Friday News Round-Up


It’s finally Friday, and this week’s been jam-packed with exciting housing-related news!

1. This week, the Furman Center released the 2012 edition of the “State of NYC Housing & Neighborhoods.” The findings are dismal: Between 2007  and 2011, median incomes significantly decreased while rents rose.  Over 1/3 of the city’s residents are spending over half their income on paying the rent. To read the full report- including detailed data about the impacts of post-recession NY on the built environment, homeowners, renters, and the City’s demographics, click here

2. On Monday, the Tenant PAC endorsed Public Advocate Bill de Blasio for Mayor.  According to the PAC (as reported by the Gothamist):

Bill de Blasio gets our endorsement for his commitment (in his words) to “re-set the agenda” for a genuine progressive city government, to “de-program the Bloomberg years”; for his opposition to privatization and to government as a handmaiden to private profit takers; for his support for mandatory inclusionary zoning requiring developers to include affordable apartments in all new buildings; and for addressing the economic inequality that is driving more New Yorkers into hardship and poverty.

4. Richmond, CA is the first city in the country to use the power of eminent domain to address the foreclosure crisis. In a move that’s being opposed by banks, cities across the country are working to buy up mortgages in bulk to reduce homeowner’s debt and reduce the risk of foreclosure and displacement. In Richmond, a city of mostly black and Hispanic residents, nearly half of homeowners with mortgages are experiencing trouble with their mortgages.  To read more about this exciting program, click here

5. This week, fast food workers went on strike in 7 cities for the right to unionize and for living wages.  Terrance Wise, a fast food worker at both Burger King and Pizza Hut in Kansas City was interviewed today on Democracy Now.  He asks:

What else do we have to lose? We are already slowly dying in our day to day lives…So why not speak up, and stand up, and let the nation know that we are suffering? This is this is really a cry for help. This great nation should not turn its back on working class people that need help.

The way we see it, this campaign for living wages and the right to organize are extremely relevant to our work in tenant organizing. Housing is unaffordable because rents are high but also because wages are low.  If people are struggling to both buy food and pay the rent while working full time, something is clearly wrong.  Stay tuned for more from us on this in the next few weeks! And to continue following this exiting campaign, visit Fast Food Forward’s website

Have a great weekend!


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.