRICT 58
Ms. Higgins. Chairwoman Waters and honorable members of the
committee, my name is Linda Higgins. I am the Minnesota State
Senator from District 58, and I proudly represent north and
downtown Minneapolis.
For several years, I have carried and passed legislation
related to foreclosures and the devastation that results.
Visitors to my office are used to seeing maps showing the
foreclosures by year in Minneapolis. Jaws drop when they see,
graphically displayed, the density of foreclosures in my
district and the change from year to year. Many comment that
there are so many dots overlaid on the other dots, that you
can't see the base map. Clearly, we are ground zero for
foreclosures in our City, our County and our State. Our mayor
says it this way: ``When Minneapolis gets the sniffles, North
Minneapolis gets pneumonia.''
I would like to describe the state of my district after
years of foreclosure. Thousands of families have lost their
homes. They have moved away or they have moved in with their
friends or families. They're still hurting from the loss of
that family home, and the opportunity to purchase another home
seems a distant dream. The foreclosed-upon properties are being
repurchased for considerably less than the previous price that
was paid. Some families have been able to purchase great houses
that are in pretty good shape. Others are buying homes that
have been rehabbed with NSP funds. Others are taking a chance
and buying a house that could kindly be called a fixer-upper.
Many homes have been vandalized, had copper stripped, sometimes
had fires, and many of those are now demolished.
Other homes are being snapped up by investors. Some of
those investors are clueless about how to rehabilitate a house
and get good tenants. Others think that the laws really aren't
meant for them. They buy a house for pennies, paint some of the
walls, maybe they'll scrub the appliances, and then they rent
it out. They forget the small details, like maybe the house was
condemned, and that there are requirements for lifting the
condemnation and getting a new certificate of occupancy and a
rental license.
A case in point is a condemned fourplex near my home. It
was bought by a consortium of investors from North Dakota. The
consortium has bought about 50 properties in North Minneapolis,
and they hired someone local to get them in shape to rent out.
It has now been 8 months since this gentleman started having
work done on this building. A couple of weeks ago, he failed
what was to have been the final inspection, so it's still
condemned. He lied about being an asbestos abatement
contractor, and illegally and dangerously removed the asbestos
himself, and he got caught. I understand, unfortunately, that
his work at his other properties is equally shoddy.
There are still many blocks in North Minneapolis with more
than one vacant house. This proves challenging in the winter
especially. The sidewalks might go unshoveled, the pipes will
freeze if they haven't been winterized. Sometimes people move
in. If the house becomes open to trespass, it will get boarded-
up.
And according to a 2001 study in Philadelphia, houses
within 150 feet of a vacant or abandoned property experience a
net loss of $7,627 in value, making it more of a burden on the
neighboring residents. In addition, a study in Austin, Texas,
found that blocks with unsecured vacant buildings had 3.2 times
as many drug calls to police, 1.8 times as many theft calls,
and twice the number of violent calls, as blocks without vacant
buildings.
In 2007, I carried and passed a Predatory Lending
Prevention package in the Minnesota Senate which: requires
mortgage lenders to verify the borrower's ability to pay the
loan; prohibits refinancing that does not benefit the borrower;
requires the mortgage lenders to act in the best interest of
the borrower; requires that people receive mortgage financial
counseling before refinancing a special mortgage, like those
no-interest loans from Habitat For Humanity; bans financial
penalties for early repayment; requires a mortgage originator
to orally inform a borrower of the additional taxes and fees
that are associated with the loans; allows the borrowers to sue
if they are harmed by predatory lending or an overinflated
appraisal; and finally, it makes mortgage fraud a specific
crime all on its own. Minnesota has also passed several
progressive measures to address protections for renters
affected by foreclosures.
In 2008, I carried a bill that requires landlords to tell
prospective tenants that the property is in foreclosure, and to
waive any penalty if the tenant in the foreclosed property
withholds the last month's rent. Another bill in 2008 provided
for mandatory expungement of an eviction if a tenant vacated a
foreclosed property before the expiration of the redemption
period or if the tenant never received the required notice to
vacate. We will continue working on renter protections in 2010.
Minnesota appreciates the Federal resources that have been
sent out to the States to address the foreclosure crisis.
However, some Federal policies actually impede our progress
here in the States. For example, Federal legislation preempts
the State control of federally-chartered lending institutions,
making State efforts less effective than they would ordinarily
be. Our 2007 bills were called the strongest in the Nation, but
in actuality only State banks were actually affected. Since
most State legislatures are considerably more nimble than
Congress, removing the preemption would allow us to do what
needs to be done in a more timely fashion than waiting for a
Federal solution. Thank you again for being here today. We
really appreciate your interest in this issue, because it
affects all of our constituents. Thank you.
[The prepared statement of State Senator Higgins can be
found on page 101 of the appendix.]
Chairwoman Waters. Thank you very much. Our next witness
will be the Honorable Jim Davnie.
STATEMENT OF THE HONORABLE JIM DAVNIE, MEMBER OF THE MINNESOTA
HOUSE OF REPRESENTATIVES
Mr. Davnie. Thank you, Madam Chairwoman, and members of the
committee. I'm grateful for the opportunity to testify before
you today. I don't need to review for members of the committee
the details of the foreclosure crisis that has swept our Nation
for the last number of years. While Minnesota did not lead in
experiencing that foreclosure crisis, I do like to think that
we have led in responding to that foreclosure crisis. And I
would like to stress that I believe we did that by working
collaboratively across jurisdictions, as this panel reflects,
as well as in ways that are broadly inclusive of the multiple
stakeholders in our community and across our State.
In 2007, as the foreclosure crisis was first being
recognized, we established a working group led by our Attorney
General Lori Swanson and a group of stakeholders that she had
assembled, and proposed and passed an aggressive platform of
foreclosure prevention and mortgage lending reform proposals. I
was privileged to author the lead piece of that legislation in
the Minnesota House. Senator Higgins, my colleague and friend
on this, has explained the critical elements of that proposal
in her testimony.
Additionally, to the work that she has described, we worked
that year to close loopholes in State law that were being
exploited by equity strippers to the detriment of challenged
homeowners.
The following year, as our recognition and understanding of
the foreclosure crisis evolved and received wider
acknowledgment, a broad array of stakeholders was brought
together, and drafted a robust package of reforms aimed at
easing the fallout, not just for homeowners, but, as has been
discussed, the large number of renters who are being caught up
in the foreclosure crisis, as well as owners of manufactured
homes.
Those initiatives prioritized increased emphasis on
foreclosure prevention outreach, to provide assistance to
struggling homeowners earlier in the foreclosure process,
strengthening and protecting the position of renters swept into
the foreclosure crisis, and providing owners of manufactured
housing greater rights and protection.
Additionally, that year both Houses of Legislature
bipartisanly passed the Minnesota Subprime Borrower Relief Act,
a narrowly targeted proposal that would have allowed lenders
and borrowers more opportunity to work together to create
mutually agreeable loan modifications based on the ability to
pay of the borrower. Unfortunately, that legislation was vetoed
by Governor Pawlenty.
Over the same time period, Minnesota Legislatures have
increased funding for housing programs and capital investment
in affordable housing. We have created the ability for renters
to take over the payment of utility bills that are in arrears
and deduct those payments from their monthly rent, and
fashioned a mechanism for the automatic expungement of eviction
records where a renter is a victim of foreclosure.
Looking forward to the 2010 Minnesota Legislative Session
that will begin in just a few weeks, we're looking at a
significant proposal for bonding, for affordable housing, and
proposals to streamline the foreclosure notification process,
to, again, get to those challenged homeowners as early in the
process as possible.
Looking forward to Federal assistance, we are, as has been
stated, extremely grateful for the $19.5 million that
Minneapolis has received and other communities from the
American Recovery and Reinvestment Act. In speaking with
advocates in preparation for this hearing, what they called
for, and I hear their voices, is a 1-2 punch from the Federal
Government. Punch 1 is additional resources for affordable
housing, and punch 2 is aggressive reforms of our financial
system in ways that create more responsible lending and
protection for consumers, so that they can go into the
homeowner process secure that their investment in their
families and communities will remain.
Again, I want to thank you for the opportunity to testify
before the committee today.
[The prepared statement of State Representative Davnie can
be found on page 87 of the appendix.]
Chairwoman Waters. Thank you very much. Our next witness
will be the Honorable Gail Dorfman.
STATEMENT OF THE HONORABLE GAIL A. DORFMAN, COMMISSIONER,
HENNEPIN COUNTY, MINNESOTA
Ms. Dorfman. Chairwoman Waters, on behalf of the residents
of Hennepin County and my colleagues on the County Board, I am
pleased to welcome you here today to Minneapolis and Hennepin
County for this important field hearing. Our own Congressman
Keith Ellison has been at the forefront of efforts to
effectively respond to the foreclosure and housing crisis both
nationally and here at home. We are thankful for his leadership
and representation, and we know that we're lucky to have this
strong congressional team of Congresswoman McCollum and
Congressman Ellison.
I want to say up front that the most important and
effective action we have taken is to come together as a
community to collaborate and innovate as partners through the
Minnesota Foreclosure Partners Council. We have a coordinated
plan focused on data collection, counseling and outreach,
community recovery, and legislative and legal strategies, some
of which you have heard about. And while the pace of new
foreclosures slowed a bit in 2009, and our prevention and
revitalization efforts grew, in large part due to the influx of
Federal support, we cannot say yet that we have turned the
corner on this crisis. Instead, we have seen the foreclosure
problem shift from the city to the suburbs, and from being
caused by mortgage products to now being impacted by job loss
and unemployment.
Hennepin County is the largest unit of local government in
Minnesota. There are 46 municipalities, with a population of
just over 1 million people. The number of annual mortgage
foreclosure sales in Hennepin increased from over 3,000 in
2006, to 5,600 in 2007, to more than 7,300 in 2008, and went
back to the 2007 level this past year. That's just shy of
22,000 foreclosures in 4 years, representing 4 percent of our
overall housing stock and particularly devastating urban and
suburban communities with the highest concentrations. As a
result, home values have fallen dramatically in the
neighborhoods with the most foreclosures, with a 14 percent
decline in home values in North Minneapolis, and 10 and 12
percent declines in the Cities of Brooklyn Park and Brooklyn
Center.
Let me just touch briefly on what we have been doing at the
County. We have provided prevention counseling resources for
at-risk homeowners and renters through the Minnesota Home
Ownership Center, HOME Line, and Legal Aid that have been
accessed by more than 3,200 households. We have held 25
foreclosure workshops at our libraries, like this one, and
distributed a workshop video seen by thousands more.
We have stepped up efforts through the Sheriff's Office and
community partners to make sure that both owners and renters
facing foreclosure understand the process and their rights
under the law.
We have been aggressively prosecuting mortgage fraud cases
through County Attorney Mike Freeman's office. To date, 24
persons and companies have been convicted, and charged cases
involve 210 properties with over $60 million in fraudulent
loans.
Hennepin County was awarded $8.6 million in NSP funding to
work with 7 targeted suburban cities, along with Habitat and
the Land Trust, to acquire and rehab abandoned and foreclosed
homes and to primarily assist first-time home buyers, with our
NSP goal of providing affordable homeownership for 200
households this year. We have invested an additional $2 million
through the County Affordable Housing Capital Fund and Federal
HOME Program to rehab another 79 foreclosed and vacant
properties in 2009. And since 2000, the County has provided
over $35 million in local county funding to assist in the
preservation and new construction of over 3,400 affordable
units.
We are targeting some of our Homeless Prevention and Rapid
Re-Housing (HPRP) funds to help renters at risk of homelessness
due to foreclosure--65 percent of the foreclosures in the City
of Minneapolis involve rental properties, and approximately 10
percent of the families who showed up in our homeless shelters
over the past 2 years are renters coming from these properties.
HPRP, frankly, is the best tool we have right now to
address the problem of renters impacted by foreclosure, through
our City/County HPRP partnership and our contracts with
community agencies. Legal Aid is providing the legal assistance
that buys the family a little more time, and St. Stephen's
provides the relocation assistance so that families never have
to even enter a shelter to get help. Just since October, these
two agencies have served over 130 people and 40 families.
Let me share just one story to illustrate how well this is
working. Legal Aid has been working with a single mom with two
children who has rental housing with a Section 8 voucher. She
moved in last year, and was notified just before Thanksgiving
that she had to move out within 48 hours because the house was
in foreclosure. Despite the requirements of State and municipal
law, the landlord had not disclosed the foreclosure. Legal Aid
attorneys were able to get the 48-hour notice retracted. The
bank then issued the 90-day notice, but Legal Aid informed the
bank of her Section 8 status and was able to extend the
family's stay to when their lease ends this summer. Legal Aid
is now working with the family and St. Stephen's to make sure
the utilities stay on and that the family is resettled into a
new home next summer. Without this help, this family would
surely have ended up in a shelter this winter.
So in Hennepin, we're tackling the foreclosure and housing
crisis from every angle we can, but we're still falling short.
For every family who gets out of a shelter, there's another
family in line to take their place. For every family we work
with to prevent foreclosure or find alternative housing, there
are new families walking away from their homes because they owe
more than their home is worth.
NSP is working to leverage other public and private
resources, to stabilize our communities and provide affordable
housing, but it's not a model that works well for renters and
for households of 30 percent or below the average median
income. We're also struggling with NSP dollars in competition
with private investors and speculators who put cash down and
can move much more quickly to acquire the properties, because
they don't have to comply with environmental assessments,
appraisals, discounted prices, and inspections. We worry that
we'll not be able to meet the September 30th deadline of having
all our NSP funds committed.
We are thankful for the new Federal assistance, but
Hennepin County and our local governments cannot solve this
problem alone. We have stepped up to fill the gaps, to help our
neighborhoods impacted by foreclosures and families who have
lost their housing. And for Hennepin, responding to the
foreclosure crisis, frankly, didn't fit neatly into our
organizational structure or mandated services, but we did it
anyway. But we don't see the financial sector doing that. It's
time for the financial sector to do what the rest of us are
doing, step up and help us turn the corner on this crisis.
Thank you.
[The prepared statement of Commissioner Dorfman can be
found on page 92 of the appendix.]
Chairwoman Waters. Thank you. The Honorable Dan
Bartholomay.
STATEMENT OF THE HONORABLE DANIEL M. BARTHOLOMAY, COMMISSIONER,
MINNESOTA HOUSING FINANCE AGENCY
Mr. Bartholomay. Madam Chairwoman, members of the
committee, Representative Ellison, and Representative McCollum,
thank you so much for the opportunity to testify today and for
holding this hearing in Minnesota. As Commissioner of the
Minnesota Housing Finance Agency, the State's affordable
housing financial institution, my testimony relates primarily
to finance issues. It is Minnesota Housing's mission to advance
affordable housing opportunities to low- and moderate-income
Minnesotans. And since 1971, Minnesota Housing has invested
more than $8.7 billion and assisted more than 750,000
households.
Every other year, we go through a process to develop an
affordable housing plan that describes the Agency's sources and
uses of funds. For the 2010-2011 biennium, the Agency will
invest about $1.4 billion of Federal, State, and agency-
generated funds to finance new affordable housing
opportunities, preserve existing affordable housing, end long-
term homelessness, and address foreclosures.
A large portion of Minnesota Housing's resources are
dedicated by law to specific purposes. Of the Agency's
discretionary budget of about $180 million, the Agency has
specifically allocated 18 percent for addressing foreclosures.
Our Agency has used both the State and Federal resources
through the Neighborhood Stabilization NSP 1 mortgage revenue
bonds and home funds to address foreclosures in the areas with
the highest need. Mortgage revenue bonds represent a large
portion of the resources available to Minnesota Housing and
other State housing finance agencies and local governments.
It's important to note that earnings on the loans financed with
bond proceeds are used flexibly to create more affordable
housing. They constitute 15 percent of our 2010-2011 affordable
housing plan and have enabled the Agency to dedicate $50
million to end long-term homelessness. As a result, a well-
functioning bond market has implications well beyond affordable
mortgages that the HFAs provide.
The impact of the foreclosure crisis on bond markets is not
well-known. Access to bond market capital is critical to
financing affordable housing. So turmoil in the market has a
significant negative impact on HFAs' ability to meet their
missions. Because Minnesota Housing and other HFAs did not
participate in the exotic mortgage-making practices, their
portfolios have fared significantly better than other lending
institutions. Despite this performance, the market did not
differentiate between predatory and subprime mortgages and HFA
mortgages.
The foreclosure crisis drove bond investors away for two
primary reasons. First, the disintegration of the subprime
mortgage portfolio was generalized to all mortgages because
investors either were not able to differentiate between
subprime mortgages and healthy mortgages, or they didn't trust
the information that would have enabled them to do so. Thus,
housing bonds in general were tainted overall, and some
corporate investors went so far as to prohibit the purchase of
any housing related bonds, regardless of the credit ratings.
Also, declining profits due to mortgage-related losses meant
investors had less money to invest, and yields on housing bonds
were higher.
During some portions of late 2008 and early 2009, yields
were so high that the debt issuance was infeasible, effectively
shutting down lending by public entities. Matters worsened for
HFAs once the Federal Government intervened to subsidize the
broader housing market by purchasing mortgages at artificially
low interest rates without extending the same benefit to public
bond issuers, thus the most powerful tool available at housing
finance agencies, the tax exemption of the mortgage revenue
bond, lost most of its value. As a result, many of the housing
finance agencies and virtually all local housing authorities
ended their mortgage lending programs. Potential borrowers, our
clients and customers whose access to credit was already
strained by the broader economic forces, had lost yet another
source to support housing.
The recently implemented Treasury/HFA initiative will help
restore some lost funding capacity, which will improve earnings
potential prospectively as we look ahead. This new one-year
program will provide about $275 million to Minnesota Housing to
finance both homeownership and rental housing. Despite this,
however, the Agency has and will continue for some time to have
fewer funding resources due to two factors related to
foreclosures: First, the significantly reduced 2009 lending
volume has had a long-term impact on our ability to internally
generate flexible revenue to plow back into housing; and
second, losses in our existing loan portfolio, due to the
declining real estate values of foreclosed loans, impaired our
earnings in both 2008 and 2009. Both of these factors reduce
our ability to provide housing assistance from internally
generated resources, which, as mentioned earlier, are our most
flexible resources, and constitute about 15 percent of all of
our resources.
So I urge Congress to continue funding foreclosure
remediation, but in addition, to look at ways of improving the
current NSP resources, which could move houses from the
foreclosure inventory to homeownership much more effectively
with temporary waivers of statutory requirements regarding
processes of the Uniform Relocation Assistance and Real
Property Acquisition Policies Act, URA Act, and also the
National Environment Policy Act. These changes would permit
final purchase offers to be made when acquiring foreclosed
properties before completion of an appraisal and environmental
review, putting the NSP purchaser on a more equal footing with
investors who are not obligated to improve substandard housing
or to make homes available to lower-income households.
I also urge Congress to continue providing funding for
foreclosure prevention, and Congress should explore new
approaches to avoiding foreclosures. Providing relatively
short-term financial assistance to homeowners in certain
circumstances so they can continue to make loan payments during
their economic troubles, may be less costly both to the
homeowner, lender, and neighborhood in the long run, rather
than foreclosure.
The Tax Credit Exchange Program that permits States to
exchange low-income housing tax credits for grants from the
Treasury should be extended to permit continued development of
low-income housing for families, including those who have lost
their homes through foreclosure.
Before closing, I would just like to thank you again, and
Congress for the financial support provided to both State
agencies but also local governments over the last few years.
The Tax Credit Exchange Program and the Tax Credit Assistance
Program have both been essential to continuing to support and
develop affordable rental housing. The NSP 1 and now 2 are
invaluable to turning around foreclosure-impacted
neighborhoods. We take pride in our partnerships with the
Federal Government, the State government, and with local
government, but also the private sector, in providing and
preserving affordable housing in Minnesota. Thank you very
much.
[The prepared statement of Commissioner Bartholomay can be
found on page 77 of the appendix.]
Chairwoman Waters. Thank you very much. I believe the
correct pronunciation of the last name of this gentleman, I
have missed. It is spelled ``S-t-r-e-i-t-z.'' Would you please
tell us the correct pronunciation of your name?
Mr. Streitz. Madam Chairwoman, it is ``Streitz.''
Chairwoman Waters. All right. I knew I was saying it wrong.
Mr. Tom Streitz, you are the next witness.
STATEMENT OF THOMAS STREITZ, DIRECTOR, HOUSING POLICY AND
DEVELOPMENT, MINNEAPOLIS DEPARTMENT OF COMMUNITY PLANNING AND
ECONOMIC DEVELOPMENT
Mr. Streitz. Madam Chairwoman, Representative Ellison,
Representative McCollum, thank you, first of all, so much, and
welcome to the great City of Minneapolis. I just want to take a
moment to say thank you for your efforts. I am the former
deputy executive director of the Minneapolis Public Housing
Authority. I spent 7 years working in public housing with this
great agency here and Executive Director Cora McCorvey, and I'm
well aware of your long record to support the public housing
residents, and the work that you all do, I really, really
appreciate, so I wanted to say that right out of the gate, so
thank you.
I would like to express my appreciation on behalf of the
mayor and the council members of the City of Minneapolis and
our partners for this opportunity to share our viewpoint and
recommendations on the successful implementation of the
Neighborhood Stabilization Program. I would also like to thank
the Subcommittee on Housing and Community Opportunity for
bringing NSP implementation issues forward.
Finally, I would also like to thank the United States
Department of Housing and Urban Development, not only for
awarding funds to Minneapolis, but for the changes they have
made in developing a Neighborhood Stabilization Program in
response to our program suggestions to improve the feasibility
of carrying out the program in our local housing markets.
The NSP resources that you have provided have proven
critical to addressing the foreclosure crisis in our
neighborhoods. However, the current allocation is only a first
step when looking at the challenges faced by our communities
most highly impacted by foreclosures. The stability of these
Minneapolis neighborhoods is significantly and uniquely
impacted by the high percentage of decline in property values,
the level of fraudulent mortgage activity, and the
disproportionate effect of foreclosures on people of color.
One notable manifestation of the high level of fraudulent
activity in Minneapolis was the investment company known as TJ
Waconia which purchased and flipped more than 150 homes in
North Minneapolis. The City, with the assistance of the County,
was successful in prosecuting the principals who are now in
Federal prison. The homes that were--thank you. It's a huge
victory. The homes that were a part of this scam have now been
recovered and are being rehabilitated and sold to homeowners.
It should be noted that low-income neighborhoods in our
community have also lost hundreds of millions of dollars of
equity, stripped from the neighborhoods.
Residential mortgage foreclosures continued to rise in
Minneapolis until 2009, when we have detected a slight downturn
in foreclosures. The decreases are partially due to lenders'
voluntary moratorium on foreclosures and the increase in
foreclosure prevention loan modifications or short sales.
In 2006, 1,610 homes in Minneapolis went to foreclosure
sale, over half of them in North Minneapolis. In 2007, 2,895
homes went through foreclosure sale, 54.7 percent of these were
in northside wards of the City. In 2008, there were 3,000
foreclosures. Foreclosures, as I mentioned, decreased slightly
in 2009, with 1,896 through the end of October. Many of these
foreclosures are investor-owned properties that we have heard
about from various panel members. Minneapolis neighborhoods
hardest hit by foreclosure are in South Central, Northeast, and
North Minneapolis, as discussed.
My testimony now will address the following specific issues
or questions raised by the committee. The first question asked
how the NSP program in Minneapolis is tailored to address the
foreclosure crisis in the City. Well, Minneapolis, as mentioned
earlier, has some unique strategies that we have put in place,
and they are focused on: number one, prevention; number two,
reinvestment, purchasing and rehabilitating homes; and number
three, repositioning these neighborhoods for market recovery.
Minneapolis received $14 million in NSP 1 resources and has
dedicated an additional $3 million in non-Federal funding to
the Minneapolis Advantage Program to assist low-income
households with downpayment and closing cost assistance in the
purchase of foreclosed properties. Minneapolis, through a
consortium agreement with Hennepin County and the City of
Brooklyn Park, was awarded $19.5 million in NSP 2 resources to
be allocated to eligible activities.
With the additional funding, the City of Minneapolis and
our community partners, many of whom are here, will be poised
and able to purchase and rehab and get back in the hands of
homeowners over 700 homes in our hardest-hit neighborhoods.
The City is putting NSP 1 dollars to work. Over 43 percent
of the funds that we received in the first round have been
obligated. We have nine nonprofit developers that are in the
neighborhoods buying homes for closing them, and people are
moving into the homes, so I want you to know that we're acting
responsibly, we're investing quickly, and the money's being
obligated.
In response to question two, Minneapolis has located and
been able to purchase REO properties, real estate-owned
properties--I didn't know that word 2 years ago, REO, but I
have learned it now--and ensured the participation of banks and
other owners of REOs.
As was mentioned earlier, Minneapolis uses two novel
concepts in its efforts to purchase REO properties. As has been
discussed here today, the major issue confronting many of our
neighborhoods are investors coming in from outside of the
community with no connections to the community, and we're in a
race against cash investors in our City.
And one of the unique things that we have been able to do,
working through the First Look Program, part of the National
Community Stabilization Trust, we formed something called the
Twin Cities Community Land Bank. The First Look Program, in
combination with the Land Bank, has been central in our efforts
to get our properties out of the hands of banks and back into
the hands of homeowners. The Twin Cities Community Land Bank is
a public-private venture with a focus on community re-building
efforts. The First Look Program is coordinating the transfer of
REO properties from financial institutions nationwide to local
housing organizations in collaboration with State and local
governments. A key component of recovery efforts is to gain
control of properties and then manage the disposition and
redevelopment of those properties at a scale large enough to
build confidence and stimulate investment.
Finally, the third question asked of me was, what
challenges are we facing when dealing with NSP 1 and NSP 2? As
mentioned earlier, I think there are three areas that we really
need to focus on in our future efforts. Number one is, again, a
recognition of the fact that we're in competition with
investors. As the commissioner pointed out, there are
regulations in the NSP program that are very burdensome, and
when we're competing against cash investors, we have willing
buyers who are told to wait 30 days, we have other
requirements, such as the environmental, etc., that are simply
making our efforts to purchase these homes extremely
challenging. I encourage HUD to look at these regulations and
work with communities to make changes.
Finally, I would like to advocate that the definition of
eligible properties under NSP 2 be redefined to include short
sales. That is the new--the new foreclosure is a short sale. So
we have a one-month inventory of foreclosure properties in the
City of Minneapolis, Twin Cities area today, and we have a 12-
month inventory of short sales. Cities, communities, our
partners who are trying to purchase these homes are stymied
every step of the way by incoherent recordkeeping at multiple
banks, and servicers fighting, and the homes remaining vacant
and a nuisance to the adjoining neighbors.
In addition, we recommend some changes to address limited
funding. I hope NSP 3 will come forward, and I would encourage
whatever future efforts we have, that they be more focused on
being upstream. As has been mentioned here today, we have
larger issues, and if we can keep families in homes, mortgage
foreclosure prevention counseling is key, emergency crisis
repair funds to help low-income seniors and other low-income
people who are choosing between paying mortgages and their roof
or a boiler, employment services to increase household income,
and foreclosure-related assistance to stabilize renters in
particular who have been very hard hit.
Finally, I commend the subcommittee today for focusing on
the impact of foreclosures on low-income renters. In
Minneapolis last year, over 50 percent of all foreclosures were
rental properties, many of the tenants affected paying their
rent and given no notice of the default of the landlord, and
many ended up homeless, as described earlier. Finally, I want
to thank you again for this opportunity, and I look forward to
working with you and stand ready to answer any questions you
may have.
[The prepared statement of Mr. Streitz can be found on page
137 of the appendix.]
Chairwoman Waters. Thank you very, very much. I would like
to thank you all for appearing before the subcommittee today,
and without objection, your written statements will be made a
part of the record.
I would now like to begin our question period. Let me--
there's so many things that I would like to discuss, but let me
just kind of gear in on these foreclosed properties, these
REOs. And since we have HUD here today, I want to talk about
FHA a bit. Before I say that--are you getting ready to leave?
Ms. McCollum. I'm going to have to leave in a few minutes.
Chairwoman Waters. Well, I have to yield my time to you to
raise your questions first before you leave. But let me just
say that we are so pleased about HUD. Secretary Donovan is like
a breath of fresh air. We have gone through a period of time
where we had a Secretary who did not care very much or know
very much--that's a bad combination. And so Secretary Donovan
is working very closely with us, and I'm very pleased, and I
just want to say that. I'm going to yield the first 5 minutes
to Ms. McCollum to raise her questions. I know she must depart
very soon.
Ms. McCollum. Madam Chairwoman, that's very generous of
you, and I thank you and Congressman Ellison. I'm going to go
back and ask a question on something that I mentioned when we
were talking together earlier, and that was short sales. And
thank you so much for bringing that up. I have been working
with Realtors who have been trying to do short sales and
paperwork, they think they have it done, time on hold, and
they're up against a crunch.
One of our financial institutions here is actually sitting
down and working--I had people get together in the room to try
to address it, because the financial institution, quite
frankly, it wasn't getting up the food chain, for them to know
that there was a problem. And so they're also working to
address it. Because this is kind of new for them, too, to be
involved in this. So if I could just maybe--the only question I
would have is, to educate us a little more about your
experience with short sales and what we can do. Some of it's
not governmentally, some of it's going to be leadership, in
getting people at the table to talk. Would you just give us
your background on short sales and what you think we can do or
should do?
Mr. Streitz. Madam Chairwoman, Representative McCollum,
thank you for that question. Absolutely, short sales are what I
call the new foreclosure. And as I mentioned earlier, we have a
one-month inventory of foreclosures, 12 months of short sales.
I can give you one example. A home became vacant in North
Minneapolis and was caught in the short sale process, and it
took 22 months, working with 7 different servicers, banks, to
determine even who owned the property, because of confusion
with paperwork, etc. Now that may be an extreme example, but I
also talk to Realtors, and we meet on a monthly basis with
local Realtors, who encounter significant issues of getting the
banks to respond. Now there are multiple reasons for that, I
believe, and the one is, of course, we have many, many banks,
particularly locally, that act as servicers. Wells Fargo, U.S.
Bank, Bank of America, are some of the biggest servicers of
mortgages. However, as you know, because of the investor-
related sale of these mortgages, often determining who the
investor buyers are and getting their consent to the short sale
is extremely problematic.
I would like to suggest that we engage in what I like to
call--we introduced the First Look Program to foreclosures. I
think we need something that I'm terming the ``Last Look
Program'' for short sales, and that is to incentify, as the
banks and servicers, like we did with HAMP and our First Look
efforts, to sit down with communities and Members of Congress
and others, to have an expedited short sale process. I
understand that the Obama Administration has proposed something
like that, and maybe one of our other panelists from the
Department of Housing and Urban Development can talk about it,
but I think we do need to sit down with lender partners, we
need to pilot a new program that would allow us an expedited
access to these properties.
As you know, Congresswoman, the properties sitting vacant
attracts crime, it declines further the property values
surrounding the properties. So getting banks and servicers to
sit down together and, frankly, figure this out, is something
that I think we're going to have to encourage very strongly,
from Congress, from our regulatory agencies. Otherwise, our
communities are going to continue to have negatives impacts of
foreclosed and, well, frankly, vacant homes.
Ms. McCollum. Maybe that's something Congressman--while we
work congressionally, Congressman Ellison and I can do. Because
I do know two of the financial leaders that you mentioned here,
both Wells Fargo and U.S. Bank, want to turn this tide around.
They have been very receptive. We have been very fortunate with
the leadership here with both of those banks. When we sit down
and talk to them about something, they're very open to address
it. And I see you're nodding your head as well. Maybe sit down
with Realtors and some of their folks to look at it. And,
Keith, we could do that together while we work on a
congressional solution, because many people--I don't think the
right people necessarily were aware of what the problem was,
with even faxes just sitting because there was so much stuff
going on. A dedicated fax machine for short sales might even be
a solution in some areas. So thank you, Madam Chairwoman.
Chairwoman Waters. Thank you very much. I would like to
address my question to Ms. Erika Poethig. Pronounce your name
for me also.
Ms. Poethig. ``Poethig.'' You said it wonderfully.
Chairwoman Waters. Oh, thank you, I got that one right. I'm
concerned about the FHA foreclosed properties, the REOs, and
not just as relates to FHA, but for the other banks and
mortgage companies also. I'm hearing a lot about what is
happening and what is not happening with these properties.
First of all, before I came here, I heard in Los Angeles about
the speculators and the investors who have an edge up, who have
the possibility of getting access to these properties in ways
that compete with legitimate would-be home buyers, often who
are bidding on these properties. And they are not just underbid
by the investors, sometimes these properties are going for less
than they could be sold for because there's some kind of
special relationship between something called the Association
of REO Brokers, who have an organization where they get access
to these properties, and not everybody can even join the
association. They have cut out people from being able to join
the association by saying they're limited to only a certain
number, which I think may be questionable. It may be something
that needs to be looked into.
But with the FHA properties, how are they being disposed
of? Do we have the same kind of problems of speculators being
able to have access to these properties over others and would-
be buyers, etc., etc.?
How are the listings done? That's another problem that I'm
told by some of the Realtors in the communities that have been
targeted by these institutions that have caused the
foreclosures to begin with. But many of the local Realtors who
work in these communities don't have access to the listings,
because the Association of Real Estate Brokers seem to have the
first possibility for this. What is going on with this? Are we
entering into another problem with these foreclosed properties
by the same people who created the problem to begin with? What
is happening here?
Ms. Poethig. You raised so many important questions, Madam
Chairwoman, so let me take the--I think the first one, which is
this more global issue of the relationship between HUD homes or
FHA foreclosed properties and the NSP program, and tell you
what we're doing in relationship to NSP 2. Our office of FHA is
mapping our foreclosed properties on to the target areas for
the NSP 2 program, to facilitate and help communities target
those homes as part of the Neighborhood Stabilization Program.
So that's one step we're trying to take to improve the
coordination, to ensure that those homes get into the hands of
low- and moderate-income buyers.
The other thing that I want to say, addressing your
question, is that the HUD homes program and the foreclosed
program features a priority period for most sales, where the
sales have to go--be available only to purchasers who will
occupy the home as their primary residence, or to nonprofits,
or the local jurisdiction, who will probably turnkey to an
eligible borrower. So we are trying to--
Chairwoman Waters. Does this include the housing
authorities also? Because they're selling to the Section 8s;
right?
Mr. Streitz. That's right.
Ms. Poethig. To local government? I am not the expert on
this. We can get back to you in public record to clarify that
point. Establishing this preference, though, is one way we're
trying to mitigate this issue related to speculation.
The other question you raised--and I actually looked into
how many foreclosed homes there are in Minneapolis. So there
are 40 HUD homes in Minneapolis, 20 are actually under contract
to sell right now, and our Office of Single Family Asset
Management is really working with a contractor to improve, to
your issue the way listings are done. But I can provide in the
public record a more detailed description for you about the
more national sort of issues and particularly those in your
district.
Chairwoman Waters. Let's just talk about here in
Minneapolis. Of those 40 homes, who controls the listings on
those?
Ms. Poethig. We have a contractor who is responsible for
the sale of those homes.
Chairwoman Waters. Who is the contractor?
Ms. Poethig. I'm sorry, Madam Chairwoman, I don't know the
name of the contractor.
Chairwoman Waters. Probably some of the real estate people
know who it is.
Ms. Poethig. I'm sure, yes.
Audience. Best Assets.
Ms. Poethig. Best Assets.
Chairwoman Waters. Okay, all right. And what is the
contractor's responsibility?
Ms. Poethig. To manage the REO process, to, on behalf of
HUD, put forth those properties for sale.
Chairwoman Waters. So they actually do the upkeep on those
properties also?
Ms. Poethig. (nods affirmatively)
Chairwoman Waters. And they're also involved in the sale of
those properties to individuals who want to buy them or to
speculators or investors also?
Ms. Poethig. Well, we have a priority period, and that
priority period is intended to, of course, guard against
speculation. However, after that priority period, those
properties are available for sale. Because we have to--of
course, FHA, as an insurance program, has to try to recover any
losses. But we are trying to protect against speculation.
Chairwoman Waters. Do you feel that your contractor here in
the Minneapolis area is carrying out the program in ways that
would be consistent with your rules, your laws, about how to do
this?
Ms. Poethig. Madam Chairwoman, I am not the expert on this
issue, but our Office of Single Family Asset Management can
certainly provide something for the record that speaks to the
contractor's capabilities.
Chairwoman Waters. Is the contractor doing a good job here,
audience?
Audience. No.
Chairwoman Waters. Okay, thank you so very much.
Ms. Poethig. You're welcome.
Chairwoman Waters. Congressman Ellison, please, for as much
time as you would like.
Mr. Ellison. Madam Chairwoman, I love the way you run a
meeting, because we get real participation. I'm a little bit
embarrassed to ask this question, but I have no pride, so let
me just put it out there. How do you think we might improve NSP
legislation? What are the barriers to participation for city-
owned or State-owned entities that might help us acquire
properties that we can then turn around and try to sell? I have
been picking up earlier, before today, and also today, that
there are certain institutional advantages certain cash
investors have over public entities. What are those? And are
these advantages in the Federal legislation, are they in local
implementation, are they--is it statutory, is it regulatory?
Who feels that they could sort of hit that pretty hard?
Ms. Dorfman. Congressman Ellison, I can start. I think
they're in the NSP rules. In order to acquire property in the
suburbs, we have to do an environmental assessment, you have to
give a 1 percent discount on the price, you have to do an
inspection, and there are probably other regulations. And while
we're going through that process, the house disappears right
under us, to somebody who can just put down the cash, doesn't
have to do any of that sort of regulatory work and can walk
right in and take it. And that's happening to us in the suburbs
and hard-hit cities like Brooklyn Center, Brooklyn Park,
Richfield, over and over again, which is slowing down our
ability to really use NSP dollars.
Mr. Ellison. Commissioner, to your knowledge, is this
something that the Feds sent down to you? Is it in the statute?
Is it in how HUD has promulgated rules?
Mr. Bartholomay. It's embedded in the statutes, I believe,
that govern the process overall that are applied to NSP. So
some of these regulations existed pre-NSP, but then NSP has to
comply with them. And that's why in my testimony I talked about
waivers, short-term waivers for NSP programs. There is more
detail in my testimony on that, but that's--the nub of the
issue is that potential buyers cannot sign a purchase agreement
or make an offer without first having an appraisal and also
going through these hoops, if you want to call them, the
environmental assessment. And so what happens is that a private
investor is able to sign a purchase agreement, go get an
appraisal and then do their work, and our partners have to do
all the work before they can make an offer. And that
essentially makes it really difficult for them to compete with
the private sector.
Mr. Ellison. In your testimony, which I did read last night
but apparently not thoroughly enough, do you lay out how we can
put the NSP buyer on equal footing with the private cash
investor?
Mr. Bartholomay. Not in detail, but we could certainly put
something together that would allow us to lay that out in a
much more thorough and detailed way.
Mr. Ellison. If we were to be able to put folks on equal
footing--NSP buyers on equal footing with the private--and it's
the cash investor, it's the person who doesn't need to worry
about a bank loan; am I right about that?
Mr. Bartholomay. I think it's the cash investor, but it may
actually relate to other investors as well who would get a
loan; right? Maybe you know more about that detail, but--
Mr. Ellison. Let me ask this one question. This is a
congressional hearing. If we could get the NSP buyer on equal
footing, what kind of a difference would that make?
Mr. Bartholomay. I would say it would make a huge
difference on a couple of fronts. One is, they would be able to
buy properties that were in better condition, so they wouldn't
have to buy the worst of the worst. They are going to get the
better properties. And the money and the properties are going
to move faster.
Mr. Ellison. Okay. Mr. Streitz, do you want to elaborate on
that?
Mr. Streitz. Yes. Congressman Ellison, I think this is
exactly getting to the issue that's very much a phenomenon in
the City of Minneapolis and Los Angeles as well, and that is
the cash investor. I can give you numerous examples, and I'll
submit additional testimony with the examples, if you would
like, where we have had a buyer who wants to invest in the
neighborhood, live in the home, and we were told by the selling
agent, no, we're not going to accept your offer because we have
a cash investor, you don't have to go through the
environmental, we don't want to wait for the FHA approval of
the loan, which was a big, big issue, so you wait 30 days, and
the people say, I'm going to take the cash. And that happens
repeatedly.
I think the default under the statute, Congressman, is that
it adheres to CDBG regulations. And so--and I see our HUD
representative here shaking her head. CDBG are the default
regulations under the NSP program, and therein lies the
problem, of the environmental and--I see Alfred shaking your
head. Thank you, Alfred, because if I'm getting this wrong,
tell me. He's our guy on the ground. But those are the main
issues we're facing. And when you're in a climate where every
house is being bid on, and you have a buyer--once again, I'll
submit additional testimony--who is looking to invest in the
neighborhood, live there with their children, be a neighbor,
and they have multiple hoops to jump through, the
environmental, the historic preservation, the waiting period
for FHA, and then you have a guy standing there from outside
the community, typically a lot of them are working with REO
agents who have hundreds of listings, and they come and they
offer cash, and the seller takes the cash.
Mr. Ellison. Can you all help get us a little bit more up
to speed on the problem here? It seems to me that we could--if
it's a Federal statutory issue, we might be able to really
weigh in on that front. Would you all mind putting some things
together?
Mr. Streitz. We would be happy to.
Mr. Ellison. That's a good one. The other thing is--
Mr. Streitz. And, Congressman, could I just make one more
point on that?
Mr. Ellison. Sure.
Mr. Streitz. And then the result is, when there's a cash
investor--not all investors are bad, but most of them are from
outside the community, they don't live here, and the difference
is this: The home becomes, in many cases, very minorly
repaired. I call it the caulk-and-paint job, unlike NSP. In
NSP, our developers, our nonprofits and for-profits, we require
them to meet green community standards.
So here's the difference. A family walks into a home with a
new roof, new windows, essentially a new boiler. They're going
to save thousands of dollars in utilities. They have gone
through foreclosure prevention counseling. They're working with
a counselor actively. So we're creating sustainable
homeownership. Compare that with the outside investor who buys
a home in cash, does the paint-and-caulk job, moves a family
in, often without adequate ventilation or heating, and mold in
the basement, we see that repeatedly, and then when things go
wrong, you call them, and that person lives in Florida or North
Dakota or South Dakota. We have people in North Minneapolis
sending rent to Puerto Rico, for example. So when problems
occur with the property, and the neighbors try to contact
someone, there's no one to be contacted, because they have no
connection to the community.
Thank you for indulging me. I just wanted to share the
difference and what happens to the community in one
circumstance versus the other.
Mr. Ellison. And my thought is, all these things that NSP
regulations seem to require are good. Of course, we want some
kind of environmental assessment; of course, we want to make
sure these things are done. But if these requirements are
essentially disadvantaging that NSP buyer, then what we're
doing is we're defeating our own purpose. We're like the dog
chasing his own tail. And I think we have to find a way to
preserve those considerations without--but still be able to
operate with the kind of speed that we need and get through
that red tape. So that would be a great thing, if we can work
on that, and I appreciate any input you have, and so, good. I
knew something good was going to come out of this hearing.
Ms. Dorfman. And, Congressman, those dollars have to be
committed by September of this year, and that causes a crunch.
Mr. Ellison. Right. Well, I was going to go to you next,
Commissioner. Commissioner, you're actually the next on my list
of questions. Because if we're having trouble meeting our
September deadline, September 30th, can you tell me, are you
getting the kind of technical assistance from HUD that you
think that you need? And what more can be done in Hennepin
County?
Ms. Dorfman. Congressman, thank you, that's not the
problem. The problem is, we're having trouble acquiring homes.
We're doing a really good job of identifying families who are
ready to move into homes, and giving them the downpayment
assistance through NSP. We have done over 100 already that
we're processing. But the actual acquisition and rehab, that's
where we're slowing down. It's just tougher to get those
properties. And so we'll have to turn back any money that we
don't spend, if it's not committed.
Mr. Ellison. Can you guys talk about what we're going to do
to make sure we don't have to turn back money?
Ms. Dorfman. Well, we are scrambling.
Mr. Ellison. Right. But what can we do, perhaps, to help
you? Extend it? Extend the deadline?
Ms. Dorfman. Extending the deadline would help. It's
tougher in the suburbs. The average acquisition price is
considerably higher than in North Minneapolis or in the City.
It makes it tougher.
Mr. Ellison. Okay. All right, good. If there's anything
else you think of--extending's a good one. Anything else, Tom,
you want to--
Mr. Streitz. Congressman, can I mention one other thing,
since I see you making a list over there? I appreciate that.
The discount requirement is a very large impediment. When you
have cash investors who are willing to pay more than the
discounted price, the seller's not going to sell to you. And so
that is a major issue for us as well. So if we--since we're
taking notes here, I would be hopeful that we could address
that issue as well, the discount requirement. Because we're
simply not seeing discounts in an environment where you have
multiple investors and purchasers willing to buy the home.
Mr. Ellison. All right, good. Another question for the
Commissioner of our State Housing Finance Agency. The housing
finance system is something that the Financial Services
Committee has identified as a priority in this upcoming year.
Can you expand on what types of policy changes would be most
beneficial to Minnesota with regard to housing finance?
Mr. Bartholomay. Well, there has been a lot of work done
this last year, year-and-a-half, to put some pieces in place
that made a big difference for us and agencies like ours to be
able to finance affordable housing in this market. Ultimately,
the market is going to have to change, for things to progress.
But we do think some of the recommendations or things that I
was urging you to consider, extending the Tax Credit Exchange
program, will--provided the economy continues to be like it is,
and it doesn't seem like it's moving as fast, the recovery, as
anybody would hope, that's going to be very important.
I could certainly follow up with additional information for
you on that too. My policy director is an expert in that area,
and I could have her put together a list. We did submit a list
to HUD of some ideas. I'm not sure that we shared that with
you, but we could certainly do that.
Mr. Ellison. We would appreciate that, thank you.
Representative Davnie, I was interested to hear about your
bill. As you know, you and I have talked about it before, and I
thought it was a great bill, and I mean now the Minnesota
Subprime Borrower Relief Act, which would have required lenders
to make a good-faith effort to restructure mortgages before
foreclosure.
I'm working on a similar bill, H.R. 3451, which I
introduced last year, which would require the lender, upon
default of a federally-related mortgage loan, to engage in loss
mitigation activities that provide for: one, long-term
affordability of the loan; and two, maximum retention of home
equity. The bill I have in mind, I hope to move forward in the
coming year. Could you tell me, from your perspective, what's
needed to move forward on mortgage servicer reform?
Mr. Davnie. Madam Chairwoman, Representative Ellison, thank
you for the opportunity. I think you know, through your
conversations in the community, Congressman, the frustration
experienced by many homeowners who are in trouble and
foreclosure prevention counselors in engaging the financial
institutions who hold the loans on modifying those loans. In my
real life, I work for one of the major social service agencies
in the State, and have frequent contact with some of the
housing counselors there, and repeatedly get stories of the
difficulty, first, of identifying, as has been identified here,
who is the lender? They may be able to identify who the
servicer is, but who is the lender? And then the issue we come
to of the secondary market and the securitization of mortgage
loans making identifying who gets to make the decision on
modifying the loan more and more difficult.
Any efforts that could be done to simply bring the
transparency that's needed to the process, from the Federal
level, would be a great help, I think, to those both as
borrowers and to the folks who are trying to assist them in
that.
The work that you have done on looking to create a Federal
system of consumer protection, I think, where we can get on the
front end of assisting homeowners, as I spoke to in my earlier
testimony, so that when they make the commitment to
homeownership, they are assured that the product that they're
using to get there for them and their family and their
community is a stable product that will allow them to continue
in homeownership, is critical as well.
Mr. Ellison. And this question is both for you and Senator
Higgins. I know that you all were working on mandatory
mediation programs in the last session, which I was really
excited about. But we're not the only State looking at a
mandatory mediation program. I think in Pennsylvania,
Connecticut, and Florida, they were looking at these programs.
Can either one of you talk about the mediation bill that you
all worked on? And please explain why, if you can, the governor
vetoed the bill--Governor Pawlenty vetoed the bill.
Ms. Higgins. Madam Chairwoman, Representative Ellison, I
can't say it kindly, so I won't say it at all. I'm probably--
were you the author of that bill?
Mr. Davnie. No, Representative Hillstrom.
Ms. Higgins. Oh, okay. So you have two people here who were
not authors of the mediation bill, so we probably don't have
the detail that we should have. But it would have set out a
process where there would have been a 6-month, 7-month period
where mediation would have been required. It was a serious and
honest attempt to get the lender to the table, which is
something that we heard and continue to hear from one and all,
that is the piece that we just can't get compliance on, is
getting the lender to the table to have an honest discussion on
how a mortgage can be restructured, how both parties can win in
going forward.
Mr. Ellison. I'm all done with my questions, Madam
Chairwoman, so I yield back.
Chairwoman Waters. Thank you very much. I'm very
appreciative for the presentations that have been made by this
panel, and the Chair notes that some members may have
additional questions for this panel, which they may wish to
submit in writing. Without objection, the hearing record will
remain open for 30 days for members to submit written questions
to these witnesses and to place their responses in the record.
Thank you very much, panel, for your very informative
presentation. The panel is now dismissed.
Ladies and gentlemen, I'm pleased to welcome our
distinguished second panel. We're going to move forward with
our second panel. Please take your seats. We have a lot of good
information for you.
Our first witness will be Ms. Cora McCorvey, executive
director, Minneapolis Public Housing Authority.
Our second witness will be Mr. Chip Halbach, executive
director, Minneapolis Housing Partnership.
Our third witness will be Mr. Michael Dahl, public policy
director, HOME Line.
Our fourth witness will be Mr. Mark Ireland, staff
attorney, Housing Preservation Project.
Our fifth witness will be Mr. Richard Amos, director of
housing services, St. Stephen's Human Services.
Our sixth witness will be Mr. Marion Anderson, constituent,
and renter displaced by the foreclosure crisis.
And our seventh witness will be Ms. Christina Louden,
constituent, and Section 8 voucher resident.
Without objection, your written statements will be made a
part of the record, and each of you will now be recognized for
a 5-minute summary of your testimony. We will begin with our
first witness.
STATEMENT OF CORA A. McCORVEY, EXECUTIVE DIRECTOR/CHIEF
EXECUTIVE OFFICER, MINNEAPOLIS PUBLIC HOUSING AUTHORITY
Ms. McCorvey. Chairwoman Waters, Representative Ellison, I
am Cora McCorvey, the executive director of the largest Public
Housing Authority in the State of Minnesota, with over 6,000
units of public housing and 5,000 housing choice vouchers. I am
honored to be here on behalf of the Minneapolis Board of
Commissioners, our staff, and over 21,000 residents and housing
choice voucher participants.
I welcome you, Madam Chairwoman, to Minneapolis. I am
personally delighted you have decided to visit our great City
today, as you are one of my role models. I proudly watched you
on television over the years, regimenting comments in the
newspapers, and know you have spent over 30 years of your life
being a fierce and tenacious advocate for women, children,
people of color, and for the most vulnerable among us. I
applaud you, Chairwoman Waters, along with thanking you for
your leadership, courage, and service to humanity.
Chairwoman Waters. Thank you, thank you, thank you.
Ms. McCorvey. Representative Ellison, I have worked with
you on many important issues during your career, and I am
grateful for your steadfast support of affordable housing
programs. I want to talk a little bit this afternoon about some
of the need. The Public Housing Authority is a bastion of safe,
decent and affordable housing for our community. This resource,
while critical, is woefully inadequate, when measured against
the need that we see. A family waiting list has been closed
since 2007, and we have almost 3,000 people on that waiting
list now, as I speak. And Chairwoman Waters mentioned that
there are 12,000 people on the Section 8 waiting list. There
were 15,000 who actually asked for applications, and, yes,
there are 12,000 who are on the waiting list today.
At our central office headquarters, we have a resource room
where people can come in off the street or just call and
request information. We have 900 contacts each and every month.
That's nearly 12,000 people, desperate people, in need of
housing who contact us that we can't serve.
The Public Housing Authority turns away literally thousands
of people each year because there are no vacancies in our
operations, either our public housing programs or our Section 8
programs. Those programs were often a step up and out of
homelessness and out of transitional housing. We literally have
no room. Families are forced to choose between food and
shelter, shelter and medicine, medicine and school needs for
their children. Wilder Research estimates that on any given
night in the metropolitan area, there are 4,700 people who are
homeless. And of those 4,700, 45 percent of those are children.
The Public Housing Authority is working hard and is
committed to respond to these needs as best that we can. We
have established seven assisted living and housing with
services and programs for our elderly. These supports help our
seniors to live more independently and remain in their homes
longer. We have worked with our partners in the community to
develop two women's shelters, a youth shelter, a transitional
housing program for chemically dependent women that is funded
through a program called Publically Owned and Transitional
Housing (POTH). This is funded by the State of Minnesota.
We have two self-sufficiency programs, one through our
public housing programs and one through our Section 8 program.
We have pursued very aggressively and won nearly $32 million of
ARRA funds, that's American Recovery and Reinvestment Act
funds. With these funds, we are developing a senior center on
the north side of Minneapolis in our Heritage Park development
and a 48-unit memory care development. We believe this is the
first in the country where public--it's a public housing
development we're envisioning we will develop, providing
comprehensive support for vulnerable elderly who have
Alzheimer's or suffer from forms of dementia.
We're investing $12 million in significant injury
improvements in our over 700 scattered site family units. We
have obligated 96 percent of the $18.2 million of capital ARRA
funds that we received last year. With those funds, we believe
that we will be creating nearly 300 jobs in our community.
We have entered into a second energy performance contract,
this is with a new provider, Honeywell International, which is
going to upgrade our energy infrastructure. And we have
structured this deal so that Honeywell guarantees a savings
that will be enough to pay for the cost of the improvements
that are going to be made in our facilities.
We are responding in small but we think very important ways
to the foreclosure crisis. We have created a Section 8
foreclosure prevention demonstration program, and it's called
Saving Homes, for families in North Minneapolis who are under
threat of foreclosure. The same prevention strategy is
available to the 185 families who have previously purchased
homes through the Public Housing Authority's homeownership
programs.
We have partnered with the City of Minneapolis and a
nonprofit agency to project base some of our Section 8 vouchers
in foreclosed properties. These properties are being purchased
and they're going to be rehabbed and made affordable for low-
income families.
We have used ARRA dollars to purchase 20 foreclosed
townhomes in North Minneapolis, and those townhomes will be
created for a rent-to-own program for low-income families.
The Public Housing Authority has many strategies to respond
to these needs, but we don't have the resources to do so. Madam
Chairwoman, thank you so much for the opportunity.
[The prepared statement of Ms. McCorvey can be found on
page 115 of the appendix.]
Chairwoman Waters. Thank you so much. Our second witness
will be Mr. Chip Halbach.
STATEMENT OF CHIP HALBACH, EXECUTIVE DIRECTOR, MINNESOTA
HOUSING PARTNERSHIP
Mr. Halbach. Thank you, Chairwoman Waters, and
Representative Ellison. Thank you both for the emphasis of
today's hearing on rental housing. As was said by the HUD
speaker, there is a need for more balanced housing policy in
this country. I'm going to speak about the urgency for
providing affordable rental housing for the lowest-income
residents, and I'm going to put it in the context of the
economic problems this country is facing. Certainly, there has
been a recent substantial downturn in the economy, but for many
low-income households, this economic challenge has been around
for at least 30 years.
So with Minnesota, we have now 7.4 percent unemployment.
And an equal number of households, percentagewise, are also
underemployed and have faced job losses or partial job losses.
That's over 200,000 people in this State. And that economic
challenge facing the State has manifested across the housing
continuum.
For instance, for the homeownership we have seen over the
last 2 years--or since 2005, that is, a default rate, people
60-plus days in default, that has gone from under 2 percent to
just about 8 percent; 8 percent of people with mortgages in
this State now are 60 days behind in their mortgage payment.
And while there have been reforms that have been discussed
earlier, that trend is continuing upward.
With rental housing, we have, of course, the cost burden
placed on many low-income families. But one of the things that
we have been able to observe, in partnership with nonprofit
developers across the State, is that many of the households
that are in affordable housing now are falling behind. In fact,
it's about 23 percent of the residents of the 3 largest
nonprofit affordable housing developers in the State are now at
least 1 month behind in their rent payment. We have an economic
situation where our policies and programs have helped a lot,
but they're still not reaching people, particularly as the job
losses continue.
And, of course, there's homelessness, which is the trend,
which is the ultimate of people not being able to afford
housing. Looking at family homelessness in Hennepin County,
where we have the best records, over the last 3 years, there
has been a 70 percent increase in family homelessness here in
Hennepin County.
Focusing more on renters, what we have here is that about 1
in 5 renter households across the State are paying more than 50
percent of their income for housing. And that is particularly
burdensome on those who are called extremely low-income, those
with incomes at 30 percent of median and below. That is about
$21,000 or less in annual income for a family of four. In the
State, we have 85,000 households who are in that situation, who
earn $21,000 or less and are paying over half of their income
for housing. That's a number that continues to increase. And as
I said before, this is a long-term trend.
Since 1980, rents across the State have increased by 19
percent, while at the same time, renter incomes have declined
10 percent. We need help for people now in being able to afford
rental housing, but also we need to be able to prepare for our
expanding population, and more low-income people, we expect,
will be residing in Minnesota. For instance, the Metropolitan
Council projected, for this decade we're just beginning, we
need about 5,100 affordable housing units per year added to the
stock, whereas our current ability to provide affordable
housing is about 1,000 units per year.
Where do we go from here? Well, of course, our primary need
is to be able to transcend that gap between what it costs to
create and maintain housing, and what people can afford.
NSP, which has been talked about here, is a great program
and extremely important. However, it is not a good program for
helping people at the bottom end of the income spectrum.
There are four areas where we need help. I'll just list
them quickly. The Low Income Housing Tax Credit, which has been
mentioned, our State uses that tax credit program, not only for
the $700 to $1,000 apartments, but also for chronic homeless,
extremely low-income. The tax credit needs to be preserved.
The National Housing Trust Fund, which if we get--that has
been authorized in the Housing and Economic Recovery Act, and
we're hoping to get it capitalized. We're looking at a billion
dollars. The two of you have been leaders in doing that,
seeking that fund. The two of you have been leaders in seeking
that fund. But a billion dollars will only bring 140 units to
Minnesota.
And then vouchers, SEVRA, and then preserving existing
affordable housing, including public housing, where the
economic stimulus has been able to provide important resources
but less than 20 percent of the resources needed for
Minnesota's public housing backlog and needed repairs. Thank
you.
[The prepared statement of Mr. Halbach can be found on page
95 of the appendix.]
Chairwoman Waters. Thank you very much. Our next witness is
Mr. Michael Dahl.
STATEMENT OF MICHAEL DAHL, PUBLIC POLICY DIRECTOR, HOME LINE
Mr. Dahl. Madam Chairwoman, it is an amazing honor to meet
with you, and, Congressman Ellison, you have been an
unparalleled leader on affordable housing, and I'm thankful
that you are having this hearing. Thank you for the opportunity
to testify. My name is Michael Dahl, and I'm the public policy
director with HOME Line. HOME Line is a statewide organization
that provides free legal, organizing, education, and advocacy
advice to tenants, so they can solve their own problems, and we
work on public and private policies that advance that goal.
As a part of our work, we operate a statewide tenant
hotline. The hotline provides renters with legal advice. And it
has grown from suburban Hennepin County in 1992 to serving the
whole State except for Minneapolis, which has its own tenant
and city-funded service. Last year, we took 11,000 calls,
setting an unfortunate record for the number of tenants who are
seeking our advice in troubles with their landlord or help in
affording their rent.
As you would expect in today's market, the number of
tenants calling us because of foreclosure has increased. It has
gone way up. In 2000, we received 18 calls from all of
Minnesota from renters who had a question about foreclosure.
This year, the number was at 1,265. We're seeing a dramatic
increase, and that increase is seen in Congressional District 5
as well. Last year, we received 273 calls from tenants in
Congressman Ellison's district. That's a fourfold increase in
just the past 3 years.
So obviously we are very happy, Congressman Ellison, that
you took a leadership role on this and got the Protecting
Tenants at Foreclosure Act passed. Since that legislation went
into effect, HOME Line's work has changed in two ways. One,
tenants have more time to move, which this is something
that's--prior to the change, a bank only needed to give someone
60 days, now they have 90 days. And that extra time gives them
time to save up for a move, and not choose just the first place
that comes available, but, instead, the place that works for
them.
Next, holding owners to the tenant's lease is a good change
as well. When a property is transferred normally, the new owner
steps into the shoes of the old owner, and the new owner must
respect the tenant's lease. That had not been the case in
foreclosures. And making one rule that applies throughout the
market is a good one.
The increased call volume for foreclosures is one that
shows no sign of abating. And so we ask that one of the first
things you can do is make the Protecting Tenants at Foreclosure
Act permanent. Its sunset in 2012 is something we would think--
we need to extend this forever. It's a good idea--it was a good
idea before, it's a good idea now, and I think that in 2012,
we'll be seeing that it continues to be an issue that we need
to address.
More, however, needs to be done in this for extremely low-
income households. And I'll leave NSP to Mark Ireland's
testimony, to talk about that. I just want to focus on some of
the issues that Chip had tried to bring up towards the end of
his testimony that we agree with.
America's affordable housing crisis predates the
foreclosure crisis. And we have people who were on the Section
8 waiting list in 2005. They still haven't gotten to the top of
the list. And that's before all of this foreclosure thing sort
of hit the media screens and became the thing that we're all
talking about.
There are two things that we need to do, basically, to
address the crisis that we're in: We need to increase the
supply of affordable housing; and we need to make more rental
assistance available.
In the 5th Congressional District, if someone needs help
right now, all of the waiting lists that they could be on are
closed. Minneapolis, Richfield, St. Louis Park, Metro HRA, all
the lists are closed. And if you manage to be lucky enough to
need help the day that a list opens, maybe you'll get on the
list, and 17,000 people will be ahead of you on all of the
lists that are out there. So we need to do something to
increase the stock and the availability of rental assistance.
Chip had talked about the need for our Nation to recommit
to a production program, and that's why Congress needs to pass
significant funding for the National Housing Trust Fund. There
are two steps that can be taken for this. One, the United
States Senate needs to put, like the House did, $1 billion into
the National Housing Trust Fund through the jobs bill, and
that's something that can happen in short order. The next step,
and this is an area where we're happy for leadership from
Senator Franken, is asking for the President to include another
$1 billion for the Trust Fund in his annual budget.
But these two steps are just partial steps, because we need
$5 billion annually for each of the next 10 years. And so we--
that's one request that we have, is to find a way to provide
permanent funding, at least for the next 10 years, to the
National Housing Trust Fund.
And then lastly, we need more money for vouchers. Nothing
will reduce the waiting list better than providing more money
for vouchers. And housing vouchers--it was already stated that
we have thousands of people who are waiting for help. There are
230,000 renter households who cannot afford where they live.
Chip talked about the 85,000 who are extremely low-income and
are paying more than 50 percent of their income. Congress needs
to make the HUD budget reflect the number of eligible people
who need a voucher.
Madam Chairwoman, Congressman Ellison, we will stand with
you and provide whatever you need to reach these goals. We know
that you have the vision to make them happen, and we're there
with you.
[The prepared statement of Mr. Dahl can be found on page 83
of the appendix.]
Chairwoman Waters. Thank you. Thank you very much. Now, we
will hear from Mr. Ireland.
STATEMENT OF MARK IRELAND, STAFF ATTORNEY, HOUSING PRESERVATION
PROJECT
Mr. Ireland. Thank you, Chairwoman Waters, and Congressman
Ellison. Thank you for inviting the Housing Preservation
Project to come here and testify today.
You can really break down the proposals and the ideas into
two broad categories. One is opportunity, and one is need, and
they certainly overlap. But I think the first is that we have
an opportunity here. It is a financially smart move to invest
in rental property, to expand our voucher programs, to expand
the availability of affordable housing tax credits.
All of these programs, now is the time that we can do that.
And we have a lot of community development agencies,
nonprofits, that want to do that, but they need access to
capital, they need access to funding, to do it. We have the
potential today to access houses and bring multifamily units,
single-family units, into these affordable housing programs in
areas that are close to jobs, close to transit corridors and
other areas where people want to live, and where you come and
you raise that standard of living for people who are renting
property in Minnesota and the country. So this is an
opportunity. It's financially a good move.
The second, and this was touched upon a little bit by the
first panel, is that by expanding these programs, we're going
to create standards and oversight. And sometimes standards and
oversights are a little bit too much and they impair the
ability to expand these programs and make them work. But we
have right now that competition between speculators and the
nonprofit affordable housing organizations. And we found that
81 percent of the foreclosed properties in the City of
Minneapolis had 911 calls. The median--and these were
properties that were foreclosed upon 3 years ago. The median
number of 911 calls related to that property was five, and the
average was eight. So by bringing these properties into the
Federal programs and putting them in the hands of responsible
owners, responsible lenders, we're going to increase the
standards--the standard of living for our renters, we're going
to--and we're also going to help strengthen those
neighborhoods.
The fourth is--or the other opportunity and need is to
subsidize scattered site rental. Our community development
corporations, our Public Housing Authority, they have
experience. And that experience has taught them that it is time
consuming, it's expensive, but the opportunity, what it
provides for the renter, far outweighs that, but we need that
need. We need the management of scattered site housing to be
subsidized in a greater degree by Congress, and Congress could
provide that. So we meet up that opportunity and that need, and
we access that.
And then the final is to loosen some of the restrictions on
NSP, and we talked about that in the first panel.
And lastly, it's an issue that hasn't been raised by any of
the panelists, but I think it relates both to where we are and
where we're going, and that's the issue of race. Nobody seems
to really talk about it all that much, but in every study that
I have seen and every article that I have seen, the
disproportionate impact of the economic crisis, the foreclosure
crisis, on renters, on homeowners, has been on communities of
color and people of color. And so, therefore, as we develop
these programs for scattered site rental housing, expanding
vouchers, expanding tax credits, we have to talk about race,
and we have to talk about those issues and see it as an
opportunity to have a conversation that's long overdue about
race, both in Minnesota and the Midwest and then in our
country. Thank you.
[The prepared statement of Mr. Ireland can be found on page
106 of the appendix.]
Chairwoman Waters. Thank you very much. Next, we will have
Mr. Richard Amos.
STATEMENT OF RICHARD AMOS, DIRECTOR OF HOUSING SERVICES, ST.
STEPHEN'S HUMAN SERVICES, INC.
Mr. Amos. Thank you, Chairwoman Maxine Waters, and
Congressman Keith Ellison. Thank you very much for giving me
the opportunity to share what we're seeing at St. Stephen's.
The mission of St. Stephen's is to end homelessness through
effective collaborations and programs, and we do that by
serving over 6,000 people, and we serve them with street
outreach, shelter opportunity, transitional housing, employment
services, support services, shelter, a free store, and multiple
programs that we believe people need. Because you can give
people a job or you can help people fill out resumes, but the
populations we work with never really had a job or an
opportunity of employment, so they wouldn't have anything to
put on a resume.
Looking at the foreclosure crisis, we're seeing people who
have never called before for services. They are working class
people, and they kind of get embarrassed and intimidated when
we ask them questions about their personal lives. We're seeing
people who were in shelters because they had their houses
foreclosed upon, and then when we locate them housing, they go
into that housing, only to find out that house was in
foreclosure, and we have to rehouse them again.
We're working with a variety of people, families and single
adults, some have mental health issues, some have addiction
issues, some have multiple barriers that prevent them from
obtaining housing on their own. So we have a program that's
called Rapid Exit. The Rapid Exit Program is funded by Hennepin
County through money that passes through the State.
One bout of homelessness costs about $5,000. We can save
someone from being homeless for $1,000. Now that makes economic
sense. An adult without children, it costs about $850 to
prevent them from being homeless. But if we pay for them to be
in a shelter or to go in and out of emergency rooms, because
all they can use is emergency services because they're
homeless, then it costs about $2,000. So when we look at the
economic issues, we can actually save money by keeping people
out of shelters and not being homeless.
The Hennepin County Homeless Prevention Program helped
nearly 2,000 people, families, and 477 adults between 2007 and
2008--95 percent of those families and 90 percent of the single
adults were stable in their house for about 6 months. And it
costs--when we look at the costs, again, $875 for family, $610
for an adult without children, that's a cost savings we look
at. And those are our tax dollars.
Between 2007 and 2008, the Hennepin County Rapid Exit
Program prevented people from being homeless. When we look at
prevention, we look at saving people from being homeless. Don't
wait until they get homeless, because it costs a whole lot
more, once they're homeless, to get them back into housing in
order to get them back on track. Some people assimilate in the
homeless culture, and it's a climate and it's hard for them to
get out of. So we don't want to wait until they have
assimilated in and they're used to being homeless. Then it's
harder to get them back on track and out of that.
We have prevention programs, where people can call in who
are in a rental crisis. Maybe they have lost their job, they
have broken an arm. We say, when you're poor, you can't get
sick. Because if you get sick and you miss 2 days at work,
there goes your rent money, and you may be homeless again.
So we have prevention assistance funds, where we can pay a
portion of the rent and help them stay on track and in that
housing until they get past that crisis, whether it was a
broken arm, whether it was a child sick and they missed a
couple days at work and they can't pay their rent.
There are a whole lot of issues that contribute towards
people becoming homeless. I haven't met anybody who volunteered
to be homeless or who would volunteer to be homeless. So we
need to think about this when we're thinking about addressing
homelessness. It's not just those people over there. I was
homeless in my life for 20 years, and people wouldn't look at
me, they would look around me, they would look down, because
they were afraid I would ask them for something. And sometimes
I wanted to ask them for something, but I knew they wouldn't
give it, because they already had their minds made up.
So homelessness, we look at it at St. Stephen's as a way to
reach out and grab a person's dignity, to talk to people and
embrace them. Because if you're not going to reach out and
embrace someone's dignity, then you might as well not talk to
them in the first place. We have all kinds of programs, and
they try to address homelessness. But if you don't have that
compassion and you don't reach for their dignity and you don't
believe that they can make it in the first place, they won't.
I sit down at work sometimes and I help people go through
the newspaper and look for housing, and I want them to call
landlords and talk to them, after I have talked to them and
they know how to do it, because I want to teach them to fish,
rather than give them fish every day.
And I hate to say it like this, but I'm going to say it
anyway. Sometimes we can create plantations for the homeless.
And I say that because we have mastered trying to show people
which way to go, when you can teach them how to go and they can
go for themselves, rather than create an industry called
homeless providers and keep on serving the populations, and
that population just keeps on growing.
So we look to the Federal Government to create some
subsidized housing, to create some short-term subsidies, not
just long-term subsidies like Section 8. And I know that may
not be politically correct, but what about short-term
subsidies, people who need help for 2 or 3 years, until they
can get an education or a skill or something that will help
them sustain their housing, rather than just all Section 8s,
which are for a lifetime and people just kind of never go off.
I think we need both short term and long term. And with that, I
will stop.
[The prepared statement of Mr. Amos can be found on page 52
of the appendix.]
Chairwoman Waters. Thank you very much. Next, we have Mr.
Marion Anderson.
STATEMENT OF MARION ANDERSON, CONSTITUENT, AND RENTER DISPLACED
BY FORECLOSURE CRISIS
Mr. Anderson. Thank you. I hope you'll bear with me, I'm
not used to public speaking at all. Thank you, Madam
Chairwoman, and members of the subcommittee, for inviting me to
testify about my experience as a renter affected by
foreclosure. My name is Marion Anderson, and for over a year my
life has been affected by the foreclosure of my rental unit.
Just to give you a little history, it was exactly a year
ago, I had just gotten--6 months prior to that, I had gotten a
job with a multinational company locally, 3M. I was a machine
operator, and I had just bought a car with no notes, paid off
in full. Life was looking good. I signed a lease for $900 a
month. I said, I can do this now.
Well, in November 2008, I signed a one-year lease on a two-
bedroom apartment in a fourplex in North Minneapolis. What I
didn't know at the time was that my landlord was already in the
early stages of foreclosure. In fact, my landlord had two
mortgages on the property, and both had gone into foreclosure.
Okay, then, one of the sheriff's sales was in August 2009, and
the other was in September 2009. In addition, my landlord had
filed for bankruptcy.
Our first suspicion that something was wrong, as far as the
tenants went, was about 4 months into our lease. In February
2009, our landlord started taking appliances out of the
property without any explanation. The first things to go were
the washer and dryer in the basement. About that time, we got
really concerned.
The next month, we started getting utility shut-off notices
at our building. In our original lease, the utilities were paid
for by the landlord, which was--$900 a month, no utilities, I
can make it.
The next month, April, the building was posted by the City
for a lack of utilities, but the landlord was still asking for
rent and not addressing the utility issues. So myself and my
roommate, we organized, contacted the utility companies, and
agreed to pay the utilities at the unit, all--it was a
fourplex, so each tenant was supposed to pay their portion of
the water bill, the heating bill, whatever.
As it worked out, on April 15th, our landlord came by the
property and manually turned off the furnace. From April to
July, we had no contact from our landlord. In July, our
landlord showed up at the property and threatened us with
evictions for nonpayment of rent. Well, at this point we knew,
okay, as long as we paid our utilities, she really couldn't
hold us accountable for the rent, as long as we kept a record,
etc., etc .
At this point, we were no longer paying rent, but we were
paying the utilities ourselves. We had already received
numerous water and gas shut-off notices. She continued to strip
the basement of appliances and never showed up again. One of
the words I became familiar with was ``abandonment,'' I got
that notice in the mail. I wasn't quite sure what that was, but
it was addressed to my landlord, that she had abandoned the
property completely, and wanted nothing else to do with it.
So right about this time--well, actually we weren't doing
too badly. We didn't have to pay rent; we just had to pay
utilities. I was unemployed. And so, you know, I'm a ``cup-is-
half-full'' kind of guy. I'm looking--I can see the future a
little bit.
And, well, right about--in the fall, mostly--right around
October, really. It says here in August, but right around
October is when they had the shut-off notices and turn-off
notices for utilities, especially because of the weather. If
you're not from Minnesota, October 15th is about the time it
starts getting cold, and the furnaces go on.
And so the fire inspector showed up at our property and put
up two notices on the door. A really nice lady, her name is
Melanie--I can't say her last name, it's Polish, but she's
really, really good help; right? I tell you, she was really--
she had a lot of empathy. She worked the north side, nice
uniform and everything. She posted these psychodelic posters on
our doors saying you had 72 hours to either get that furnace
turned on or the building would be condemned. And we had from
that time until January 1st to have a new rental license for
that property. Evidently our landlord hadn't renewed our old
license in August.
So by this time, it's, like, fall, October. So we say,
well--I had been a little depressed before, but I got a little
hint of--with 72 hours, I had a little hint of what clinical
depression really was. But like I said, she was really
empathetic, told me they were changing some of the laws and
some of the rules as far as what they did for condemnations.
And we were able to get the furnace turned back on with help
from their contacts with CenterPoint, with, I'm saying, the
fire department, Legal Aid.
A woman in particular, Genevieve Gaboriault from
Minneapolis Legal Aid, she was on it from the minute I called
her. These are resources I really wasn't aware I was eligible
for. So she contacted them. They made an agreement with
CenterPoint. We got the furnace turned on by that Saturday. We
could still stay in the building. That means all the tenants
who were still in there could still stay there. I'll hurry up.
And Legal Aid also--Genevieve, she also tried to get the
City of Minneapolis to allow the tenants in our building to pay
for our rental license ourselves, so that we could stay
throughout the winter--well, at least throughout the redemption
period. There is a 6-month redemption period if the old
landlord doesn't buy the property back, you can stay there,
just pay the utilities. I'm, like, yes, I can make that too.
March 29th would be the end of the redemption period.
Well, that didn't look like that was going to work out,
because the City wasn't really willing to do that for a
fourplex. Maybe more with a single ownership, a single-family
home, but for a fourplex, I guess they weren't really able to
do that.
Legal Aid then connected me with St. Stephen's Housing
Human Services, and their housing advocate, her name is Susan
Dunn--I mean Sara Dunn, I'm sorry, she helped me greatly. She--
as soon as she got wind of what was going on, and her contact
with Legal Aid and Genevieve, they had their own assistance
program for renters who were affected by foreclosure. I didn't
know this program was available. And since we found out the
property had been in foreclosure and had been in--had numerous
utility shut-off notices--this is about the time when I found
out from Sara that, yes, I was eligible for some financial
assistance, if the property was foreclosed on, that maybe she
could help me with relocation fees, relocation money, that kind
of thing, which was a great burden off my mind.
Since it was in foreclosure, the old building manager left
the unit, and some of his family moved in upstairs. No lease,
they were basically squatting. Another unit up above me, who
were receiving Section 8, they moved out to another Section 8
property, once they found out about the foreclosure. And they
left and allowed their friends and family to move into their
unit. There have been three or four squatters in the vacant
units and in the basement, which does not have a secured door,
and it has been hard or impossible to get the squatters there
to contribute to the utility payments.
In fact, what just happened last week was, the new owners--
the new owner--and I just found this out from Senator Higgins.
What happened was, the new owners bought this property from one
of the banks, one of the mortgages--okay, I'm finishing.
Chairwoman Waters. Your time has expired; however, we want
to hear the end of this story. So, please, keep going. There's
unanimous consent to grant this gentleman additional time to
finish this story.
Mr. Anderson. Well, to make a long story short, the
squatters made it impossible to--they brought other problems to
the building. We actually had police come out last week to take
one of the squatters out. The new landlord, I think he's a
landlord, he came in and asked to see the apartment, and the
guy opened the door with a wrench and said, ``You're not coming
in my house, white dude; you're out of here,'' and he closed
the door on him. And this is one of the squatters, I don't even
know his name. And the guy left, the supposed new owner, and
the squatter came out of the house with a wrench and followed
him to his truck, and they got to scuffling out there.
To make a long story short, it's not safe for us or any
other tenants who are qualified to be there or supposed to be
there. And they told--the fire inspector came back out and told
us that the building was at risk of being condemned again for
suspected meth use by this person upstairs.
At any rate, from March to December, our building had
virtually no management or ownership. This has created an
unsafe environment for the remaining tenants. There's no
accountability, and we have no one to address our safety,
utility, and maintenance concerns.
Right now, as of December 28th, we have a new owner who is
selling it to another owner, an Irishman from Australia named
Bernie O'Brien. And he says--he promises he's going to close by
September 20th and we'll get a new stove. That's a wrap, and
thank you for your time.
[The prepared statement of Mr. Anderson can be found on
page 75 of the appendix.]
Chairwoman Waters. Wow. Ms. Louden?
STATEMENT OF CHRISTINA LOUDEN, CONSTITUENT, AND SECTION 8
VOUCHER RESIDENT
Ms. Louden. I want to say thank you for giving me the
opportunity to testify. My experience is with Section 8 and the
waiting list. My name is Christina Louden. I'm a 31-year-old
single parent of two daughters: Ruby Rose, age 9; and Danista,
age 5. I am currently unemployed but pursuing my bachelor's
degree online in business administration while actively looking
for employment.
When I first applied for Section 8 assistance in May 2003,
I was a single parent of one child and paying more than 50
percent of my income towards rent. During my 6\1/2\ years on
the Section 8 waiting list, I had another child and managed to
make my rental payments, however rarely on time. On February
12, 2009, I lost my job due to health concerns. I recently had
a pacemaker put in and have suffered significant injuries in an
automobile accident.
I was on the verge of losing my apartment and was unable to
pay my rent. I did not receive child support or any childcare
assistance, and my income was significantly reduced to some
welfare for my children and unemployment insurance. I called
the Section 8 department in March 2009 and was informed that I
was near the top of the waiting list, and was finally approved
for the Section 8 voucher in July of 2009. I found an apartment
and was leased up in November 2009.
My two-bedroom apartment rents for $960 per month, and my
share of the rent is $432 per month. And this is more than half
the rent I would be required to pay if not for my Section 8
assistance.
This housing assistance allows me to make sure my children
have adequate food, clothing, and shelter, as well as being
able to provide them with what is needed for school and other
day-to-day requirements.
My lower rent also enables me to be able to prepare for a
better future. I'm attending the University of Phoenix online,
and I expect to receive a bachelor's degree in business
administration in 2011. I hope to be able to use this degree to
find a better job and put myself in a position where I will no
longer need Section 8 assistance, and someone else who needs
the help can have the same opportunity that Section 8 has
brought to me.
I am not an expert in what Minneapolis needs, nor in
affordable housing. I can tell you that waiting 6\1/2\ years to
receive assistance is not a realistic way to help people who so
desperately need assistance. If I would have lost my job 2
years ago, or experienced any other kind of setback that would
have impacted my income, my girls and I would have been
homeless.
I think of all the families that I hear about who are
homeless, and wonder, knowing that the miracle I experienced
may not be there for them. The waiting list is closed, and I'm
told that thousands of other families have to wait as long as I
had to wait to get help. Thousands of others can't even apply
for help at this time, and Minneapolis needs more Section 8
vouchers to help families. They need more landlords willing to
accept Section 8, and they need more just plain old affordable
housing.
There is an economic crisis, and so many families are
impacted by it. I know, from my 6\1/2\ years on the waiting
list, that for low-income people working or on welfare, there
has always been an economic crisis. Rents of over $1,000 per
month, car payments, insurance, food costs, clothing costs,
medical, and other day-to-day costs associated with just
living, are almost impossible to meet with a low-paying job or
welfare benefits.
It is hard to even have to ask for assistance. And I want
you to know that assistance should be viewed as an investment
instead of a handout. With the investment you are making in me
and my family, you will see a big return. I will graduate
college, find a good paying job, and help my children, so
hopefully they will not have to experience the difficulties
that I have had to face.
[The prepared statement of Ms. Louden can be found on page
111 of the appendix.]
Chairwoman Waters. Let me thank all of our witnesses for
being here today. Each of you, in some way, has touched on what
we work for and about every day. And the issues that you raised
are at the centerpiece of our legislative agenda, serving on
the Financial Services Committee and the Subcommittee on
Housing and Community Opportunity.
Let me just briefly say, this Nation is a little
schizophrenic about public housing. On the one hand, we have a
lot of people who are supportive of public housing, yet we have
people who want to see public housing not as an opportunity for
the least of these or people who really find themselves in a
position where they cannot afford to live anyplace else but
public housing. But they want to change the requirements and
the makeup and a lot of things about public housing to
basically eliminate trouble, rather than providing the
resources and the money to assist people to change their lives
and to be able to manage their lives and be given
opportunities. And we have some people who want to just
eliminate public housing altogether and maybe deal with the
Section 8 and scattered housing, and who just believe that
there should not be a public housing kind of footprint.
I support public housing. I support the upgrade of public
housing, money for renovation, repairs. But I also support
money for services. And I appreciate what you described to us
today and what you're doing. You certainly are innovative in
creating that center that you referred to. So some of us,
despite a growing call for almost getting rid of public
housing, some of us are supportive. And even when we are not so
sure, we know that some public housing in some cities would
like to renovate and to downsize, but we're going to insist,
for the time being, one-for-one replacement on all public
housing. We're going to do that because we are not going to go
down this road of getting rid of units.
You have heard described here today so passionately the
need for low-income housing. The Housing Trust Fund, yes, we
had $1 billion. We supported--Barney Frank has put his life on
the line for it, and we have passed it, I believe, in the
House. And we don't know what's wrong with the Senate, but the
Senate never can seem to get its act together. But, yes, we
intend to get that billion dollars. And, you're right, we
should have the goal of having a permanent funding Housing
Trust Fund for years to come, whether it's $5 billion or
whatever. That's an ideal, that's a goal that we would like to
reach, we would like to support. We worry about it when we have
more and more people crying about the deficit and talking about
cutbacks, but we're going to fight for not only the billion
that we have already passed out of the House, but we will
continue. Because, you're right, there is a need for low-income
housing that has never been met in my career, my time in public
service, and we have to continue to work for that.
Know your rights. I can remember, I guess in civics classes
when I was young, that there was a program called Know Your
Rights. And they always talked about how it's important for
people to pursue justice and how it was important to have
agencies that would assist people in knowing their rights. And
you're absolutely correct, we're not against the landlords. We
need landlords to provide housing. But we need landlords who
are fair and who will treat the tenants right and who will
invest in the properties. And sometimes the landlords forget
that they have lease contracts and arrangements, and they just
overlook that and they try and do whatever they want to do. We
have to make sure that we deal with this business of cutting
off utilities and pulling out the washing machines and all of
that stuff. But I'm so pleased about the work that you do in
helping to assist people with legal services.
For homelessness, we reauthorized the homeless program. And
one of the things we are focused on is permanent supportive
housing for the homeless. We want--and we will continue--I
think we put some money in to--we authorized money for
permanent supportive housing, and we're going to have to expand
on that. The idea that somehow homeless people cannot manage an
apartment or do not want permanent housing, they kind of lack
the way that--we have to get rid of those notions. And we have
to show that with supportive services, most of the homeless can
be put off the street, and you don't even need a transition
period. You can go right into permanent supportive housing, if
you have the services to go along with assisting people who
need some assistance. So we're going to work toward that end.
We have $1.8 billion--$1.5 billion we put into the stimulus
package, above and beyond what's in the budget, we have
additional money.
And so--the City that I come from is perhaps the homeless
capital of this country, and it is heartbreaking to walk
through downtown Los Angeles and see what is going on there.
And I'm committed to it, Congressman Ellison is certainly
committed to it, and we're going to do everything that we can
with this Administration to do what has not been done for far
too long. Thank you for dedicating your life to this work; we
really do appreciate it.
I want you to know, it was just today that someone, and I
forgot who it was, asked what were we going to do about tenant
ownership of some of these foreclosed properties. Who was it
that asked me that?
Mr. Dahl. (raises hand)
Chairwoman Waters. That was you who asked me that. What was
just described by Mr. Anderson, where the tenants were
abandoned and you were left in this property and all that you
described, I was just sitting here thinking, what can we do,
with the kind of proposal that you alluded to, that would
provide the opportunity for tenants to have taken over that
building and to own that property and manage that property?
There needs to be capital, there needs to be well-thought-
through programs about how you do it, but it's certainly,
certainly needed. So you have put that on our radar screen, and
we will do everything that we can to pursue examining those
possibilities. And thank you for just hanging in there. You
could have just said, well, let me just go on and try and find
some shelter to live in until--but you--you're pretty tough.
And so for those squatters, you can handle them. Yes, that's
going to be great.
And I'm appreciative for the testimony that you were able
to give about Section 8. I appreciate--well, first of all, you
frightened me, when you first started to talk, about being 31
years old with 2 children and without a job, and then further,
about the medical problems that you had. But you evidently are
in control, no matter what. And you have said, in so many ways,
to people, that they, too, can be in control, no matter how
difficult it gets. You have to pursue opportunities and stick
with it.
And I'm appreciative for the testimony that you gave for
Section 8. We need so much more. And the reauthorization, I
have asked for 150,000 more vouchers. That's just a drop in the
bucket, but we have to fight for that. And I think--did we get
that off the Floor? It's out of committee, but it's not off the
Floor yet. But we're going to fight, and I'll do anything I can
to try to increase that and keep increasing it. But we know how
important it is and how it certainly saves families.
Let me just say to all of our advocates and all of our
panel who have made their lives and their careers a part of
this housing struggle for all of our people all over the
country everywhere, I certainly appreciate you. I'm certainly
dedicated to the proposition that we can do a lot better than
we're doing, creating housing opportunities, maintaining
sustainable neighborhoods, utilizing and expanding resources
that make good sense, and we're going to keep working toward
that end. And I believe that we're going to be able to do more
under this Administration than has been done in many years, and
so just keep working with us. Keep working with us.
I like advocacy on the ground. I like people to act up a
bit and to make noise and to keep saying to their elected
officials, these are the things that you have to do. Because
politicians tend to get nervous around election time,
particularly when they talk about deficits and we can't spend
any more money and the government's getting too big and all of
that. You have to help back them down, and talk about our need
as a free and prosperous country to be able to supply a safety
net for the least of these. And so the more you act up, the
better we'll be. Thank you very much.
Congressman, please, please, go right ahead.
Mr. Ellison. Can we have another round of applause for our
chairwoman? My first question is for you, Mr. Anderson. When
did you first get notice that the building that you had just
rented a unit in was going to be under foreclosure?
Mr. Anderson. Actually, we signed the lease in November,
got laid off in January, and got a foreclosure notice in March.
And they sent the mail--I don't know if it was supposed to come
to us, but we got it addressed to the landlord. But we got two
foreclosure notices, first and second mortgage, at our address.
Mr. Ellison. So it was never sent to you? You were never
told directly, this building is in foreclosure?
Mr. Anderson. No--well, not until later on. But in the
mail, it came addressed to the landlord, the foreclosure. Even
the bankruptcy mail came to us. That's the only way we knew
what was going on, really, because she never contacted us again
after that.
Mr. Ellison. Well, I think there should be an affirmative
duty for somebody, perhaps the landlord, but somebody to tell
you as soon as they know.
Mr. Anderson. Right.
Mr. Ellison. I think that that's something that we might
want to start working on. Because it certainly would put you in
a better position pursuing this idea of, perhaps, tenant
ownership. You could, perhaps, get busy working on that the
earlier you know.
Mr. Anderson. Right.
Mr. Ellison. Let me also say that, Ms. Louden, I think your
point about investing, together with the point that Mr. Amos
made--Mr. Amos made the point that it's actually fiscally
responsible to prevent people from getting into the homeless
situation, because it costs more to get a person out of
homelessness than to prevent somebody from ever becoming
homeless. And then your point about investing in people. Here
you're going to--about to be a college graduate, significantly
increasing your earning potential. This program, which you
almost--it seems like it's just a blessing that you were able
to take advantage of.
Ms. Louden. Absolutely.
Mr. Ellison. How do you all respond to this? Do you think
that it is fiscally responsible and actually saves money and
actually increases wealth in our community by investing in
people, by keeping them in homes and avoiding homelessness?
Could you all--anybody on the panel address this issue? Ms.
McCorvey? And everybody is welcome to answer.
Ms. McCorvey. Absolutely. Absolutely. Because it's
providing a stable environment, not only for the parent or the
parents, it's also the environment for the children. The
children cannot prosper in chaos and confusion. Children need
to be stable, they need structure, they need to have a base,
like we all do. And so having the Public Housing Authority,
Section 8 or those kinds of programs be there for people, it's
critical. And I have built my life--spent my life with these
programs for over 30 years in various levels, and I have seen
how Section 8 and our public housing programs have not only
stabilized families, but also seniors and people who are
disabled. I know people who have had serious health problems
and felt that public housing allowed them to live for as long
as they had to live in dignity here. And they ended up dying,
but they were very grateful to have that dignified place to
live, where they didn't have to worry about their rent and
whatnot. So, yes, absolutely.
Mr. Ellison. Well, what about this issue--I know that Ms.
Louden has--go ahead?
Mr. Halbach. Just to add a quick note to that, I know it
was 4 to 5 years ago, there was a study of Minnesota's TANF
program, a welfare program. And one of the conclusions of the
study was that people who had stable housing did much better
economically than those that didn't. So in addition to what
Cora was saying, in terms of her experience, there is
documentation of that, at least in terms of recipients of TANF.
Mr. Ellison. Well, when you think about housing
instability, how does it--do any of you have any either
personal experience or secondary experience on how it impacts
children? I do know that--I'm not sure which one of you said
this, but I heard somebody say, about 4,700 people are homeless
and some major percentage of that are children.
Ms. McCorvey. 45 percent of those are children, yes, based
on the Wilder Research, yes.
Mr. Ellison. Now, Ms. Louden, you are a mom?
Ms. Louden. Yes.
Mr. Ellison. What are some of the challenges that a parent
might have when--for raising their kids, and how does it affect
the grades, how does it affect all these things, when a parent
is facing housing instability?
Ms. Louden. Yes, and moving. There should be--they do
thrive and grow on stability. It's--they have a place to call
home, they have their bedroom, whatever, their area. It's very
important. Getting them back and forth to school,
extracurricular activities, they have a routine, but they
always have that home to go to. And when we have moved and had
to move--I see, like, my oldest, she's nine. Now my five-year-
old's starting to come into it and notice what's going on. And,
like, my nine-year-old will start--she asks a lot of questions,
starts acting up and just kind of goofing off because there's
no stability. She doesn't know what we're doing from one day to
the next, so--
Mr. Ellison. And how do the kids--how does it affect the
kids? I am curious to know, maybe Mr. Amos can share, if a
child is living in a shelter, and they go to school, and the
other kids say, where do you live, how does that impact the
kids?
Mr. Amos. When I first started as a case manager, it bugged
me to death that--I heard one of the children say that, when we
were looking for housing, that they hated to be dropped off at
a shelter, coming from school, because the other kids would
tease them about where they lived, so they couldn't wait to get
out of there. And that just made me want to get them out of
there a lot faster. But now they have different buses that go
to the shelter and drop them off.
But there are studies that have shown that if a family is
homeless, if the parent is homeless for a long period of time,
that child will grow up to experience homelessness also. So we
don't want to start a pattern of homelessness within families.
We want it to be as short as possible, back in housing, and
stable as possible. As she said, having your own room, your own
toys, your own place to go to, is stability in life. We all
want that. And shelter should be a basic right.
Mr. Ellison. I guess my last question is for Mr. Ireland.
You ventured out into that unsafe water of race. And I was
going to say that I thought that was a courageous thing for you
to do. I think I can speak for people of color generally. When
we hear people who are White speak about systemic racism, it
makes us all feel a little bit better, because we know what's
going on. And when it's like--and it makes me feel like, look,
we're all Americans. Some have--we have different ethnic
backgrounds, but we're all Americans. And you really can't
totally maximize your resources as a society if one part of it
is sort of relegated to the side, because we're not getting
maximum production from that part because it's not fully
included. What do you think we should do, and how do you think
we might communicate the message of racial justice and
inclusion as we pursue this work?
Mr. Ireland. I think that any discussion of race,
particularly from some 6-foot White guy like me, has to be done
with humbleness and done very carefully. Because race is a
conversation, a discussion, about racial justice. And just the
historic draining of resources and assets and money from
communities of color, it's just something that has to be done
very carefully. But I think that it was--we just celebrated Dr.
King's day. And in his last book, ``Where Do We Go From Here,
Community or Chaos?'', he set out a structure for that
conversation to occur. I think that it would be in the best
interests of everybody to follow that structure. First, you
identify, where are we at right now? The second thing is that
you assert the dignity and worth of all people, and assert that
vigorously. And then you identify the structural impediments to
moving forward, and then you fight like hell, in a nonviolent
way.
And so, for that to occur, and with race underpinning and
being the unspoken issue in the financial crisis, in the
foreclosure crisis, you have people like Ann Coulter who blames
the Community Reinvestment Act for the financial crisis. So
you're stepping into a dangerous environment where a discussion
about race could, if done incorrectly, backfire. But I think it
has to be done, because that's going to inform how you target
the resources.
Because every initiative, it seems like, over the past 50,
75 years, you start out with the intention that you're going to
improve communities, improve neighborhoods, and then all of a
sudden those resources start getting split off, and the people
who are most in need of those resources, it doesn't quite get
to them. Somehow all of a sudden you're building a stadium or a
prison, instead of infill housing in North St. Louis or North
Minneapolis. And so those resources start being peeled off. So
as we talk about expanding Section 8 vouchers, as we talk about
expanding affordable housing tax credits, now we have the point
where we can do that--if we have that conversation about race,
we can target those, to make sure that affordable housing, low-
income housing, is put in communities where it's going to
provide that ladder. Leveraging mass transit, good schools,
located near jobs, all those goals that have been there all
along, but making sure that it happens.
Mr. Ellison. Well, I think it's important to be able to
discuss issues of race in a non-polarizing way that brings
people together, as opposed to just sending people into their
corners. And so I want to thank you for introducing that
important topic into this congressional hearing. Let me tell
you, it's not often that congressional hearings have that
element of the conversation brought up.
And so I just want to, again, give praise and honor and
thanks to you, Madam Chairwoman, and also all of our witnesses
who have testified so eloquently. I just want to remind people,
if they want to get something into the hearing record, I think
we can accommodate that. And this is a real congressional
hearing, just like one we have in Washington all the time.
Before I yield back, I'll hand the floor to Mr. Anderson.
Mr. Anderson. Well, since this is on the record, down here
on the ground, I really would like to see how we're going to
get jobs back into the community. From where I stand, if I
can't work, I can't eat, and I can't afford affordable housing.
And so laying off--I have never been laid off twice in one year
before, and it happens. And so I'm just saying, most of the
jobs that pay anything in the Twin Cities--I'm originally from
New York, but in the Twin Cities now, most of the jobs that pay
any kind of money, whether skilled or semi-skilled, are out.
Transportation is an issue, the weather's an issue, all of
that. But there was a time, when I first came here, where you
could practically walk to your job. The good paying jobs were
right in the community or close enough to it. Is there any
way--is that going to happen, infrastructure coming back,
monies, anything?
Mr. Ellison. Well, let me just tell you, it's funny,
because actually both Congresswoman Waters and I are very
focused on issues of jobs. And I can tell you that based on
my--what I hear in our democratic caucus meetings, that most
members of our caucus are very focused on jobs. We have the
Senate issue to overcome, but a lot of members really, really
want to see a jobs--we passed a jobs bill right before the
Christmas break. It included some extensions of unemployment
insurance, COBRA--COBRA, when you lose your healthcare, and
then--and some food stamps and then some infrastructure
investment.
Many of us are still focused on a jobs bill. We're trying
to figure out how to get the Senate to come along with it. But
I think we need--but jobs are our front strategy. I have told
more than one Member of Congress, if we don't figure out how to
get some jobs, we're going to be looking for them ourselves.
And let me just tell you this. I have a jobs bill that
calls for--we put $40 billion that would create 1 million full-
time jobs, with nondisplacement procedures, like prevailing
wage, stuff like that, together with an infrastructure
investment, because all the--not only do we need the jobs, but
we need the work done. Our roads and bridges are crumbling. You
all know, we could walk to 35W from here, where the bridge fell
down, Madam Chairwoman.
And so jobs are a key focus element. We want to put money
into State and local government, so that we can retain
essential city and county and State services, which you know
are being cut. And with the LGA cuts, they're really hurting
locally around here--39 States are facing a deficit right now,
and are cutting. So with that, I'm going to yield back to our
chairwoman. Thank you very much.
Chairwoman Waters. Thank you very much. As we wrap up, I
would like very much to thank all of our panelists for
participating in this hearing. We were not able to talk about
all of the public policy work that we're involved in.
In this conversation that was held just a moment ago about
race, we just had a hearing on a piece of legislation that was
initiated by Congressman Al Green, where he's asking now for
$20 million, and I'm suggesting that he increases it to $50
million, for what is known as the PIP program. This is a
program, fair housing program, where the testers go out. And I
was kind of surprised to discover, in that discussion, that
there are many cities that don't even have this at all. So
we're going to increase that. We'll get that legislation passed
out of our committee.
In addition to that, we're going to talk about appreciation
for Secretary Donovan. St. Bernard Parish down in New Orleans
had developed local laws to prevent multifamily housing,
because they didn't want those people in their neighborhood.
And it had gone into court and to the court system, and the
courts had ruled against them, but they defied the court.
Secretary Donovan came in and said, you're not going to get any
Federal money unless you change these local laws. And so they
began to understand that they have to eliminate those laws,
reverse themselves, in order to get any Federal money to have
in their parish at all. So sometimes it doesn't take
legislation or litigation, it just takes a person with the
power to exercise it. And I'm very appreciative about the way
that Secretary Donovan is moving in that way.
And another little story is this. As you know, there was a
lawsuit that was filed against Wells Fargo, because they were
accused of targeting minority neighborhoods in the subprime
meltdown. I think the NAACP Legal Defense Fund and some others
were involved in that. They didn't win. But I called the CEO of
Wells Fargo, Mr. Stumpf, to talk to him about the lawsuit. And
he seemed very humble, and he said, yes, but they were going to
do more. He said, I remember you told me that we weren't doing
well in these loan modifications, and I need to get our
servicers on the ground, I need to get more storefront
operations, I need to be available to the people. He says, I'm
going to do that. He said, I think that we can do more. And so
I was appreciative to hear the CEO, even though they won that
lawsuit, really in many ways acknowledge that they needed to do
better.
So we are all working on some of these issues. And as you
said, the discussion must take place. And those of us who have
the power to do something constructive about these issues, must
use their power to do so. So I want to thank you all for the
issues that you have brought up today.
And I'm reminded by my staff that the memorandum that you
just gave me about what Chairman Barney Frank wanted to do on
preservation in relationship to the first refusal memorandum,
there's more going on than I knew about. Right of first
purchase, it seems that Barney Frank is now in the process of
trying to work out how to put it in his preservation bill. And
it's not easy, because we have a lot of the owners of
multifamily properties who threaten to drop their support of
preservation if the right of first purchase is in.
Now I want you to know that sometimes the wheels of
progress move very slowly. And when you're moving something
like preservation, which is extremely important, and you have
the support of the multifamily owners, that's good support. But
when you start to lose that support, it threatens the
legislation, and sometimes it takes time to keep working on it,
and it may have to go beyond, certainly, this legislative
session. But it is on the radar of Barney Frank, and we will
talk with him about it when we get back. Thank you all so very
much for your participation.
Also, the Chair notes that there may be additional
questions for this panel, which we will submit in writing. And
without objection, the hearing record will remain open for 30
days, so that we will be able to submit written questions to
these witnesses, and place their responses in the record, and
this panel is now dismissed.
Before we adjourn, however, I'm told the written statements
will be made a part of the record of this hearing. We have some
written statements we're going to insert, from the City of
Lakes Community Land Trust and Mr. Robert Roedell. We will make
sure that their statements are included in the record.
Thank you all so very much, and this panel is dismissed and
the hearing is adjourned. Thank you.
[Whereupon, at 3:10 p.m., the hearing was adjourned.]
A P P E N D I X
January 23, 2010
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