The Shriver Brief : Poverty Law Commentary & Insights : Sargent Shriver National Center on Poverty Law : Affordable Housing, Healthcare Reform

Around the country, advocates for low-income Americans are incorporating international human rights norms into their daily work. This spring, in both Illinois and California, advocates for homeless people are on the verge of having their elected representatives pass legislation that would guarantee homeless people certain basic rights. These efforts are part of a positive recent trend. Last summer, Rhode Island became the first state to clearly define homeless people’s rights through the passage of a homeless bill of rights. The state legislatures in Vermont, Oregon, Connecticut, and Missouri have also introduced bills to protect homeless residents’ rights. 

Last week, the Illinois House passed the Bill of Rights for the Homeless. Advocated for by the Chicago Coalition for the Homeless (and supported by the Shriver Center), the bill would “protect people who experience the loss of housing from discrimination by creating a list of basic rights. These rights include the right to maintain gainful employment, to access emergency medical care, to access public spaces and transit systems, the right to privacy of personal property, records, and information, and the right to vote on the same basis as others.” Notably, under the terms of the Illinois bill, these rights could not be denied because of housing status; if they were violated because someone was homeless, that person could sue for damages.

California’s Homeless Person’s Bill of Rights and Fairness Act, formally known as Assembly Bill 5, recently passed an important committee hearing and moved one step closer to a final vote.  Although it targets the same problem as the Illinois legislation, the California bill differs from the Illinois bill in many respects. The California bill is significantly longer than the Illinois legislation and contains protections for people who assist homeless citizens. The California bill also requires local law enforcement agencies to provide information to the attorney general and the public about their enforcement of ordinances against homeless persons and compliance with the act. Under the California bill, the California Department of Public Health would be required to create “health and hygiene centers” for homeless residents. Like the Illinois bill, the California bill would allow civil suits and damages for people whose rights are violated.

As Greg Kaufman observes in his blog at The Nation, it would be particularly meaningful for California’s homeless population to have a clear statement of their rights. In California, Kaufman writes, “[t]here are now approximately 160,000 men, women and children who experience homelessness … on a daily basis, about 20 percent of the nation’s total homeless population. The state ranks second worst in the number of homeless children, and third worst in the percentage of children who are homeless.” 

Bills of rights for the homeless have opponents, however. The California Chamber of Commerce labeled the California bill a “job killer” because it supposedly imposes “costly and unreasonable mandates on employers.” Other Californians are concerned about how much the health and hygiene centers could cost, and the time and money that law enforcement would need to devote to the bill’s reporting requirements. In Illinois, by contrast, criticism of the Bill of Rights for the Homeless focused on the supposed potential for voter fraud.

Both the Illinois bill and the California bill are still moving through their state legislatures. The California bill is scheduled to go before the Appropriations Committee shortly, and the Illinois bill has been returned to the Illinois Senate for a vote on an amendment. Even if the bills pass, their supporters’ work will not end. As the Rhode Island Coalition for the Homeless observed:

“The Homeless Bill of Rights hasn’t changed conditions overnight. Ensuring that agencies are complying with the new rules is difficult. Committees have been established to ensure that the law is implemented, but of course, law or no law, harassment and discrimination continue.”

No matter what happens to the Illinois and California bills, however, they have prompted legislators to give serious consideration to the issues facing homeless people—and to use human rights language when doing so. As the Illinois bill recognizes in its statement of legislative intent:

“[N]o person should suffer unnecessarily from cold or hunger, be deprived of shelter or the basic rights incident to shelter, or be subject to unfair discrimination based on his or her homeless status. At the present time, many persons have been rendered homeless as a result of economic hardship, a severe shortage of safe and affordable housing, and a shrinking social safety net.”

To learn more about how you and your colleagues can use human rights principles in your work, consult Clearinghouse Review’s 2011 special issue, Human Rights: A New (and Old) Way to Secure Justice.

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When travelers recently felt the sting of airline delays due to sequestration, Congress quickly acted to provide additional money for air traffic controllers. As more cuts are rolled out over the next few months, a cadre of interest groups will press to restore funding to various federal programs. One group that needs Congress’ attention and action right now: the millions of low-income families who rely upon federal housing assistance to keep a stable roof over their heads and are being threatened with losing access to these funds. If Congress does not act, deep cuts to federal housing programs will do more than just delay a vacation or business trip—they will push thousands of families into needless homelessness. And these cuts will encourage private property owners who participate in these programs to take a pass the next time they are offered a chance to help house the nation’s poor. 

The Housing Choice Voucher program, which gives low-income individuals and families a subsidy they can use to afford housing in the private market, is the dominant source of federal housing assistance for the nation’s poorest households. Because of sequestration, however, housing authorities across the country already have been forced to stop issuing newly available vouchers to households on their waiting lists—many of whom have been awaiting this help for years—and are even taking vouchers back from the households that were most recently given assistance. It is estimated that by the beginning of next year approximately 140,000 fewer households will be using vouchers to access affordable housing. 

Without this assistance to keep housing costs stable and at an affordable level, low-income households will face an ever-present risk of eviction. Families will be forced to double up with other households, or will wind up in shelters. Children who are forced to change schools will fall behind. Parents who lose access to public transportation will lose jobs. Both physical and mental health will suffer for the whole household. Family members will be separated as they struggle to find a way to stay off the streets. And those families who do manage to find a way to keep their homes will have to sacrifice other necessities such as utilities, food, and medicine.

The nation’s public housing resources are also threatened by the impact of sequestration. Cuts to the public housing operating and capital funds will mean the further deterioration of a housing stock that is already experiencing a severe backlog in addressing capital needs. At some point deferred maintenance cannot be undone, and we will lose these housing units dedicated to serving low-income individuals and families forever. Sequestration is doing long-term damage to our ability to meet the need for low-income housing—a need that already outpaces the assistance that is available by more than 8 million households.

Even as sequestration pushes more low-income families who rely on housing assistance toward homelessness, it will also deprive local communities of the homeless assistance funds that they use to keep people housed in times of crisis and to move families from shelters into permanent housing.

Furloughs of our nation’s civil servants will be tough to be sure, but homelessness creates far greater burdens—not just for the families that experience it, but also for the communities where they live. The debate over sequestration needs to address restoration of funding for the rental assistance programs that keep millions of Americans in stable housing.

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On October 15, a landmark lawsuit was filed in the United States District Court for the Southern District of New York against Morgan Stanley for facilitating the production of risky loans that targeted African-American borrowers. The suit, which was filed by the American Civil Liberties Union (ACLU), the ACLU of Michigan, the National Consumer Law Center, and San Francisco-based law firm Lieff Cabraser Heimann & Bernstein on behalf of five Detroit residents and the nonprofit legal aid organization Michigan Legal Services, is unique for two reasons. First, according to the ACLU, the suit is the first to connect racial discrimination to the bundling of mortgage-backed securities. Second, unlike previous lawsuits where the named defendants were subprime lenders that originated the loans, this is the first lawsuit where victims of the subprime lending crisis have sought to hold an investment firm accountable for its role in providing a subprime lender strong incentives to originate risky mortgages.

Specifically, the three-count suit alleges that Morgan Stanley violated the federal Fair Housing Act (prohibiting discrimination in housing transactions and unfair lending practices), the Equal Credit Opportunity Act (banning discrimination for credit transactions such as mortgages loans), and the Michigan Elliott-Larsen Civil Rights Act (prohibiting discrimination in making or purchasing of loans secured by residential real estate). Plaintiffs contend that Morgan Stanley was the principal financer for the now bankrupt New Century Mortgage Company, providing the funding that enabled New Century to make mortgage loans to borrowers located in Detroit’s African American communities. Morgan Stanley then “dictated” the types of loans that New Century issued by requiring that a substantial percentage of New Century’s loans bear a combination of high-risk terms (e.g., adjustable interest rates that increase significantly after an initial year of low interest rates and prepayment penalties), effectively placing borrowers at an elevated risk of default and foreclosure. Plaintiffs further allege that Morgan Stanley encouraged New Century to abandon standard fair lending practices that focus on whether borrowers can meet their obligations under the terms of the mortgages and, instead, focused solely whether the loans New Century originated could be processed and sold as securities. The complaint also states that an African American borrower was 70% more likely to obtain a high-cost loan from New Century than a white borrower. 

Although the case concerns lending abuses in Detroit, these practices were common among financial institutions and had a disproportionally adverse affect on Latino and African American borrowers across the country. In this past year alone, the Department of Justice has successfully negotiated residential fair lending settlements against Countrywide Financial (now a subsidiary of Bank of America) and Wells Fargo for African American and Hispanic minority borrowers who were steered into subprime mortgages or who paid higher fees and rates than white borrowers because of their race or national origin.

Morgan Stanley has issued a statement that it will defend itself "vigorously" against the lawsuit. If successful, however, this suit could introduce a new avenue of justice aimed at holding investment institutions accountable for their role in helping to craft the lending policies that resulted in the subprime mortgage crisis.

This blog post was coauthored by Stephanie Patterson.

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America has long been experiencing a growing racial wealth gap, however, the 2008 recession and mortgage crisis widened the gap.   

Household wealth is the sum of assets such as a home, car, savings, stocks, etc., minus the sum of debt. The Federal Reserve has released an analysis of U.S. family finances that showed that racial and ethnic minorities lost about a third of their net worth from 2007 to 2010. Overall, median family worth dropped from $126,400 to $77,300 in just four years, and medium income dropped 7.7%. This dramatically unbalanced wealth disparity is the largest since the government began collecting and documenting the data over 25 years ago. The racial wealth gap is twice the size it was 20 years before the 2008 recession.

A recent Pew research study explains that decreasing home values are the main cause for the decline of household wealth among minorities, hitting Hispanic and black families the hardest. The Pew study also showed that homeownership rates are highest for whites and lowest for blacks; in between are Hispanics, who experienced the greatest decline in the homeownership rate, from 51% to 2005 to 47% in 2009. A leading cause of the decline in homeownership was the foreclosure crisis.   

During the housing boom, there seemed to be loans for anyone who wanted them, but for some these loans came at a high cost. The boom enabled a boost in homeownership in minority neighborhoods because of the availability of risky loans at high interest rates. As the bubble burst, borrowers defaulted on these loans, and home prices fell at record rates. Investigations into the cause of the housing collapse revealed that many mortgage companies were discriminating against minority borrowers or otherwise engaging in suspect practices. SunTrust, for instance, was sued for charging African American and Latino borrowers significantly more than white borrowers with similar credit backgrounds for loans in Atlanta. The judge in that case called the lender's actions a “racial surtax.”

The recession also had a trickledown effect on other important aspects of families’ financial health, especially their credit scores. A foreclosure can remain on a credit report for up to seven years and drop a credit score by 86-160 points leaving a lasting scar on one’s financial well being. A low credit score, in turn, can limit a person’s ability to get a job and increase the interest rates one pays for loan products. According to FICO, nearly 50 million people saw their scores drop more than 20 points at the height of the financial crisis, and over 15 million people’s scores dropped 50 points in 2010-11. A low credit score due to a subprime mortgage, foreclosure, or the inability to pay bills on time can prevent one’s achievement of the American Dream, which, for minorities, was once a reality but is now out of reach. 

Read more about the growing racial wealth gap in Clearinghouse Review: Journal of Poverty Law and Policy. 

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For over a year, three minor criminal offenses have kept Ms. K – a single working woman with mental health disabilities – out of housing that would otherwise bring her closer to both her daughter and free transportation to work.  Considering that her most recent offense – theft of a library book – took place over four years ago, it is no wonder that Ms. K’s employer entrusts her to handle confidential financial documents. And yet, her criminal record remains a relentless obstacle to federally subsidized housing.  

To help people like Ms. K, the U.S. Department of Housing and Urban Development (HUD) has taken the first steps toward what advocates hope will be a long-term plan to increase housing access for people with criminal records.  In two letters issued over the past year (one last June and the other last month), HUD Secretary Shaun Donovan reminded public housing authorities and project owners of the discretion they have to admit people with criminal records in the federally subsidized housing programs.  Contrary to popular belief, a person is not barred from these programs simply because of a past criminal record.  Rather, as Secretary Donovan recognized, “people who have paid their debt to society deserve the opportunity to become productive citizens and caring parents, to set the past aside and embrace the future.”   

These reminders are sorely needed, as the Shriver Center’s “When Discretion Means Denial” report has shown. For example, more than half of the written admissions policies in Illinois gloss over the fact that applicants could—and in some cases, have the right to—present mitigating circumstances after being denied based on criminal history. Additionally, PHAs and project owners do not consistently follow HUD regulations requiring them to consider the time and nature of a public housing applicant’s conduct.  

Noting that upwards of seven and half a million people leave prisons or jails in the United States each year, Secretary Donovan acknowledged that many intend to return to their families, some of whom reside in federally subsidized housing.  Policies that ban people with criminal records from these housing programs not only prevent family reunification, but they also put people at greater risk of recidivating, thus straining the community.

To prevent these results, Secretary Donovan urged PHAs and project owners to engage in thoughtful consideration of various factors. In particular, he noted, these housing providers should “seek a balance between allowing ex-offenders to reunite with families that live in HUD subsidized housing, and ensuring the safety of all residents.”  

To make this type of balancing a reality, however, HUD needs more than a strongly worded letter. HUD should take active steps to ensure that discretion does not become synonymous with denial.  For instance, PHAs and project owners need specific guidance on the limited value of relying on arrest records or unreasonably long look-back periods. This is especially important considering the significant risk that use of these screening devices violates the Fair Housing Act because of their disparate impact on minority applicants.  Without additional affirmative steps, hard-working people like Ms. K will not be able to access the housing they need to pull themselves away from their past and out of poverty.

This post was coauthored by Shannon Flaherty.

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The Department of Justice (DOJ) ended 2011 with a bang, reaching an enormous $335 million fair-lending settlement with Countrywide Financial Corporation and its subsidiaries. The record-setting settlement secures relief for more than 200,000 African American and Hispanic borrowers who were more often steered into subprime mortgage loans or were charged higher fees than were white borrowers with similar credit profiles. The proposed consent order of December 21 resolves DOJ’s claims that Countrywide’s lending practices during the housing boom of 2004–2008 violated both the Fair Housing Act and the Equal Credit Opportunity Act.

The Equal Credit Opportunity Act (ECOA) prohibits discrimination in every phase of a credit transaction such as a mortgage loan. When creditors discriminate on the basis of race, ethnicity, marital status, or another protected class, they subject themselves to civil liability for actual and punitive damages. Private citizens can bring ECOA claims, as can several authorized government agencies such as the Department of Justice and the new Consumer Financial Protection Bureau. ECOA has been on the books since 1974, but its enforcement has been minimal. The foreclosure crisis and its disproportionate impact on minority groups, however, have renewed public interest in fair-lending laws such as ECOA—and given DOJ’s landmark discrimination settlement, this revived focus has come none-too-soon.

ECOA is valuable for more than just compensating victims of discriminatory lending, as was accomplished by DOJ. Many people who were unfairly steered into subprime mortgages ultimately found themselves facing foreclosure. In the current issue of Clearinghouse Review: Journal of Poverty Law and Policy, Jennifer D. Newton and Tamara St. Hilaire of Florida Legal Services explain how advocates can use ECOA to challenge and prevent such foreclosures. The authors explain that borrowers, depending on where they live, may file a lawsuit under ECOA to prevent a foreclosure or, if a foreclosure case is already underway, may countersue under ECOA or use it as a defense against the foreclosure action. Plaintiffs may prove discrimination with direct evidence of discriminatory intent. Most courts also allow plaintiffs to meet their burden of proof with circumstantial evidence of disparate treatment or impact.

When courts allow disparate impact claims under ECOA, they look to fair housing discrimination cases for guidance. The U.S. Supreme Court will also be looking at disparate impact claims under the Fair Housing Act (FHA) later this year when it decides Magner v. Gallagher, which is scheduled for oral argument on February 29. Specifically, the Court will decide whether disparate impact claims are cognizable at all under FHA and, if so, how they should be analyzed. The outcome of Magner will likely affect how courts view disparate impact claims brought under ECOA as well.

In the meantime, the Justice Department will be appointing an independent administrator to identify victims of Countrywide’s discriminatory lending who are entitled to compensation as a result of the settlement. Those who believe they were discriminated against by Countrywide and have questions about the settlement may contact the Department at countrywide.settlement@usdoj.gov. 

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With a penchant for equating criminal activity with the participants of various anti-poverty programs, it’s not surprising James Bovard recently took aim at one of the most important federally-assisted housing programs—the Section 8 “Housing Choice Voucher” program. Bovard’s August 17, 2011 Wall Street Journal piece “Raising Hell in Subsidized Housing” blames the Section 8 housing subsidy program for increased crime, allowing criminal-minded Section 8 tenants to stave off evictions by falsifying claims of domestic violence, and, oh yes, argues that the Obama Administration is responsible for the alleged failings of this more-than-40-year-old, Republican-created program. 

Bovard’s blaming of Housing Choice Voucher holders for the rise in crime in their communities is not unlike Hanna Rosin’s widely discredited 2008 American Murder Mystery piece in the Atlantic Monthly. Like Bovard, Rosin’s claim of a link between crime and voucher participants made dangerous assumptions and stereotypes about program participants. Both writers also conveniently avoided reviewing empirical research to support their claims of a Section 8 to crime connection. Indeed, a new study commissioned by HUD found that Section 8 Housing Choice Vouchers do not bring crime when they move to a new community.

In reality, the Section 8 housing subsidy programs provides 2 million low-income Americans with a chance to afford their housing, find new opportunities, and escape poverty. Rigorous admission screening practices and lease compliance laws make participants some of the most scrutinized tenants in the country. 

In this era of debt ceilings and super committees, Bovard’s rant might help rally budget hawks to push for the end to this program. Even without Bovard’s allegations gaining traction, the federal assisted housing programs are part of a package of discretionary spending programs that could face draconian budget cuts totaling $1.2 trillion beginning in 2013 should the super committee fail to reach agreement.  With cuts that significant, low-income Americans who rely upon Section 8 programs to make their housing affordable could actually lose their housing subsidies. These households would then join the millions of families across the country who are considered “housing burdened”—paying up to 100% of their income towards rent, and being forced to choose between utilities, food, transportation, and medicine in order to stay housed. Worse still, they would join the ranks of the homeless. So that’s the real danger here—not some mob of people with Section 8 subsidies wreaking havoc on a community—but pushing law-biding low-income Americans into even deeper poverty.

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When the Secretary of U.S. Housing and Urban Development (HUD) recently urged public housing authorities (PHAs) to use their discretion to admit applicants with past arrest and conviction records rather than simply exclude them from subsidized housing, we wondered: what happens when discretion means denial?

In a report entitled “When Discretion Means Denial: The Use of Criminal Records to Deny Low-Income People Access to Federally-Subsidized Housing in Illinois,” the Shriver Center reviewed the criminal records policies of nearly all the public housing and Housing Choice Voucher programs in the state as well as over 100 properties participating in the project-based Section 8 program. Concentrating on areas where HUD give PHAs discretion to admit applicants with criminal records, the report identifies four areas where PHAs and project owners are most likely to abuse their discretion. The report also urges HUD to align its programs with its “belie[f] in the importance of second chances” by taking affirmative steps toward ending each of these abusive practices.

Many PHAs and project owners fail to set reasonable limits on how far back to look when considering an applicant’s criminal history.  Even though federal law requires PHAs and project owners to narrow their inquiries to criminal activity that occurred during a “reasonable time” before screening takes place, many admissions policies often give them license to look back as far as they want.  These policies often:

• Have no time limits and simply deny admission to applicants who have certain types of criminal history in their backgrounds.  Without a specific look-back period as a guide, many applicants with criminal records do not bother applying.
  
• Impose permanent bans on people who have been convicted of certain criminal activity. Given that the federal government has chosen to impose permanent bans in only two narrowly tailored instances, however, permanent bans in federally assisted housing should be sparsely used in only the most compelling circumstances.
  
• Use excessively long look-back periods, which essentially function as permanent bans. In two particularly egregious cases, the written admissions policies actually allow owners look back 99 years and 200 years, sending a strong message to people with criminal records—and their families—that they are not welcome in federally subsidized housing.
  
• Rely on minimum look-back periods rather than engage in the usual practice of setting maximum look-back periods. As a result, applicants are deprived of any notice of how long their criminal records will prevent them from accessing federally-assisted housing.

PHAs often rely on arrests as sufficient proof of criminal activity, even where the charges were ultimately dismissed and the arrests never led to convictions. Federal law allows PHAs to deny admission to applicants who have engaged in “criminal activity.” But instead of determining whether criminal activity actually occurred, many PHAs substitute a criminal arrest for criminal activity. This administrative shortcut often deprives people of housing when no wrongdoing may have ever taken place.  Moreover, its effect on reducing crime is questionable. What is certain, however, is that arrest record screening impedes the fair housing choice of racial minorities disproportionately represented in the criminal justice system and therefore highly suspect under the federal Fair Housing Act.

What do these policies look like? About one out of every ten public housing programs in Illinois define “criminal activity” simply by the number of arrests on a person’s criminal record, even if no conviction resulted. The Housing Authority of Edgar County and Massac County Housing Authority, for example, go so far as to deny public housing applicants for a single arrest within the past decade.

More common are PHAs that consider arrests as evidence of criminal activity. Although about half of these admissions policies add that “a conviction for drug-related or violent criminal activity will be given more weight than an arrest for such activity,” the authority to deny admission on the basis of mere arrests remains. As a result, these PHAs are susceptible to violating their duty not to discrimination and their duty to affirmatively further fair housing under the Fair Housing Act. 

Some PHAs and project owners use categories of criminal activity so vague that neither applicants nor administrators fully understand how to apply these standards. Admissions policies usually refer to the three types of criminal activity listed in HUD regulations: drug-related criminal activity, violent criminal activity, and other criminal activity that threatens the health, safety, and right to peaceful enjoyment of other residents. Sometimes, PHAs and project owners supplement this list with vague categories of criminal activity that provide little notice to applicants of the housing provider’s actual standard, such as crimes of “moral turpitude,” an imprecise term that is not defined in the Illinois Criminal Code. 

Other amorphous categories include criminal activity “that indicates that the applicant may be a threat and/or negative influence on other residents” and “criminal activity that will adversely affect the reputation of the Development.” Neither standard reflects any language found in federal statutes or regulations, making them vulnerable to abusive application. Furthermore, a standard based on a building’s reputation strays from a property owner’s legitimate interest in resident safety, further increasing the potential for abuse.

A number of housing providers underuse mitigating circumstances, thus depriving applicants of the opportunity to overcome their past arrest and conviction records. Although HUD regulations require PHAs to consider the time, nature, and extent of a public housing applicant’s conduct, including the seriousness of the offense, more than half of the written admissions policies in Illinois gloss over the fact that applicants could—and in some cases, have the right to—present mitigating circumstances upon being denied for criminal history. Without notice of how to challenge a denial based on a criminal record, many applicants are likely to select themselves out of the admissions process.

In the project-based Section 8 program, consideration of mitigating circumstances is encouraged but not required. One out of four tenant selection plans reviewed explicitly stated that the project owner would not consider an applicant’s mitigating circumstances, thus stacking the odds of admissions against anyone with a criminal record.

Together, HUD, PHAs, and project owners need to ensure that criminal records screening respects the applicant’s right to be free from unwarranted discrimination. More than simply pulling a person’s criminal history, proper screening requires thoughtful consideration and proper balancing of various factors, such as the nature and severity of the offense, the time elapsed since the commission of the offense, and its relationship to a person’s tenancy. In the quest for bright-line rules, however, policies in Illinois today instead allow PHAs and project owners to abuse the discretion given to them by HUD. 

For proper screening to happen, HUD must make clear that housing providers need to look beyond the criminal history or face potential consequences. To help ensure that people with criminal records are not unnecessarily barred from federally subsidized housing, we recommend that HUD, PHAs, and project owners:

1. reign in unreasonable look-back periods;
   
2. end the use of arrests as conclusive proof of criminal activity;
   
3. enact clear standards for reviewing criminal history that have a basis in federal law; and
   
4. ensure that applicants can overcome criminal records barriers by presenting evidence of mitigating circumstances.
   

Only when HUD, PHAs, and project owners take these affirmative steps can discretion lead to admission, not just denial.

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While political pundits reminisce about the month-long government shutdown of 1995-96 as the current budget battle takes place, I can only think of a political cartoon from that time. In December 1995, my local paper ran a political cartoon depicting two homeless men huddled together in front of a fire on a blustery winter day. In that cartoon, a member of Congress walks by and proclaims, “What a relief! For a minute I thought you were burning a flag!” That more than 15-year-old symbol of Congressional disconnect from the real-life challenges facing low-income people still rings true today. As our national poverty rate among children is set to hit a record 25%, the U.S. House of Representatives proposes to cut $61 billion from the FY 2011 budget, representing the largest cut to domestic spending programs in U.S. history.

Among hundreds of programs that help low-income households, H.R. 1 proposes deep cuts to housing programs that prevent homelessness and provide stability to low-income households. H.R. 1 proposes to cut $5.4 billion from domestic housing programs, which could mean fewer available rental vouchers (which help families rent housing in the private market), the loss of 10,000 vouchers for homeless veterans, almost a 70% cut to programs providing affordable housing for the elderly and disabled, a $1.1 billion cut to capital money needed to repair and maintain public housing, and the loss of HOME dollars, which enable local governments to meet local affordable housing needs.

These deep cuts to critical housing programs come at the same time the U.S. Department of Housing and Urban Development released a report, finding that “worst case housing needs” grew by 1.2 million households, or more than 20%, from 2007 to 2009. “Worst case housing needs” are defined as low-income households who pay more than half their monthly income for rent, live in severely substandard housing, or both.

To avoid a government shutdown, the House and Senate must figure out how to fund the remainder of FY 2011 by March 18, 2011. Given the hard lines being taken in this budget battle, more proposed cuts are expected to domestic spending programs, including housing. Campaign rhetoric cannot ignore everyday people and children, who rely upon this Congress and President to protect them from deep poverty and homelessness. In the end, domestic spending cuts that eliminate critical housing programs will not save us money—they will cost us money. Research has shown that homelessness costs us more than paying for programs that prevent/address it. Indeed, a recently published study found that the cost of family homeless programs far is nearly double the cost of the nation’s rental assistance programs. These housing programs deliver real assistance on a daily basis so that seniors, families, and persons with disabilities do not have to choose between medicine, food, and housing. Wake up Congress, put aside this political blustering, and provide the necessary support for our nation’s low-income housing programs.

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Even as the home prices and rents decrease in the wake of the housing crisis and communities see more and more vacant units, American families increasingly need more affordable housing.

Last month, the Joint Center for Housing Studies of Harvard University released its “The State of the Nation’s Housing 2010” report. The report describes a housing market sputtering toward stabilization, but facing significant obstacles. 

Indeed, many aspects of the housing market continue to erode. The Joint Center reports that one in seven homeowners owed more on their mortgages than their homes were worth at the end of 2009. Similarly, foreclosures continue to rise; 2.1 million loans were in foreclosure during the first quarter of 2010. Nonetheless, 2009 saw an increase in home affordability and a surge in first-time homebuyers (due in large part to the first-time homebuyer tax credit). 

On the rental front, the number of renter households grew by 800,000 in 2009. But, due to a combination of new multifamily completions and a jump in the number of existing homes for rent, vacancies continued to rise and rental prices correspondingly sagged. (For information regarding Chicago-area rents and vacancy data, see DePaul University's Institute for Housing Studies first-quarter 2010 Cook County Rent and Vacancy Report.)

Despite increased vacancies and lowering prices, housing continues to become less and less affordable for more families. There has been a significant increase in the number of households with a severe housing cost burden (more than 50% of income spent on housing) since 2000. As of 2008, one in four renter households and over 44 million Americans, of which nearly 14 million are children, are living within households with severe cost burdens. Over half of renter households spend over 30% of household income on housing. Of these households, low-income, single-parent, minority families are more likely to suffer from harsher cost burdens.

Amid the upheaval in the housing market, The State of the Nation’s Housing 2010 makes clear that the nation’s housing remains unaffordable for more and more low-income Americans--especially in light of the staggering rate of unemployment. Indeed, while the number of vacant rental units priced at $1,500 or above per month jumped 23 percent, the number of vacant rental units for less than $600 remained virtually the same as the year before. Exploring ways to increase the availability of housing that is affordable to American families is more important now than ever.

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Thousands of homeowners will be getting relief soon if they took out a loan with Countrywide Financial before 2008. Charges against Countrywide, now a subsidiary of Bank of America, are part of the largest mortgage-servicing case ever to come before the Fair Trade Commission (FTC), and one of the largest overall judgments. The New York Times reported that Bank of America will pay $108 million to families who were charged inflated “cost of service” fees such as lawn mowing and property inspection.

Over the past few years, Countrywide has become the poster child for the predatory lending industry and has received much of the blame for the housing crisis. Reports of abuses include the inadequate underwriting of adjustable rate mortgages or ARMs, unhelpful customer service, abysmal record keeping, abusive origination fees, and making false and defaming claims against homeowners who filed for bankruptcy protection.

As part of the monetary settlement, the FTC is requiring Bank of America to establish internal procedures and to use an independent third party to verify that bills and claims filed in Countrywide’s ongoing bankruptcy proceedings are valid. Countrywide also faces a criminal investigation by the Federal Fraud Enforcement Task Force into the defamation charges against it.

Unfortunately, Countrywide is only one of many lenders accused of predatory lending and consumer abuses. Although the FTC has played an integral role in holding Countrywide accountable, these predatory practices still abound in the mortgage industry. We need strong laws that protect consumers; that is why the Shriver Center supports an independent consumer protection agency which will prevent these abuses from happening in the future.

For more information contact the Community Investment Unit at the Shriver Center.

This article was co-authored by Susan Ritacca.

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Congress and several states take actions to stop evictions of victims of violence

For women and children in this country, domestic violence is one of the leading causes of homelessness. Survivors of domestic violence (of which 90 to 95% are women), dating violence, sexual assault, and stalking living in rental housing are particularly vulnerable to homelessness because they are often threatened with eviction after an incident of violence. These evictions are frequently born out of property owners’ stereotypes about survivors of violence as individuals accountable for the acts of their abusers. Indeed, up until a few years ago, when victims of violence who lived in federally assisted low-income housing called the police to report intruders, being shot, or otherwise terrorized by their abusers, they would immediately receive an eviction notice.

In 2005, Congress adopted federal protections against evictions and denial of housing for victims of domestic violence, dating violence, and stalking. The 2005 reauthorization of the Violence Against Women Act prohibits evictions and admission denials of victims of violence who live certain types of federally supported low-income housing. The 2011 VAWA reauthorization should improve upon VAWA 2005 and expand it to cover other types of federal supported low-income housing. Any reauthorization must also extend those protections to survivors of sexual assault. 

On April 27, the Illinois Legislature passed H.B. 5523 and joined several other states, including Indiana, Colorado, Arkansas, Delaware, Texas and Virginia in protecting victims of violence from evictions based upon incidents of violence and/or their status as a victim of violence. Maryland has recently passed a similar bill. The governors of those states should sign the bills immediately.

However, property owners are not the only ones threatening survivors’ housing. A growing number of municipalities have adopted aggressive property nuisance codes or “crime-free” rental housing ordinances that obligate owners, under threat of losing their license to operate rental property, to evict all tenants when there is a crime or multiple police calls for assistance. To limit a survivor’s access to police assistance under threat of homelessness or to blame them for the crime committed against them likely violates their rights under the U.S. Constitution and Federal Fair Housing Act. While we support the idea of improving the quality and safety of rental housing, municipal actions cannot interfere with a survivor’s safety or hold them accountable for a perpetrator’s actions. Municipalities should amend these ordinances to eliminate these harmful and likely illegal provisions.   

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Bill seeks to ensure that Illinois homeowners benefit from federal Making Home Affordable Program

On April 29, 2010, the Chicago Tribune reported that the number foreclosures reaching completion in the Chicago area was higher in the first quarter of 2010 than in any other period during the past five years. This is according to Woodstock Institute data released the same day. 

While the worsening crisis in the Chicago region certainly highlights the shortcomings of federal foreclosure prevention programs like the Home Affordable Modification Program (HAMP), HAMP servicers have also been failing Illinois homeowners. Advocates report that homes are being lost to foreclosure even while homeowners are still trying to modify their loans under HAMP, in violation of the program. Indeed, the National Consumer Law Center and the National Association of Consumer Advocates reports that in a recent survey of over 100 consumer advocates, nearly 95% of the surveyed advocates have represented homeowners in cases where a servicer tried to proceed with a foreclosure sale without a completed review under HAMP. HAMP can hardly be successful if homeowners who apply to the program are losing their homes because the program is violated. Illinois homeowners deserve the opportunity to try and benefit from federal foreclosure prevention programs, even if they are not as effective as was hoped.

Recognizing the need to improve the effectiveness of the HAMP program, the Treasury Department issued new directive 10-02 on March 24, 2010, that, among other things, (a) clarifies that servicers must inform homeowners who meet basic criteria about the HAMP program, (b) prohibits referrals to foreclosure until either the homeowner has been evaluated and determined ineligible for HAMP or reasonable solicitation efforts have failed; and (c) requires that a servicer of a mortgage potentially subject to HAMP certify to the foreclosure attorney or trustee that the homeowner is not HAMP-eligible before a home can go to foreclosure sale. 

Although these new rules give foreclosure attorneys better guidance about when to file cases and proceed to sale, the directives still rely on the compliance of servicers. In order for the HAMP program to truly benefit homeowners, they must be able to stop foreclosure court proceedings when the HAMP program is violated before their homes are lost.

A proposed Illinois law may help. HB 5735, spearheaded by former Representative Deborah Graham, Representative Al Riley, and Senator Jacqueline Collins, makes clear that if a home goes to foreclosure sale in violation of the Making Home Affordable Program (of which HAMP is a major component), the homeowner can have the court set aside the sale, so that the owner can continue to work through the federal program. HB 5735 should be heading to Governor Quinn’s desk shortly. We implore Governor Quinn to sign the important protections of HB 5735 into law.

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A new report released by the Illinois Assisted Housing Action Research Project (IHARP) shows that Chicago families in the Housing Choice Voucher (HCV) Program continue to live in overwhelmingly poor, African American neighborhoods on the city’s south and west sides. These neighborhoods also experience high rates of crime, mortgage foreclosures, poor health, and high levels of lead.

The HCV program is supposed to give families the chance to rent in “healthy communities,” meaning areas with job opportunities; good schools, services, and transportation options; and low rates of crime. But this study and others like it shows that the majority of HCV families don’t live in those communities.

Being stuck in communities without opportunities is a significant issue not just for HCV families but for all low-income families, especially minority families. A recent Urban Institute report on residential mobility found that “residential churning,” or moving short distances due to financial stresses and housing problems, is prevalent in low-income communities. Nearly half of families originating in the report’s study areas were described as “churning movers” who gained little in neighborhood amenities and opportunities by moving. Strikingly, higher percentages of African-American and Hispanic families who moved were “churning movers” than white families who moved. 

This may be due to the fact that minority households face race-related barriers to residential mobility, and remain in poor neighborhoods due to racial segregation and social and economic inequities. As cited in the Urban Institute report, African Americans are less likely to move to better neighborhoods than other groups, even when they have achieved the same levels of income and education as other groups who moved out.   

We can do more to help HCV families move to healthy neighborhoods. Mobility counseling must be offered and supported provided both before and after families move. The rents offered by the HCV program must also be adjusted to reflect the block-by-block distinction of many communities, particularly in urban environments. If the rents are not set high enough to compete with the actual market rents in a healthy community, then no amount of mobility counseling will make a difference. As well, too many HCV families across the country are denied the chance to live in a healthy community because of open discrimination by property owners. Only by protecting voucher holders against source-of-income discrimination will these types of practices end. Finally, some thought should be given about how to make these moves to healthy communities more permanent--converting some of these vouchers to site or project-based subsidies (so the housing subsidy remains even after the tenant leaves but the tenant receives another voucher) could secure a long-term supply of affordable housing in these communities.

All in all, we need to reconsider how many housing choices not just low-incomes families really have under the current HCV program, but all low-income families in this country have.

This post was co-authored by Elizabeth Frantz.

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As the foreclosure crisis has unfolded throughout the country, it has become evident that renters – not just homeowners - have been victims of this crisis. Indeed, the National Low-Income Housing Coalition reports that renters make up about 40% of the families facing the loss of their housing due to foreclosure and more than one in every five foreclosed properties is a rental property. 

Residents in foreclosed properties have been caught unaware that their home is being foreclosed and have scrambled with very little notice to find safe replacement housing. Rental properties in foreclosure fall into disrepair – even when there are still families living there.  Advocates throughout the country, grappling with the effect of the economic downturn, have called for increased protections for renters affected by foreclosure. Legislators have listened.

On May 20, 2009, President Obama signed into law the Protecting Tenants at Foreclosure Act of 2009, part of the Helping Families Save Their Homes Act of 2009 (Pub. L. 111-22). This law, which sunsets in 2012, ensures that renters in foreclosed properties receive at least 90 days notice before they have to move, and that tenants who start a lease term before the notice of foreclosure may continue to live in their homes until the lease expires.

In Illinois, Representative Will Burns and Senator Jacqueline Collins have championed a bill, HB 3863, which would provide much needed protections for Illinois renters living in foreclosed properties. Currently, Illinois renters are not entitled to notice when control or ownership of the property in which they live changes as a result of foreclosure. Consequently, they frequently do not know who owns the property, where to pay rent, or who to call if repairs are necessary. Among other protections, HB 3863 would provide renters with essential information regarding their homes. 

The basic provisions of HB 3863 include:

·         During the foreclosure case, if a receiver (or mortgagee in possession) is appointed to operate and manage the property while the foreclosure case is pending, the receiver must:

a)      Make a good faith effort to identify residents of the property; and

b)      Notify residents of his or her appointment, inform residents that the property is the subject of a foreclosure action, and provide contact information for resident concerns and repair requests.

c)       Post notices with contact information at the property.

·         After the foreclosure is complete, the lender/new owner must:

a)      Make a good faith effort to identify residents of the property; and

b)      Notify residents that the lender/new owner has acquired the property, inform residents that the property has been the subject of foreclosure, and provide contact information for resident concerns and repair requests.

c)       Post notices with contact information at the property.

·         Tenants evicted as a part of the foreclosure case are granted a minimum of 30 days to move after the eviction hearing.

HB 3863 has been sent to the Governor’s desk. We implore Governor Quinn to sign it to protect the hidden victims of the foreclosure crisis.

Call 217-782-0244to encourage Governor Quinn to sign HB 3863.

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Dedicated advocates around the country are working furiously on behalf of clients who face foreclosure. Surely some of these creative minds have figured out how to solve the foreclosure crisis—haven’t they? Well, no. Lenders and loan servicers continue to resist loan modification, despite new federal incentives contained in the Home Affordable Modification Program, and advocates continue to grapple with the foreclosure monster.  

But promising efforts are underway. Philadelphia’s mandatory foreclosure diversion program, often held up as a model, can force lenders to come to the table. Of course, as advocates there point out, the program’s success relies on multiple pieces being in place: organizers (from ACORN, Philadelphia Unemployment Project, and other organizations) making personal contact with homeowners facing foreclosure, the Philadelphia Legal Assistance hotline, housing counselors, and representation in the actual mediation. While no panacea, a report on the program’s first year credits it with averting 1,400 foreclosures.

In areas where property values hit the stratosphere a couple of years ago many borrowers, to keep their homes, need not just loan modification but also principal reduction. In Los Angeles’ San Fernando Valley, advocates from Neighborhood Legal Services and community organizers from One LA joined forces to help homeowners negotiate collectively with their loan servicers; One LA used the data gathered to get the city council involved. The result is a pilot project through which, if the lender agrees to reduced principal and a fixed interest rate, the city will fund a “silent second” mortgage to reduce payments even further; the second mortgage is payable only upon sale or refinancing of the property.

Both these approaches were highlighted in a June 23 Shriver Center webinar, and the Los Angeles effort is also the subject of an article in the May-June 2009 issue of Clearinghouse Review. What innovative approaches are underway in your community? We’d love to hear about them. Email marciahenry@povertylaw.org  

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During the past eight years, almost 100,000 units of public housing have been approved for demolition, and fewer than 40,000 units of public housing have been constructed, meaning that over 60% of public housing units demolished have not been replaced. In 2007, the U.S. Department of Housing and Urban Development (HUD ) approved a request from the San Diego Housing Commission “to get out of the public housing business” by vouchering out its entire stock of over 1,300 units. Vouchers allow residents to rent a unit in the private market. In 2008, the housing authorities in Las Vegas and Atlanta submitted applications to HUD to dispose of all their public housing units.

While most displaced residents receive Housing Choice Vouchers in which to move, the vouchers do not compensate for the loss of public housing to a community. Public housing is a commitment from the government that there will always be a housing resource for our most vulnerable populations—a commitment that the private sector cannot make. Even though vouchers are an important part of the nation’s affordable housing supply, they are not a permanent replacement for hard public housing units. 

On June 15, 2009, the Chairman of the U.S. House Financial Services Committee, Representative Barney Frank, and the Chairwoman of the Subcommittee on Housing and Community Opportunity, Representative Maxine Waters, sent a letter to HUD Secretary Shaun Donovan asking him to impose a one-year moratorium on the approval of applications for demolition or disposition of public housing units. The Committee noted that, “Until such time as housing authorities are required to replace demolished or disposed units on a one-for-one basis, we risk losing the crucial investment and significant asset these units represent.”

We applaud the decision of Representatives Frank and Waters in making this request and in working on legislation to require one-for-one replacement of demolished public housing units.  In order that the nation not lose any more public housing units, it is imperative that HUD Secretary Donovan declare a one-year moratorium on public housing demolitions so that legislation can be enacted to preserve the nation’s supply of low-income public housing. 

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