The Surreal Estate

Perspectives on Tenant Organizing from the Urban Homesteading Assistance Board

Tag Archives: Housing Crisis

How to Address Increasing Homelessness? Recapture Vacant Land

In January 2012, Picture the Homeless released a report, “Banking on Vacancy,” to document vacant property in New York City and make suggestions as to how that space can be used to reduce homelessness and increase low income housing. During this time, 38,000 people were living in city shelters. Here are their findings:

The numbers show that there was a massive amount of under-utilized housing stock in New York City. So much, in fact,that the vacant spaces in just one-third of the city (the area their survey covered) could house the number of people living in the shelter system many times over.

Since the survey was conducted, the need to recapture vacant buildings and land for affordable housing has only intensified. In August, the Bloomberg administration reported that nearly 50,000 people are spending the night in New York City shelters. This is almost a 10% increase in the number of recorded homeless people – the actual number is likely much higher, as un-housed people seeking shelter with family, friends, or spending the night outside are not recorded. In the wake of this increase, the Department of Homeless Services rushed to open nine new shelters in just two months.

The problem deepens: In a joint press conference with Cuomo on November 4th, Bloomberg emphasized the major housing crisis that left in Sandy’s wake. According to Bloomberg, there are as many as 40,000 New Yorkers that “we’re going to have to find housing for.” The Governor agreed: “There’s going to be a massive, massive housing problem.”

Now, more than ever, seems like an ideal time to return to Picture the Homeless’ survey. The unprecedented number of shelter-seeking people in New York, along with a possible influx of federal disaster relief money, calls for innovative housing solutions. By directing disaster relief money towards rehabilitating vacant property, we could provide housing to victims of Sandy – many of whom are NYCHA residents – while stabilizing long term affordable housing in New York City.

 

It’s Time To Talk about Housing

The broad topic of last night’s debate was “domestic issues,” so if presidential candidates were ever going to engage with one another on housing, last night was the night. But they didn’t. Obama mentioned the word “housing” once last night (it’s on its way back), and Mitt Romney said it twice (government regulations are hurting it; he wants it to come back.) While there was some discussion around financial regulation and Dodd Frank, the word “foreclosure” was not uttered once by either candidate. Neither was Fannie Mae, or Freddie Mac. (You can double check all of this at the Washington Post’s transcript of the debate.)

From this lack of discussion we can conclude one of two things. Either the housing crisis is over, or neither candidate is ready to propose a bold, new idea to reform the housing market and support families facing foreclosure.

It’s definitely the first option. The housing crisis is over! Congratulations everyone.

Just kidding. According to RealtyTrac the number of new foreclosures crept up in August, 2012. And the number of homeowners who have received successful mortgage modifications has decreased significantly since 2010. The housing crisis isn’t over, and judging by the way the candidates seem afraid to come near the issue, we’re not even close.

Jed Kolko of Trulia wrote for Business Insider that the best indication of a housing recovery is a market recovery, and so perhaps by focusing on the economy, the candidates CAN improve housing. Maybe. But housing is also a issue of human rights, and when millions of Americans are on the verge of losing their homes (or have already lost it) it also needs to be addressed as problem of providing shelter and immediate assistance.

As our blog has already noted, a market recovery without real protections from the pre-2008 manic borrowing climate is dangerous and can only be temporary. President Obama seems to believe that Dodd Frank will prevent loan officers from offering faulty products to homeowners who were “borrowing money to pay for homes they couldn’t afford,” and we hope he’s right. But he hasn’t proposed an idea about how to keep homes affordable as a market recovery drives the price of housing up. Neither has his challenger.

We believe housing is a human right, one that is increasingly difficult to secure in this country. Last month, Alen Jenkins at Rooflines published an open letter to the presidential candidates from the Home for Good coalition. It says:

We are calling on our political, business, and civic leaders, including our next president, for bold action to stop needless foreclosures, expand affordable rental housing, and revive a sustainable path to homeownership.

Neither Barack Obama or Mitt Romney were willing or able to offer us that last night.

It’s Time to Talk About Housing

Photo via the Center for American Progress

The Center for American Progress has released a brief on the state of the housing market and the comparatively pitiful amount of attention the persistent crisis in housing has received in the presidential election. Barack Obama is relatively silent when it comes to the persistent housing crisis, and Mitt Romney’s only vague policy recommendation is to obliterate HUD. In the brief, authors John Griffith, Julia Gordon and David Sanchez lay out seven essential questions that presidential candidates should be able to answer about housing in the United States. (Whether or not they will be able to do so is a different matter.)

Housing is of the utmost importance to Americans and should be important in this election cycle. As the foreclosure crisis persists, expounded by a crisis of unemployment, we must call upon our presidential candidates to provide real, substantive policy recommendations to revitalizing and reforming a basic human necessity: safe shelter.

Written by John Griffith, Julia Gordon, and David Sanchez for the Center for American Progress.

The ongoing housing crisis remains one of the biggest drags on our economic recovery. But less than three months before a presidential election viewed by many as a referendum on the economy, housing is little more than a side conversation on the campaign trail.

President Barack Obama has barely mentioned housing in recent months, aside from occasional pitches for reforms to help more homeowners refinance. Presumptive Republican nominee Mitt Romney’s 59-point economic plan unveiled last year makes only a couple passing references to housing, and Gov. Romney is yet to release any substantive housing proposals since.

This brief lays out seven essential questions the presidential candidates need to answer on housing, including:

  1. What will you do to prevent more unnecessary foreclosures and keep more families in their homes?
  2. How will you address the problem of “underwater” mortgages?
  3. How will you revitalize communities already hit hard by the foreclosure crisis?
  4. How will you meet the pressing need for affordable rental housing?
  5. What will you do to ensure that working and middle class families can achieve homeownership in the future?
  6. What do you plan to do with the government backed mortgage giants, Fannie Mae and Freddie Mac, and what will take their place in the mortgage market of the future?
  7. How do you plan to protect households from predatory lending and discrimination in the U.S. mortgage market?

Read the report here.

California Investors Experiment with Eminent Domain to Solve the Housing Crisis

A few days ago, MSNBC reported on a partnership between Mortgage Resolution Partners (MRP) and several California local governments that would aide in the solution of the persistent housing crisis. San Bernardino and its neighboring cities have set up a joint authority that would use the power of eminent domain to forcibly purchase distressed mortgages. Rather than evict homeowners through foreclosure, the public-private entity would offer residents fresh mortgages with reduced debts. Tom Braithwaite, who also covered this story for The Financial Times writes,

If rolled out nationwide, the biggest losers could be the largest US banks, who hold loans on their books at more than their current face value. People involved with the plan believe it could be disastrous for big mortgage lenders like Bank of America.

MRP is paying for the program by soliciting institutional investors, who will be repaid when local governments re-sell the modified loans to long term lenders. The first targeted group of loans for the program is made up of 5,000 mortgages with debts totaling near $740M. Because they are buying in bulk, we speculate that local governments will likely be able to purchase mortgages for deep discounts that they will then be able to pass on to individual homeowners. This is a creative means of intervening in the foreclosure crisis by allowing a local government to work as an interim note holder (ahem, interim facility) to stabilize financially distressed housing stock.

The program has not yet been given the green light, and there is plenty of reason to suspect it might not get off the ground. Bank of America and other large mortgage lenders are powerful lobbyists. And the use of eminent domain is endlessly controversial in the United States, where we tend to be sensitive to government encroaching on our near-sacred right of property ownership.

But as controversial as it is, the practice of forcibly taking over distressed properties is embedded into the history of New York City affordable housing.  It is through eminent domain law that many cities, including New York, were able to carry out the large scale “slum clearance” programs that characterized urban renewal era housing. It is also is typically used to clear land for large scale public works projects — if you read yesterday’s post, Atlantic Yards and Willet’s Point are both examples of this.

New York City has also directed a takeover of distressed housing without invoking eminent domain law at all, through the Third Party Transfer program. Third Party Transfer allows the city to foreclose on outstanding property taxes and subsequently transfer title of tax delinquent residential properties to responsible developers (or building residents themselves.)

All in all, we believe that there is great opportunity in New York City for a program similar to that being implemented in California. Much of the infrastructure is already in place, including the quasi-public non-profit Neighborhood Restore that administers TPT and would be a logical body to run a mortgage program such as this.  Of course, it would look different in our world: mortgage modifications would be intended for new, responsible developers rather than the original owners. But the California model is an exciting idea that could potentially stabilize massive amounts of housing stock for struggling homeowners. We’re excited to watch it play out – and, hopefully, to bring something similar here.

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