Congressional leaders address foreclosure crisis
From left, U.S. Congressional Representatives Keith Ellison (MN-5), Maxine Waters (CA-35), Betty McCollum (MN-4); and in back, Keo Chea and an aide. (Photos by J. Lee)
By J. Lee
MINNEAPOLIS (Jan. 23, 2010) – U.S. Congress Financial Services Committee Subcommittee on Housing and Community Opportunity Chair Maxine Waters was at Minneapolis Central Library last week to preside on a hearing about the “Impact of the Foreclosure Crisis on Public and Affordable Housing in the Twin Cities.”
The hearing was hosted by U.S. Congressman Keith Ellison (MN-5) and U.S. Congresswoman Betty McCollum (MN-4). Asian Pacific America Housing Consortium members present included Rep. Ellison’s Legislative Director Minh Ta, and Rep. Waters’ Sub-Committee Counsel Keo Chea.
Chairwoman Waters said she “fought hard to secure $6 billion in national Neighborhood Stabilization Program funds”, and wanted to hear “how these funds, other resources and programs are being used to fight neighborhood blight and expand the stock of affordable housing.”
Rep. Ellison voiced his efforts in securing funds for Minnesota. Of the $2 million in NSP grants through the U.S. Dept. of Housing and Urban Development, the Minneapolis received $19.5 million and St. Paul received $18 million.
“These funds will bring jobs and housing for our communities most in need,” said Ellison. “NSP funds include funds to purchase and rehab property for affordable home sales to low and moderate income people.”
Testimony was offered by HUD officials, elected leaders, non-profit organizations and residents about Minnesota’s housing problems that included lack of affordable rent, tenant evictions after landlords fell into foreclosure, and the sellers taking investors’ cash offers instead of entities using NSP funds.
Testimony, comments and recommendations will be received until February 22, 2010 at the office of Congresswoman Maxine Waters, 2344 Rayburn House Office Building, Washington, DC 20515, fax 202-225-7854 or complete the form online at https://waters.house.gov/Contact/ContactForm.html.
HUD Deputy Assistant Secretary of Policy Research and Development Erika Poethig, said affordable rentals is a priority of HUD Secretary Shaun Donovan. She said they are working on a comprehensive plan, citing “60 percent of foreclosures were rentals”, with factors including renters unable to pay rent, and then leaving to live with friends and families.
State Senator Linda Higgins (DFL-58) said her district is the “ground zero” of Minnesota foreclosures. She said foreclosed homes have caused a $7,626 loss in market value of neighboring homes.
Higgins requested consideration of Minnesota legislation as a national model. Both she, and State Rep. Jim Davnie (62A), have together with other legislators worked on consumer protection against predatory lenders, banning early mortgage repayment penalties, making mortgage fraud a crime, closed the loophole that has allowed equity stripping, offers renter protections and loan modifications.
Rep. Davine said their work is “reforming the financial system to protect consumers, helping homeowner early in the process, and using bonding money to make homes affordable.”
Hennepin County Commissioner Gail Dorfman was also present to address collaboration and innovation as a solution to the delays of getting appraisals and environmental reports, resulting in sellers taking investors’ offers instead that are a barrier to meeting the September 30, 2010 deadline to use NSP funds.
“Ten percent of the people in shelters are from foreclosed homes,” said Dorfman.
Minnesota Housing Commissioner Dan Bartholomay reported that $1.4 billion was spent on addressing affordable homes, another $180 million on foreclosure, and $50 million on ending long term homelessness.
He spoke of investors spending less on bonds because of foreclosure impaired loans producing lower yields and less value. He urged “foreclosure mediation” and supported waivers of appraisal and environmental review requirements to be able to compete with investors.
“Short sales are the new foreclosures,” said City of Minneapolis Director of Housing Policy and Development Tom Streitz. Although nonprofits are now working on prevention, home rehabilitations and stabilizing communities, he said help is needed for employment and affordable rentals.
Rep. McCollum said she’s been working with realtors on the issue of short sales, and with the banks on solutions.
Chairwoman Waters addressed other concerns such as the allegations that REO Brokers Association limited members and excluded realtors not having access to listings.
“It needs to be looked into,” she added.
Waters also noted that $50 million is being spent to address racism and Fair Housing testers. She said that HUD Secretary Donovan is advising one state to change its discrimination practices or risk losing federal funds. She said that Wells Fargo stated it needed to improve in areas after a lawsuit alleged targeting of minorities for sub-prime loans.
Comments may also be left with Rep. McCollum at http://forms.house.gov/mccollum/webforms/issue_subscribe.htm, and with Rep. Ellison at http://ellison.house.gov/index.php?option=com_content&view=article&id=36&Itemid=7.