Slowly the nation realizes that banks are not in the business of financing mortgages but rather the business of making money – a lot of money. And refinancing risky mortgages and even new, solid ones does not generate enough cash to spark their interest.

One alternative, a nationalized banking system, looms closer as government returns to its traditional role of supporting unprofitable public works. Another tactic is to let the foreclosures fall as they will and return to the days when renting was the norm and homeownership was rare.

For a pdf version of the full articles, plus contextual stories in social, economic and legal areas, contact Bo McCarver at bmccarver@austin.rr.com

At Current Rate, Nine Million Homes Face Foreclosure by 2012

By Mary Kane   Washington Independent July 13, 2009

The time may be ripe for a shift in strategy as the foreclosure machine grinds on, and new foreclosure notices reach the troubling milestone of 10,000 per day.

A weak economy has added job losses and falling home values to the mix of toxic loans that prompted the crisis two years ago, making an already difficult situation even more severe. Government measures from foreclosure freezes to loan modifications have only served, so far, to stall the inevitable – and to create an ominous backlog of millions of pending foreclosures. Plus, more than one in five homeowners now owe more on their mortgages than their homes are worth, according to the real estate website Zillow.com. No one can predict with assurance whether those underwater homeowners will keep paying on their loans, or take a walk.

Tight Mortgage Rules Exclude Even Good Risks

By David Streitfeld   New York Times July 10, 2009

BOSTON — Inna Komarovskaya was ready to do her part to revive the economy: She found a “really cute” condo to buy.

Despite a good credit score, a six-figure income and an ample down payment, Dr. Komarovskaya, a recent dental school graduate, could not get a loan. Her mortgage broker told her she ran afoul of new rules requiring two years of sufficient tax returns from some home buyers, instead of only one.

“Everyone says this is a buyer’s market, but they wouldn’t let me buy,” said Dr. Komarovskaya, 30. “It’s not fair.”

From Treasury to Banks, an Ultimatum on Mortgage Relief

By Joe Nocera   New York Times July 10, 2009

Remember that infamous meeting last October at the Treasury Department, the one where then-Secretary Henry Paulson locked the chief executives of the nation’s nine largest financial institutions in a room, and wouldn’t let them out until they agreed to accept billions of dollars in government bailout money — whether they wanted it or not?

O.K., that’s a bit of an exaggeration. But I was reminded of that meeting on Thursday night when I was shown a letter that the administration had just sent out calling for yet another big meeting at Treasury with yet another sector of the financial industry. Signed by Treasury Secretary Timothy Geithner and Shaun Donovan, the housing and urban development secretary, the letter demanded that representatives from the top 25 mortgage servicers assemble in Washington on July 28. It is likely to be every bit as painful for them as that Paulson meeting last October was for the bank C.E.O.’s.

13 Indicted In $100 Million Mortgage Fraud Case

By Lisa Chow   NPR July 9, 2009

Prosecutors in New York have charged 13 people with running a massive mortgage fraud scheme. They say everyone was in on the alleged scheme: lawyers, appraisers and mortgage brokers.

According to the indictment, mortgage company AFG Financial Group, based on Long Island, targeted properties whose owners were starting to default on their mortgages.

Loan servicers deluged by homeowners seeking new terms

By Barry Schlachter   Fort Worth Star-Telegram July 13, 2009

Celina Gallegos of Arlington has taken a second, part-time job on a loading dock but still can’t afford her $930 mortgage payment.

The solution her mortgage company offered? Payments of $1,100 a month aimed at helping her get caught up on back payments.

“My income is about $1,600 a month, and I cannot afford the $930 payments,” she said.

Gallegos is one of a growing number of homeowners struggling to stay in their homes despite recent efforts by the federal government to encourage lenders to work with borrowers and renegotiate terms when possible. A backlog of cases spurred by the Obama administration’s $75 billion Making Home Affordable program has contributed to the crush of borrowers seeking help.

Gallegos, 34, a house cleaner and single mother in Arlington, was facing a foreclosure sale of her home on the courthouse steps Tuesday. It wasn’t until she called the activist group ACORN, which planned a courthouse protest, that Litton Loan Servicing, a division of Goldman Sachs, agreed at the eleventh hour to postpone the sale for 30 days and offered to negotiate a loan modification.

Most of Tarrant sees decline in June home sales

By Sandra Baker   Fort Worth Star-Telegram July 13, 2009

The area around Texas Christian University in Fort Worth and four Arlington neighborhoods were the only sections of Tarrant County that saw gains in single-family home sales in June from a year ago.

Every other area of the county saw declines in sales, though half saw slight-to-healthy gains in median home sales prices.

Southeast Arlington was the hardest-hit area, where home sales dropped 50 percent last month from June 2008, according to the most recent figures from the Real Estate Center at Texas A&M University. Grapevine was next, with a 47 percent decline.

Downtown Fort Worth was unchanged in the number of sales, yet the median sales price rose 93 percent, the highest increase. Kennedale saw the largest decline in the median sales price, which dropped 28 percent to $189,500.

Habitat for Humanity Finds Buying is Cheaper

By Josh Harkinson Mother Jones July 10, 2009

Charlotte, North Carolina, has found a silver lining in the housing crisis:

Charlotte’s Habitat is among the first in the nation to start buying up houses in troubled neighborhoods where up to a third of the homes are vacant due to foreclosure. Average cost: $38,000 to $55,000, less than half the original price.

“We’re getting them as low as $30,000, knowing we’ll put in $10,000 of repairs,” said Meg Robertson, an associate director with Habitat. “To build a new one is over $60,000 … we’re $20,000 to $30,000 cheaper per home.”

So what about Habitat’s commitment to sweat equity? To having energetic volunteers “build houses together in partnership with families in need?” Robertson told the Charlotte Observer that she thought it was more important to house as many people as possible.

Besides, subdivisions built in the boom are already falling apart on their own or at the hands of vandals, so there should be plenty of sweat required to restore and maintain them.

[End of story]

Land banks gain popularity as way to fight urban blight

By Kathleen Gray   USA Today July 13, 2009

In downtown Flint, the historic Durant Hotel sat empty for more than 30 years until a financial tool led to its current $30 million renovation.

That tool is the land bank, an idea gaining national attention for its positive impact on urban blight and abandonment at a time when most cities are dealing with more foreclosures.

Instead of selling abandoned or foreclosed structures at auction, the city or county creates a land bank of properties. Some homes are fixed up and sold. The worst of the homes are demolished, and the land is then sold to nearby homeowners or developers, explains Genesee County (Mich.) Treasurer Dan Kildee, who started that county’s land bank.

City design guide seen as threat to transit measure

By Mike Snyder   Houston Chronicle July 8, 2009

Fallout from the long-dormant Ashby high-rise development emerged Wednesday as a potential obstacle to the city’s effort to promote walkable, urban-style development along Metro’s planned light-rail lines.

Neighborhood opposition to the Ashby project, a planned 23-story mixed-use tower whose developers continue to await a permit almost two years after they first applied, inspired changes to an obscure city document known as the Infrastructure Design Manual. The changes include a review process intended to prevent high-density developments from worsening traffic congestion on surrounding streets.

Developer plans new community south of Avery Ranch

Land bought near commuter rail line at foreclosure sale planned as $250 million mixed-use project.

By Shonda Novak   Austin American-Statesman July 9, 2009

Within a few years, residents of Avery Ranch could have more than 2,000 new neighbors to the south.

Developer Bob Wunsch said Wednesday that he plans to build a $250 million project with about 700 homes and townhomes, two shopping centers and, possibly, an assisted-living or nursing-home facility on 178 acres near Lakeline Mall. International Bancshares is his partner in the project.

Local housing industry observers say the move is a sign that the housing market might be turning around.

Increase in FEMA funding saves millions locally

By Leigh Jones Galveston County Daily News July 9, 2009

Officials throughout Galveston County are breathing a sigh of relief now that the federal government has agreed to pay for 90 percent of the damage caused by Hurricane Ike.

Funding for the increased contributions was part of the supplemental appropriations bill approved by Congress and signed by President Barack Obama two weeks ago.

Until then, local officials expected to be on the hook for 25 percent of the storm repair costs.

The increased federal funding will save taxpayers throughout the county about $17 million and save some area governments from putting off repairs they couldn’t afford before.

Homelessness in suburbs, rural areas increases

By Wendy Koch USA TODAY July 11, 2009

As the recession took hold last year, homelessness shifted toward rural and suburban areas and gripped a growing number of families, the U.S. government reports today.

The number of homeless people receiving shelter, 1.6 million, was largely unchanged from 2007, but the number of those in families rose 9% from about 473,000 to 517,000, according to the Department of Housing and Urban Development report. The figures are for the fiscal year ending Sept. 30.

The number of homeless people in rural and suburban shelters jumped sharply: 32% of all people in shelters compared with 23% in 2007.

I haven’t discussed it much yet, but there’s a lot to be said about the new Low Income Housing Tax Credit Exchange Program (TCEP) recently authorized by the federal government. One of the things that needs to be said immediately is that as the state begins to structure how it is going to operate the program it needs to be careful to prevent the program from  becoming a financial windfall to developers that deprives the program of funds to build more affordable housing.

I’m not going into a lot of detail here about the TCEP. I’ll be talking a lot about it a lot in coming weeks. But I do want to lay down my marker regarding considerations for Texas Department of Housing and Community Affairs (TDHCA) should be taking to operate the program in a financially prudent manner.

TDHCA will be in a position to determine how much of a developer’s fee LIHTC housing developers are allowed to collect. In prior years, large urban LIHTC development had the potential to allow a developer to collect a $2 million-$3 million fee.

Under the TCEP program TDHCA is basically baling developers out who were unable to sell tax credits into the private market because of the recent financial downturn. A number of developers with pending applications had counted on receiving $.75 on the dollar or more by selling their housing tax credits. But nowadays nobody is buying tax credits. So the TCEP program allows TDHCA to sell the tax credits that are turned back into the state housing agency by private developers to the federal government. This is instead of private developers having to continue the fruitless effort to sell the tax credits into the private sector and the housing tax credits eventually being lost because they cannot be sold.

Once TDHCA recovers the tax credits from a developer whose application cannot go forward, TDHCA needs to carefully consider the public interest in how it utilizes these recaptured tax credits. TDHCA should not move forward under an assumption that it has a moral obligation guarantee high profit margins of housing developers who cannot make their deals work because of the current financial situation. The  state agency’s moral obligation is to maximize the effective use of the public funds and to create the highest quality and most affordable housing that it can with the limited public tax credit resources.

Therefore, TDHCA needs to tell the developers returning tax credits that it is not going to give them the same level of developer fees that were built into their applications many months ago before the current financial crisis. The economic realities of the country and the economy of the development industry has changed in profound ways. Profits that were available to housing tax credit developers two years ago should not be guaranteed by the government.

I would favor that the developer fees paid under the TCEP program be capped at a reasonable profit level of 5% to 10%. I know that’s going to make some developers scream, but that’s plenty of profit to continue to attract developers to continue to participate in the program.

The taxpayers money should not be doled out by a state agency to guarantee housing developers profits at levels that ignore the current economic reality.

I came across this sign today in Austin providing a “public notice” regarding an application to build housing for the elderly. The absurdity of the extent to which state law in Texas requires notification of the public regarding proposed housing developments utilizing low income housing tax credits struck me as absurd.

The state law requiring signs like this should be repealed.

I have pointed out previously that low income housing is one of the few activities that a private developer can undertake in the state of Texas that triggers public signage and notification processes. You can drill a gas well next door to somebody’s house and you don’t have to put up a sign to notify them in advance. And what, will somebody please tell me, is it that these notification requirements concerning affordable housing are protecting the public from?

The truth is that the signage requirements represent an official expression that the State of Texas believes that there is something for surrounding property owners and the public at large to fear from low income housing. Otherwise, what is the point of providing this extraordinary level of public notification?

Do homeowners living adjacent to this proposed elderly housing development need to live in fear that old ladies with walkers will threaten the peace of their neighborhood? Are not the protections of city ordinances and zoning powers supposed to control proposed development? If so, why is this extra level of notification necessary for affordable housing?Why are these notices required only of developments financed through the Texas Department of Housing and Community Affairs? Why are not privately financed housing developments required to provide the public the same type of notices?

As part of the sunset review process of TDHCA these inflammatory, unnecessary and absurd public notification provisions should be repealed.

At yesterday’s hearing on the future of FEMA disaster housing before the House Homeland Security Committee the committee staff produced an interesting exhibit. It shows the various models of housing that FEMA has either purchased of is testing through the Katrina Cottage demonstration program. It is reproduced in part below.

As I blogged about a couple weeks ago, there is clearly a lot of improvement that is needed to make these structures into anything more than temporary housing.

Leveraging temporary post-disaster housing into permanent housing is essential to a rebuilding strategy for lower-income families. Whatever housing is provided to lower-income families on a temporary basis will likely represent a large portion of the total amount of government funds allocated to meeting those families’ total — temporary and permanent housing needs. We have seen in the wake of the past three hurricanes to strike Texas that we are unlikely to get enough HUD funds (or to secure local political support to spend enough of the available funds for housing) to completely rebuild the pre-disaster housing of all lower income survivors. Therefore, these rather large FEMA temporary housing investments should be leveraged as the platform for permanent rebuilding.

The $61.815 Heston model in the picture below is the one being deployed in Texas under contract with FEMA. Clearly none of these temporary housing solutions will provide a permanent housing solution.

The word-on-the-street is that “things are going to get worse before they get better:” a massive wave of foreclosures looms as banks get tough on defaults. A new study indicates there’s not enough profit in restructuring mortgages for banks to engage in the practice.

Meanwhile, homeless shelters are brimming with families evicted by landlords who waited until the school year was over before giving final notices.

For a pdf version of the full stories, plus contextual articles in economic, social and legal issues, contact Bo McCarver at bmccarver@austin.rr.com

Did Homeowners cause the Great Recession?

By Joel Kotkin   NewGeography June 29, 2009

The person who caused the current world recession can be found not on Wall Street or the city of London, but instead could be you, and your next-door neighbor–the people who put so much of their savings and credit to buy a house.

Increasingly, conventional wisdom places the fundamental blame for the worldwide downturn on people’s desire–particularly in places like the U.K., the U.S. and Spain–to own their own home. Acceptance of the long-term serfdom of renting, the logic increasingly goes, could help restore order and the rightful balance of nature.

Another wave of foreclosures is poised to strike

By Don Lee   Los Angeles Times July 4, 2009

Reporting from Washington — Just as the nation’s housing market has begun showing signs of stabilizing, another wave of foreclosures is poised to strike, possibly as early as this summer, inflicting new punishment on families, communities and the still-troubled national economy.

Amid rising unemployment and falling home prices, mortgage defaults have surged to record levels this year. Until recently, many banks have put off launching foreclosure action on the troubled properties, in part because they had signed up for the Obama administration’s home-stability plan, which required them to consider the alternative of modifying loans to make it easier for borrowers to make payments.

Just how big the foreclosure wave will be is unclear. But loan defaults are up sharply. And with many government and banks’ self-imposed foreclosure moratoriums expiring, the biggest lenders indicate that they are likely to move more aggressively to clear up a backlog of troubled mortgages.

Lenders avoid redoing loans, Fed concludes

Study cites lack of profit in aiding the distressed

By Jennifer McKim   Boston Globe July 7, 2009

Mortgage lenders don’t try to rework most home loans held by borrowers facing foreclosure because it would probably mean losing money, a study released yesterday by the Federal Reserve Bank of Boston concludes.

The Boston Fed’s findings suggest the Obama administration’s major effort to solve the foreclosure crisis by giving the lending industry $75 billion to rewrite delinquent loans to more affordable levels is not likely to work.

One of the study’s coauthors, Boston Fed senior economist Paul S. Willen, said the government would be better off giving the money directly to struggling borrowers to help them with their payments, rather than to lenders that are averse to working out the troubled loans.

“Loan modification is not profitable for lenders,’’ Willen said. “If it were profitable, they would go out and hire staff.’’

A steady hand for troubled Freddie

Ex-Putnam chief could take reins

By Todd Wallack and Jenifer B. McKim   Boston Globe July 2, 2009

Charles “Ed’’ Haldeman Jr. keeps looking for bigger messes to clean up. Taking the helm of the embattled mortgage giant Freddie Mac fits the billHaldeman – who this week ended his seven-year tenure at Boston’s Putnam Investments – has been recommended by Freddie Mac’s board to be its chief executive, but he must be approved by the company’s US regulator, according to a person knowledgeable about the decision.

Dallas Housing Authority says most challenged payments legitimate

By Kim Horner   Dallas Morning News July 3, 2009

The Dallas Housing Authority’s new chief says the agency can now prove that most of the $20 million in questionable rental assistance payments cited in a 2008 federal audit were legitimate.

After months of examining files, the agency has found documentation to account for all but $978,701.43 of the payments, said MaryAnn Russ, the DHA’s president and chief executive officer.

“This wasn’t evil. This was incompetence,” said Russ, who was hired in January, after the critical audit. “We will repay every penny of it. We’ll probably overpay.”

The audit found that the agency spent nearly $20 million on rental assistance payments to people it did not report to the federal government and some who had either moved or died. The agency also made duplicate payments to landlords.

Beazer Homes payout over predatory lending likely limited

By Kirsten Valle   Charlotte Observer July 4, 2009

A day after Beazer Homes promised to pay $50 million to victims of its predatory lending practices, analysts say the actual payout might not be as hefty — and that not everyone who deserves money will get it.

Some say the Atlanta homebuilder is on the brink of bankruptcy and, if it files, would cease payments to the restitution fund. Even if the company stays afloat, others say, a settlement agreement that bases payments on Beazer’s earnings means the builder is unlikely to shell out the full amount.

How urban can Houston become?

Big changes to our development code loom, but some worry flooding, parking and other problems will follow

By Mike Snyder   Houston Chronicle June 28, 2009

Density hasn’t been kind to Cottage Grove, a small neighborhood with narrow streets, few sidewalks, poor drainage and scarce parking for the owners of its many new homes and their guests.

Like many neighborhoods inside Loop 610, Cottage Grove in recent years has experienced a flurry of construction of large townhomes that loom over 80-year-old cottages next door. Two or three dwellings crowd sites where one house stood previously. Streets are cluttered with vehicles parked every which way. Water stands in the streets after heavy rains.

“It was shocking to see this jewel of a neighborhood in this condition,” said former Pittsburgh Mayor Tom Murphy, a senior fellow with the nonprofit Urban Land Institute who toured Cottage Grove two years ago. “It was about the ugliest thing I’d ever seen, to be honest with you.”

High-rises on hold: What to do with empty lots?

San Francisco Chronicle July 6, 2009

The high-rise boom has gone quiet, and a new challenge faces San Francisco: deciding what to do with land cleared for towers that may not rise for another decade – if at all.

At least a dozen large development sites in the city’s South of Market district now sit empty or covered by asphalt because of the recession. If history is any guide, developers will either leave them fenced off or use them as parking lots.

But there’s another alternative – one that, if successful, could influence cities across the nation.

With ingenuity and a modest investment, San Francisco could breathe life into these voids until the demand for development returns. Some could be landscaped with fast-growing trees and shrubs that offer environmental benefits. Others could display art or offer casual spots for social interaction.

McMansions Out of Favor, for Now

Americans want smaller homes, but will the desire for less square footage outlast the recession?

By June Flecther   Wall Street Journal July 2, 2009

A new study out Monday by the American Institute of Architects shows that Americans have fallen out of love with McMansions. The 500 residential architects surveyed said that only 4% of their clients wanted more square footage in their homes this year, compared to 16% last year.

Hearing on air conditioning at Pleasant Grove apartments postponed

By Laurence Iliff   Dallas Morning News July 6, 2009

Residents of a Pleasant Grove apartment complex said they’d have to sweat out two more days with no air conditioning after a judge ruled Monday to postpone an emergency hearing on the matter.

State District Judge Gena Slaughter said she was concerned about the tenants and felt the matter was urgent. Nonetheless, she ruled that the defendants had not been given enough notice under the law.

Chinese drywall blamed for odors and corrosion in U.S. homes

By Don Lee and Alana Semuels   Los Angeles Times July 4, 2009

Reporting from Los Angeles and Wuhan, China — The final years of the U.S. housing boom and a disastrous series of Gulf Coast hurricanes created a golden opportunity for Chinese drywall manufacturers. With domestic suppliers unable to keep up with demand, imports of Chinese drywall to the U.S. jumped 17-fold in 2006 from the year before.

That imported drywall is now at the center of complaints of foul odors seeping from walls. Hundreds of homeowners, most in Florida, have also reported corrosion to their air conditioners, mirrors, electrical outlets and even jewelry.

State and federal authorities have traced the problems to Chinese-made drywall but haven’t yet fully determined the causes. Some Chinese experts, however, suspect that the culprit is a radioactive phosphorus substance — phosphogypsum — that is banned for construction use in the U.S. but has been used by Chinese manufacturers for almost a decade.

Summer Brings a Wave of Homeless Families

By Julie Bosman   New York Times July 6, 2009

As the school year sailed to a close last month, Arielle Figueras crossed the stage in her cap and gown and proudly accepted her fifth-grade diploma.

The next day, she was homeless.

Arielle, a petite 11-year-old, and her parents, brother and sister packed their belongings and arrived at the intake center for homeless families in the South Bronx. Though they had been fighting with their landlord for months and their gas and electricity had long been shut off, they refused to leave their apartment while school was in session.

“She was graduating, so we had to wait,” Arielle’s mother, Marilyn Maldonado, said. “We just didn’t want to disrupt their routines. We couldn’t do that to them.”

Many New Yorkers view summer as a time for vacations, camp and lazy days at the beach. But city officials have been preparing for quite a different summer ritual: the swelling of the population of homeless families.

The College of Liberal Arts at the University of Texas at Austin has unveiled a very useful and interesting way to learn about Texas government on-line called Texas Politics. The website is described as a “Multimedia Textbook.”

One beta section offers an overview of poverty in Texas.

There is a useful section on colonias within the poverty area that features a couple videos of TxLIHIS co-director Karen Paup discussing the origins and general characteristics of colonias and the basic geographical and financial difficulties confronting colonia residents.

Also of interest in the poverty section are interviews about the nature of poverty in Texas with Eva Luna de Castro of the Center for Public Policy Priorities, who describes wage conditions and some reasons for low wages in Texas. Francis Deviney, also of the Center for Public Policy Priorities, discusses how poverty is defined in Texas and argues for a structural understanding of poverty.

University of Texas Social Work Professor Laura Lein, discusses in a video how poverty exists in multiple dimensions in Texas.

The poverty related videos can be accessed on the Texas Politics poverty section’s multimedia page.

The Austin American-Statesman’s Eric Dexhiemer has a really good background story on the collapse of the American Housing Foundation in today’s paper.

The story attributes the economic collapse to the thin margins that the corporation operated on and the fact that they lost their property tax exemption through a series of unfavorable court rulings.

Dexhiemer reports that, “In the past 15 years, American Housing has received about $53 million worth of income tax credits for 16 projects, according to the Texas State Department of Housing and Community Affairs.”

American Housing also bought 13 apartment complexes across Texas by borrowing $128 million in tax-exempt bonds issued through the Texas State Affordable Housing Corporation (TSAHC). This was one of the factors that caused some Texas lawmakers to demonstrate their dissatisfaction with TSAHC by refusing to allow it to continue in business following a Sunset review of the agency. The Legislature reversed that decision during the special session concluded this week, at least temporarily, by granting TSAHC the ability to continue to operate through September 1, 2011.

Dexhiemer reports that the man behind American Housing Foundation, Steve Sterquell, “distributed hundreds of thousand of dollars in campaign donations to state politicians. A licensed pilot, he ferried some of them around on his private jet. He went on big-game safaris in Africa. Court documents in Amarillo show that he rewarded local private investors handsomely, paying them up to 18 percent interest to use their money.”

Sterquell is reported to have committed suicide April 1.

July 4, 2009 – I’m grateful and challenged to live in the United States.

We are placed where we are today by historical events. I understand that the power of the Declaration of Independence has placed me where I am today in life. The power I feel from the Declaration is not simply inspirational. I feel the power of the Declaration on shaping what I believe most deeply and on what I feel compelled to do.

The Declaration launched our country on an experiment in self governing democracy. It demands of us that we engage actively in the experiment. If enough of our citizens give up on active engagement in the experimentation, I believe our country will die.

It is easy to superficially embrace the truth of our Declaration’s preamble declaring the self evident truth that all men are created equal. But a truth unseen is no longer a truth that is realized, and the truth of the equality of man is constantly threatened to be buried in the oppression of bigotry and poverty. I believe we are all called on to actively and aggressively fight the forces of bigotry and poverty to ensure that the equal nature of all men remains self-evident and alive in our own time.

The power I feel from the Declaration lies in the way it demands that we use the tool of government to realize the truths about the nature, rights, dignity and freedom of mankind.

That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.

This is not a declaration that says, “Here is this new democratic system of government so sit back, celebrate and enjoy it.” Instead the Declaration pushes us to take action. To secure our rights we instituted this government and we have to actively alter or even abolish it to effect our safety and happiness. To engage with and struggle to shape our government is our ongoing calling.

I feel the special power of the Declaration of Independence to place me where I am today in my life. I see all around me others who feel and act on that power also. We fight against the oppression of poverty and work to perfect our government to positively effect the safety and happiness of the people. We do these things through the power and the duty we were endowed with by the Declaration of Independence.

The Texas State Affordable Housing Corporation (TSAHC) won a reprieve from the Texas Legislature yesterday. The housing agency, along with four other state agencies, failed to be reauthorized during the regular legislative session to continue to operate.

Because TSAHC was up for Sunset review in 2009, the failure of the Legislature to explicitly reauthorize TSAHC during the general session meant that the agency would be forced to close down in a year.

The Legislature reauthorized TSAHC yesterday to operate until September 1, 2011, forcing the agency to go back through Sunset review this interim.

Senate Bill 2, adopted yesterday, provides…

SECTION 1.04.  TEXAS STATE AFFORDABLE HOUSING CORPORATION.   Section 2306.5521, Government Code, is amended to read as follows:          Sec. 2306.5521.  SUNSET PROVISION. The Texas State   Affordable Housing Corporation is subject to Chapter 325 (Texas   Sunset Act). Unless continued in existence as provided by that   chapter, the corporation is abolished and this subchapter expires   September 1, 2011 [2009].

TSAHC ran into trouble during the regular legislative session over its bad judgment in awarding tax exempt mortgage bonds several years ago to a number of newly formed nonprofit organizations. The bonds were used to buy older apartment complexes. The transactions attracted the ire of local elected officials when the projects secured exemption from property taxes.

At the time of the transaction, and subsequently, TxLIHIS was critical of the transaction because we could see no public purpose in the deals and because the transactions did not result in the extent of repairs to these older apartments that were needed. A number of the apartment projects financed by TSAHC have since defaulted on their loans.

TSAHC staff testified that these transactions occurred several years ago and that the agency will not provide this type of financing again.

Yet questions about TSAHC’s lending policies will undoubtedly resurface during the upcoming reexamination by the Sunset Commission. Just last month the American Housing Foundation, a large beneficiary of TSAHC bond finance, declared bankruptcy in the wake of a financial scandal following the suicide of the nonprofit corporation’s leader.

Steve Sterquell, the one-time head of the now bankrupt Amarillo, Texas nonprofit affordable housing corporation American Housing Foundation, gave out nearly $370,000 to Texas elected officials over eight years according to the Amarillo Globe-News. This made Sterquell number 65 on the 2006 list of Texas campaign contributors according to Texans for Public Justice, a campaign watchdog group.

Sterquell died in an April 1 car crash that has been ruled a suicide. Bankruptcy proceedings for American Housing Foundation began in April of this year.

The nonprofit owns 78 apartment projects renting to low-income persons, 52 of which are in Texas. The Amarillo Globe-News has posted a list of the apartments.

This situation raises many questions.

1) Why did a Texas nonprofit housing corporation head give so much in political contributions to Texas state officials?

We will probably never know the true answer, but here is some speculation.

The largest contributions were made to the two most recent Texas Comptrollers. The Texas Comptroller’s office oversees the status of Texas corporations. According to the Amarillo newspaper…

In Texas alone, at least 160 for-profit and nonprofit limited partnerships, limited liability companies and other business entities can be tied to AHF, its office suite at 1300 S. Washington St., to Steve Sterquell or his son, Steve “Sterk” Sterquell II.

Contributions were also made to the Texas Attorney General, the state’s chief civil law enforcement official. It would be up to the attorney general to go after a statewide nonprofit corporation for violation of state law.

The governor and a local state representative also received contributions from Sterquell the paper reports. In recent years the Texas Legislature has dealt repeatedly with the question of property tax exemption for nonprofit Texas housing corporations. The Legislature also makes the ultimate decision on the amount of tax-exempt bond financing available to corporations like American Housing Foundation along with the rules on who the recipients of this state authorized bond financing can rent to as tenants and how much rent the tenants can be charged.

2) Did city and state housing officials exercise due diligence in providing bond and tax credit funding totaling in the hundreds of millions of dollars to American Housing Foundation?

This question has a simple answer is self evident — “no.”

It is clear that something was deeply wrong with the finances at the American Housing Foundation. It is unlikely that this happened overnight.

Each time AHF went to state or local officials seeking housing tax credits or tax-exempt bond financing to purchase another apartment project those officials had an obligation to examine the condition of the borrower (in this case AHF) who was asking for public funds. Whatever process state and local officials used to determine that AHF was creditworthy obviously came up with the wrong answer.

It was common knowledge in the affordable housing world that AHF was an unusual nonprofit.  It has been the subject of rumors and speculation for years. AHF was purchasing properties at a rate far greater than any other Texas nonprofit. Then there is the matter of the corporate airplanes that the nonprofit owned and operated for its executives, and occasionally giving a state official a ride too. I can’t think of another example of a nonprofit low-income housing corporation that maintains a fleet of corporate airplanes. This was no secret. It should have raised flags. But it did not.

Finally, there were the management problems which plagued AHF owned apartments.  My colleague Karen Paup worked, along with the leaders at Austin Interfaith (a grassroots community advocacy organization) to try to get government officials to force AHF to clean up deplorable substandard living conditions at the corporation’s Fairway Village apartment project in Austin. The same government officials who readily handed over millions of dollars in government authorized loans to AHF claimed to have little authority over the nonprofit so far as enforcing minimum housing property standards when the tenant’s health and safety were imperiled.

This tells me that the relationship between government officials and this large nonprofit corporation were, at the least, far too informal. American Housing Foundation is not the only nonprofit or for-profit corporation that enjoys a too trusting and too cozy relationship with public officials overseeing affordable housing programs.

3) What will become of the properties AHF owns and the the low-income tenants who live in the apartments?

Unfortunately, I fear that we know the answer to this question as well.

If the creditors are successful in the bankruptcy proceedings then the nonprofit will lose the housing. In many cases, the rent restrictions, monitoring requirements and long-term affordability covenants the corporation entered into with government housing financing entities will be erased in the bankruptcy.

If the use restrictions are wiped out by bankruptcy one of three things can happen.

1. If it is in the creditor’s financial interest they might operate or sell the property while maintaining it as affordable housing.
2. If the property is really nice, and a desirable place to live, then it will likely be worth more if it is operated as market rate housing. In this case the rents will go up and low income tenants will be forced out.
3. If the property is undesirable, or if the creditor is lazy or incompetent, then the property is likely to be allowed to deteriorate in both its physical condition and its property management. In which case these properties will become a blight upon both the tenants and the surrounding community.

This bankruptcy could not have occurred at a worse time. Because of the current financial crisis gripping the country it is extremely difficult to find financing to purchase multifamily housing. This is doubly a problem for affordable housing. The lack of available capital to allow for the purchase of these apartment projects by new, responsible owners will likely consign many to a path of deterioration and decay.

There are clearly many lessons to be learned from this fiasco.

Like a caboose on a wayward train, renters feel the brunt of the ongoing housing debacle. Their plights are largely undocumented by newspapers that cater to real estate advertisers and whose business stories feature flashy developments while glossing-over the grim truths of foreclosures.

In Galveston, FEMA finally responded to Hurricane Ike and placed emergency trailers on the island — but it was too little and too late: hundreds of the shelters sit empty as low-income residents have either left the island or found other shelter.

For a pdf version of the full stories, contact Bo McCarver at bmccarver@austin.rr.com

Renters Hit by Foreclosure Crisis Too

By Martha White   Washington Independent June 26, 2009

While the plight of homeowners affected by the real estate meltdown has been well-documented, renters too often fall under the radar. Although tenants’ advocacy groups credit recently passed national legislation for including some protections, they charge that the new law only scratches the surface.

The number of renters being forced from their homes is on the rise as foreclosures increase. “We’ve seen a mass increase. I would say it’s up by 50 percent,” said Arlene Bradley, housing advocacy director of Housing Rights Inc. in Berkeley, Calif., a group that provides legal advice and counseling to renters in the greater San Francisco Bay area.

Full story at: http://washingtonindependent.com/46844/renters-hit-by-foreclosure-crisis-too

KB Home chief says prices are stabilizing in some areas

Jeffrey Mezger, the CEO of KB Home, says he still sees challenging conditions ahead for builders. The company’s second-quarter revenue dropped 40% from a year earlier.

By Peter Y. Hong   Los Angeles Times June 26, 2009

The head of one of the nation’s largest home-builders said today that home prices are stabilizing in some parts of the country, but ongoing economic woes will continue to challenge the housing market.

KB Home chief executive Jeffrey Mezger said in a conference call with analysts that “in many markets we’re seeing a bottom form on price,” and that in some areas of Southern California where the company sells homes, monthly payments “are lower than rent today.”

The Los Angeles company targets first-time buyers, and in California many of its projects are in the areas hardest hit by foreclosures, where home prices have fallen most dramatically. KB Home’s average selling price for one of its homes fell to $216,200, down 4.6% from $226,600 a year earlier.

The company reported its fiscal second-quarter revenue dropped 40%, to $384.5 million from $639.1 a year earlier.

For the period ended May 31, KB Home’s loss narrowed to $78.4 million, or $1.03 a share, compared with a year-earlier loss of $255.9 million, or $3.30 a share. The company had been expected to lose 63 cents per share, according to a median estimate of 13 analysts surveyed by Bloomberg.

The company ended the quarter with $1.1 billion in cash.

KB Home has cut the size and prices of its homes to compete with low-priced foreclosed homes in many of its markets. Net new home orders were down 31% in the second quarter from the year-earlier period, to 2,910 homes. The total was up 59% from the previous quarter.

[End of story]

City’s home sales off from a year ago

By Chris Van Wagenen   Lubbock Avalanche-Journal June 25, 2009

It’s a tale of two sales and in Lubbock and it’s been all about the mending process since the depths of the recession swept through the Hub City last fall.

The bad news: sales of existing homes fell again in May when compared to figures a year ago. The good news: Lubbock-area Realtors have sold more homes each month since the year began.

Existing home sales down almost 15%

El Paso Times June 28, 2009

EL PASO — Sales of existing homes in El Paso declined almost 15 percent in May compared with sales a year ago, new data show.

Last month, 266 existing homes were sold through the El Paso Multiple Listing Service, down from 312 homes in May 2008, show data from the Greater El Paso Association of Realtors.

The median sales price of existing homes declined 10 percent in May compared to a year ago. The median sales price in May was $124,941, down from $138,841 a year ago.

[End of story]

Smart Growth Bill Vetoed

By Wendell Cox   New Geography June 25, 2009

Texas Governor Rick Perry has vetoed a bill that would have created a state level “smart growth” program. The veto message is below.

June 19, 2009

Pursuant to Article IV, Section 14, of the Texas Constitution, I, Rick Perry, Governor of Texas, do hereby disapprove of and veto Senate Bill No. 2169 of the 81st Texas Legislature, Regular Session, due to the following objections:

Senate Bill No. 2169 would create a new governmental body that would centralize the decision-making process in Austin for the planning of communities through an interagency work group on “smart growth” policy. Decisions about the growth of communities should be made by local governments closest to the people living and working in these areas. Local governments can already adopt “smart growth” policies based on the desires of the community without a state-led effort that endorses such planning. This legislation would promote a one-size-fits-all approach to land use and planning that would not work across a state as large and diverse as Texas.

IN TESTIMONY WHEREOF, I have signed my name officially and caused the Seal of the State to be affixed hereto at Austin, this the 19th day of June, 2009.

RICK PERRY
Governor of Texas

Reference: http://governor.state.tx.us/news/veto/12632/

[End of story]

‘Smart growth’ begins to take root in El Paso

By Gustavo Reveles Acosta   El Paso Times June 30, 2009

EL PASO –For all their brainpower, school districts do not always plan for “smart growth.”

They have built schools on sites that are not connected to the neighborhoods they serve. This has forced parents in dozens of schools to drive their children to class, even though they live just blocks away.

“The cooperation between school districts and municipalities when it comes to developing smart communities has been lacking,” said Nathan Norris of PlaceMakers, an urban-planning firm helping the city develop better growth patterns. “Fortunately, these conversations are taking place now in El Paso, and we should soon see a change in the way our schools are built and designed.”

Mirasol suit: Complex debate over ‘complex designation’

By Carlos Guerro   San Antonio Express-News June 30, 2009

When I saw all the suits in Judge Antonia Arteaga’s State District Court on Monday — with most in spectator seats — I knew the second Mirasol lawsuit would be a doozie, pitting working-class San Antonians against some of real estate’s heaviest hitters.

But the main players were three plaintiff’s lawyers and four for the defense — led by Roger Kirstien, who faced an uphill battle against Frank Herrera’s motion to have one judge consider all the cases.

Mirasol is a 250-home project that the San Antonio Housing Authority contracted KB Home and Magi Realty to develop as affordable housing, some for sale and some for rent.

The 72 homes sold went for $60,000 to $80,000, but complaints arose almost immediately about poor design and shoddy construction, like the use of untreated wood for exterior walls, improperly anchored sole plates and missing felt and vapor barriers. There was also bad shingle work, improperly anchored brick and poorly installed roof decks.

Many FEMA trailers vacant

By Leigh Jones   Galveston County Daily News June 30, 2009

More than three months after it opened, the mobile home park at Schreiber Field in Galveston is still only half full.

And now that more apartments and rental houses are available on the island, the park’s occupancy rate is unlikely to rise, officials with the Federal Emergency Management Agency said.

On Monday, only 27 of the park’s 54 furnished mobile homes were occupied by people displaced by Hurricane Ike, Erica Lopez, a spokeswoman for the agency, said.

After the storm, island officials begged the agency for months to open the park as hundreds of Galvestonians remained in hotels, unable to find any other place to stay.

But when it opened on March 13, only 20 families had agreed to move in.

Founder kept nonprofit’s structure ‘all in his head’

160 firms in Texas can be tied to nonprofit

By Karen Smith Welch   Amarillo Globe-News   June 29, 2009

At the heart of American Housing Foundation lies a tangle of companies wired together to build, buy and run affordable housing complexes.

Like the electrical circuitry of a home, multiple strands power separate projects.

But they run through a primary fuse box, where breakers can trip to isolate an overload and prevent the whole house from burning down.

A tiered network isn’t unusual in nonprofit housing and real estate development, according to legal experts familiar with the process, though none could speak specifically about AHF.

Establishing project-specific groups of companies could assure that “each property stands on its own – and lenders like it that way because they don’t want the property that they are financing to be harmed by its relationship to other projects that might be in trouble,” Dallas attorney Daryl Robertson said.

The one man who could sketch AHF’s blueprint appears to be Steve Sterquell, who died in an April 1 car crash ruled a suicide.

Add-ons vs. scrape-offs

Group pushes for zoning code change to OK carriage houses

Peter Marcus   Denver Daily News June 22, 2009

A group of Denver residents believe the city’s new zoning code should allow for the building of so-called carriage houses.

Following implementation of the old code 53 years ago, city officials did away with residents’ ability to build what are known as accessory dwelling units. The structures carry several different names, including carriage house and granny flats, named so because many families build them to house their aging relatives.

But as city officials are preparing to finalize the new zoning code — a draft was released at the beginning of June — a group called Friends of Granny are pushing for the right to once again build carriage houses.

Vancouver Mayor’s quick fix for homeless a long-term nuisance

Gregor Robertson’s big election promise has become a PR fiasco

By Greg Mason   Vancouver News and Globe June 26, 2009

No one said solving the world’s problems would be easy. Just ask Vancouver Mayor Gregor Robertson.

When Mr. Robertson ran for mayor last fall, he said his top priority was the city’s homeless problem. He’s vowed to eradicate it completely by 2015. His plan is to build lots of social housing – or at least get the province to. Meantime, he’s set up emergency shelters as a temporary measure.

And it’s quickly turning into a PR fiasco.

Seeking solutions to city’s homeless population

By Sara Foley   Corpus Christi Caller-Times June 28, 2009

CORPUS CHRISTI — Joe Duran’s bedroom view is of Corpus Christi Bay. His bed is a concrete step near Memorial Coliseum. He’d rather not talk about the places around downtown that have been his bathroom.

Two years on the street have taught Duran that downtown and uptown Corpus Chrsiti are places he can sleep, eat and drink beer.

For the business owners who shuffle sleeping transients away from their storefronts and pressure-wash the stench of urine off their bricks, the accepted presence of the homeless is a frustrating, escalating price of doing business.

Now, after their complaints reached City Council’s attention, there is an attempt among the businesses and city to at least control the problems.

The Self-Service City

By Timothy Egan   New York Times June 29, 2009

First, they took away the cops parked at key intersections and replaced them with with mounted, overhead cameras. This idea didn’t start in my city, Seattle, but when it turned out to be a revenue-generator, even if it reduced safety, City Hall took to it with a vengeance.

Who needs a human being when you can write ten times as many tickets without overtime pay?

Then, they made us do detailed sorting of our garbage – not just paper and plastic, but all the melon rinds and apple cores favored by compost worms. Fine.

They asked us to put rain barrels under our gutters to collect runoff. Done.

Next up was a plan to force people to haul out their trash from certain city parks. These may be public spaces – the city’s shared living rooms – but the message was clear: you’re on your own.

I get it. And so do my neighbors. This spring, while planting tomatoes and squash in the terraced garden behind my house, I noticed the hillside was full of fellow urban horticulturists ripping up ornamentals to push the edges of their farmlets.

The Texas Department of Housing and Community Affairs (TDHCA) could not meet to conduct business yesterday because it could not get a quorum of board members. As a result the agency is compelled to schedule an “emergency” board meeting for next Monday at Dallas Love Field.

All of this could have been avoided had Governor Perry followed state and federal law and appointed someone to fill the open TDHCA board seat reserved for a consumer. The consumer seat was recommended by the Sunset Advisory Commission back in 2001. It became a legal requirement shortly after that with the passage of a federal law requiring all government boards acting as public housing authorities (TDHCA being one) to have one representative of public housing residents or Section 8 housing voucher residents be a board member. The requirement that PHAs have a consumer on their board is also a require of state law as well.

Don’t get me wrong. My observations are that Governor Perry has done a generally fine job of picking decent and caring board members for the agency. It just makes sense to me that both for efficiency and for the benefit of a board charged with making decisions about housing programs and policy, the board would be even better with the perspective of a consumer of those housing programs to advise it.

But neither Governor Perry nor Governor Bush before him see things that way. Both refused to name a low-income housing consumer to the board. To fill the seventh TDHCA board seat with someone other than a representative of low-income housing consumers would be a direct violation of the law. So, while the state law says there are supposed to be seven TDHCA board members, there have never been more than six appointed.

Which takes us back to Thursday’s quorum problem. Three board members attended the meeting. If a seventh board member has been appointed and attended today there would have been four board members present to establish a quorum and the meeting could have proceeded.

Instead, there will be next Monday’s emergency board meeting. Department staff, board members and interested members of the public will lose another day of work. The state (taxpayers) will pay thousands of dollars flying people to the emergency meeting in Dallas. All to prevent the governor from having to empower one voice of low-income consumers.

Come on Governor. Do the right thing and make the consumer appointment.

• Homebuyers buying new houses through a CDC in Brownsville, Texas have an average income of $19,000.

• Low-income border families, who a decade ago would have bought lots and built homes through their own labor in a colonia, have lately been buying homes from many of the former colonia developers. Lately, these former colonia developers have been selling low-income families a lot and a house with financing through an exploitative subprime loan.

• The subprime lending problem on the Texas-Mexico border has led to a very large number of home foreclosures among lower-income families.

These are three things that stand out from an interview I conducted with Nick Mitchell-Bennett, Executive Director of the Brownsville Community Development Corporation. In the interview we talked about about the CDC’s work over the past 35 years in providing housing to low income families on the Texas-Mexico border.

Watch the video interview…

A new public opinion poll found that 37 percent Texans say their family’s economic situation is worse than one year ago and only slightly more than half are “very confident” that they can pay the rent or mortgage.

The Third Annual Texas Lyceum Poll, conducted from June 5th-June 12th, 2009, focused on Texans’ attitudes on a variety of social and economic issues. Three out of four said they are registered voters.

Housing and foreclosures tied for second place in the list of the most important economic issues facing Texas today along with health care and immigration (too many people living here illegally). The most important issue was unemployment and the lack of jobs.

When asked about the most important issue facing their family, affordable housing came in relatively high on the list. beating out the cost of education, retirement planning and gas and fuel prices.

Texans surveyed were about evenly divided about the need for increased government regulation of major financial companies.

Here are the detailed results of these questions.

Question: Now thinking about you and your family’s economic situation, would you say that you are better off, worse off, or about the same economically compared to a year ago?

17% Better off.
37% Worse off.
46% About the same.
- Don’t know/Refused/NA.

Question: First, how confident do you feel about your ability to pay your mortgage or rent?

53% Very confident.
25% Somewhat confident.
11% Not very confident.
4% Not at all confident
7% Don’t Know / Refused / NA

Question: What do you think is the most important economic issue facing Texas today?

41% Unemployment/Lack of Jobs/Jobs.
6% Housing/Foreclosures.
6% Health Care.
6% Immigration (Too many people living here illegally).
5% Financial Issues-Budget/Debt.
5% Taxes.
5% Energy/Utilities (Oil/Natural Gas)/Availability.
4% Poor Government/Would like New Government.
4% Cost of Education/Lack of Funding.
4% Gas Prices/Fuel.
4% Other.
3% Economy (General).
3% Cost of Living (Grocery Prices/Inflation).
3% Wages (Not enough, keep getting cut).

Question: What do you think is the most important economic issue facing YOU AND YOUR FAMILY today?

27% Unemployment/Lack of Jobs/Jobs.
8% Health Care/Being Available in Future.
7% Financial Issues-Budget/Debt.
6% Taxes.
6% Cost of Living/Inflation.
5% Wages (Not enough, keep getting cut).
5% Economy (General).
3% Affordable Housing.
3% Cost of Education/Lack of Funding.
3% Retirement Planning.
3% None/Nothing.
2% Governance/Leadership.
2% Government Financial Issues/Overspending.
2% Gas/Fuel Prices.
2% Other.
1% Stock Market/Investments.
1% Cost of Energy/Utilities (Oil/Natural Gas).
1% Poor Programs (Social Services).
13% Don’t Know/NA

Question: Is increased government regulation of major financial companies something you would support or oppose? (Follow-up: Is that strongly support/oppose or just somewhat?)

29% Strongly favor
18% Somewhat favor
17% Somewhat oppose
29% Strongly oppose
7% Don’t Know / Refused / NA

The overall margin of error for the sample is plus or minus 3.34 percentage points at the 95% confidence level.

The Texas Lyceum, a non-profit, non-partisan group, is a statewide leadership organization focused on identifying the next generation of top Texas leaders. The Lyceum consists of 96 men and women from throughout the state who begin their six-year terms while under the age of 46, and who have demonstrated leadership in their communities and professions, together with a deep commitment to Texas.

The Texas Lyceum acts as a catalyst to bring together diverse opinions and expertise to focus on national and state issues, and seeks to emphasize constructive private sector, public sector, and individual responses to the issues.

To accomplish these purposes, the Lyceum conducts periodic public forums, publishes the Lyceum Journal, commissions The Texas Lyceum Poll, and convenes programs for its Directors to explore and discuss key economic and social issues of the state and nation.

Robert Doggett worked on behalf of TxLIHIS during the past session of the Texas Legislature, One of his main focus areas was trying to gain some reasonable protections for consumers facing mortgage foreclosure.

In my first experiment with a diavolg I asked Doggett about what was proposed in the legislative session to deal with consumer protections for mortgage borrowers and what the Texas Legislature passed.

This turned out to be more of a monovolg than a diavolg.

I’m just learning the technologies and techniques of diavolgs so bear with me. They will get better. (At least I’ll know to comb my hair and shave next time).

A surge of mortgage defaults is forecasted as the housing industry slowly sinks further into the general recession. The Texas market has been slower to react but now approximates national averages.

A new Harvard study suggests the “echo boomers,” children of baby boomers, will create new market demands and help lift the economy.

For a pdf version of the full stories, plus contextual articles in social, environmental and legal areas, contact Bo McCarver at bmccarver@austin.rr.com.

Worse than subprime? Other mortgages imploding slowly

By Kevin G. Hall   McClatchy Newspapers June 18, 2009

WASHINGTON — Call it son of subprime. Experts warn that a new wave of mortgage foreclosures may be coming soon and could rival the default rates for subprime mortgages and slow efforts to find bottom in a prolonged national housing slump.

The mortgages in question are $230 billion of option adjustable-rate mortgages, creative lending products that flourished at the height of the housing boom. In an option ARM, a borrower can opt to pay less than his or her monthly balance due, and the difference is tacked onto the outstanding loan balance.

Many experts had expected an explosion of defaults in the springtime on these roughly 564,000 outstanding mortgages. However, interest rates dropped to historic lows, and that delayed the detonation of what many housing analysts still see as a ticking time bomb.

“They’re probably going to default at a rate that makes subprime look like a walk in the park,” warned Rick Sharga, senior vice president for RealtyTrac, a foreclosure research firm in Irvine, Calif.

Mortgage rates fall back from 7-month high

Associated Press June 18, 2009

WASHINGTON — Rates for 30-year home loans fell back this week after soaring to the highest level in seven months a week earlier.

The average rate for a 30-year fixed mortgage was 5.38 percent this week, down from 5.59 percent a week earlier, mortgage company Freddie Mac said.

Rates had risen for three consecutive weeks after yields on long-term government debt, which are closely tied to mortgages rates, had been climbing as investors worried that the huge surplus of government debt hitting the market could trigger inflation.

But data released Wednesday suggested that inflation remains largely in check, and the yield on the 10-year Treasury note has fallen back from an 8-month high of 4.01 percent reached last week.

D-FW foreclosure postings hit new high

By Steve Brown   Dallas Morning News June 18, 2009

Dallas-Fort Worth area home foreclosure postings are hitting new highs, with more than 6,000 properties set for sale next month.

That’s a 62 percent jump from a year ago, according to Addison-based Foreclosure Listing Service.

The latest tally of foreclosure postings easily topped the last record of just over 5,500 filings for May’s auctions.

Austin area feeling the foreclosure bite

Filings lower than elsewhere, but they’re on the rise, and families are struggling.

By Jeremy Schwartz Austin American-Statesman June 21, 2009

GEORGETOWN — Alma and Adolfo Vasquez might not appear to be primecandidates for foreclosure. Their 3,100-square-foot home near two golf courses is appraised at nearly half a million dollars. They were far from irresponsible buyers, making a 20 percent down payment after selling their California home in 2006, just before the housing bubble burst.

But by early April, the Vasquez family, slammed by a double whammy of rising property taxes and tough times for Adolfo’s home-renovation business, were three days from losing their home at a foreclosure auction.

Home start surge could mean housing market has hit bottom

Building permits also increase more than expected, but inventories remain high.

By Jack Healy New York Times June 17, 2009

Construction of new homes rebounded in May after dropping sharply a month earlier, the government reported Tuesday, signaling that the housing and construction markets might be hitting a bottom.

In another report, the government said that prices received by producers for finished goods rose a smaller-than-expected 0.2 percent in May, hinting that Wall Street’s fears of inflation might be exaggerated.

Still, energy prices posted the largest increase since January, with gasoline prices up nearly 14 percent for the month.

Dallas-Fort Worth ranked 3rd best housing market in report

By Steve Brown   Dallas Morning News June 17, 2009

The Dallas-Fort Worth area is one of the top three housing markets in the country.

That’s according to a just-released economic report from the Brookings Institution.

In this comprehensive, nationwide study, the D-FW area, in this comprehensive, nationwide study, ranked third behind Houston and Buffalo among the metro areas that have been the least affected by the falling home prices.

‘Echo Boomers’ may anchor economy

By Lynn Adler   Reuters June 22, 2009

NEW YORK – The children of baby boomers will eventually resuscitate the pummeled U.S. housing market, Harvard University said on Monday, but in the meantime, limits on income and credit are sustaining the three-year bust.

The highest unemployment in almost 26 years, record foreclosures and rigid lending threaten to overcome emerging home sales progress despite unprecedented efforts by the Obama administration, Harvard’s State of the Nation’s Housing 2009 report said.

Echo boomers, the children of the post-World War Two baby boomer generation, offer a massive source of support for housing, the study said. The generation is entering the peak home buying and renting ages of 25 to 44 and numbers over five million people more than did their parents’ record-sized group in the 1970s.

Vancouver to boost building of low-cost rentals with stimulus plan

Developers to be offered everything from a fee holiday to permission to build super-small suites to bonus space

By Francis Bula   Vancouver Globe and Mail June 19, 2009

Vancouver will be offering developers everything from a fee holiday to permission to build super-small suites to bonus space if they build affordable rental units, as part of a mini-stimulus program meant to get construction going again in the city.

The program, which the city aims to start by July 6 and which will last until Dec. 15, 2011, is not just a first for Vancouver but for Canada, when it comes to a city pushing an affordable-housing agenda.

Indicted: San Antonio Housing Authority staffers, past and present

San Antonio Express-News June 18, 2009

Five current or former employees of the San Antonio Housing Authority have been indicted in a federal corruption investigation.

At least four suspects were arrested by the FBI on Thursday in connection with separate indictments alleging they took kickbacks from contractors vying to get work from the housing agency. They face charges of accepting something of value involving federal program funds.

Galveston Housing Authority hires design firm

By Leigh Jones   Galveston County Daily News June 17, 2009

GALVESTON — Galveston Housing Authority’s board of trustees on Tuesday hired Houston-based Civic Design Associates to create a plan to rebuild public housing at Cedar Terrace, Oleander Homes and Magnolia Homes.

But the company really will be acting as a facilitator in the process, project director James Hill said. “We’re not the ones who will be determining this master plan, it’s the community,” he said. “That’s the only way it will be successful.” Hill, whose firm has worked in Galveston for the past 20 years, said he understood how contentious the public housing issue had become on the island since Hurricane Ike flooded four housing authority developments and displaced 569 families.

Using a weeklong public design process, the firm hopes to get residents, business owners and public officials to come together and work out a plan that will be acceptable to the most people, Hill said.

“We continued not in a state of indolence, but hunted every day, and prepared a little cottage to defend us from the winter storms.” – Daniel Boone

Daniel Boone's cabin -New York Public Library

As the Southwest Airlines flight climbed upward from the El Paso Airport it banked southeast over the area known locally as the Lower Valley. The rich soils along the Rio Grande River and the extensive network of irrigation ditches emanating from the river made the 40 miles down river from the city of El Paso one one of the most agriculturally productive areas of the state.

From a couple of thousand feet in the air it was clear that the farmland was rapidly being overtaken by an irregular scattering of growth of residential subdivisions. Beyond the boundaries of the city of El Paso these subdivisions sprang up rapidly in the 1970s.

The so-called “developers” of these colonias often did little more than buy a piece of farmland and mark out the lots with wooden stakes before selling them with low monthly payments and little or nothing down to low income families with the dream of owning a piece of land and building a home. The explosion of the growth of colonias in El Paso’s Lower Valley, when viewed from the ground were distressing for the substandard housing conditions they brought but the view from the window of the airplane was most alarming because the magnitude of the problem could be appreciated.

Sitting next to me on the plane was my late friend John Edmondson, the son of one of El Paso’s largest homebuilders, and at the time the chief of staff to El Paso State Senator Peggy Rosson. “What a mess,” I said to Edmondson. “Colonia sprawl is gobbling up all the farmland in the Lower Valley. You all need to get this under control.”

“How do you tell those families they can’t build a home in a colonia?” Edmonson replied. “They’re like Daniel Boone, going into the wilderness and building a cabin for themselves. They can’t afford to live in the city. There’s no housing for them. How do you say ‘no’ to someone with a frontier attitude of, ‘I’m going to do what I have to do to make a home for my family.’”

That 1991 plane ride and conversation has stayed in my mind as each session the Texas Legislature brings new bills to address the colonias. For me, weighing colonia legislation amounts to a balancing act between limiting inefficient urban growth, sprawl, environmental problems, dangerous substandard living conditions and transportation dilemmas on the one hand and the need to allow poor families to exercise the option of buying land and building a home they can afford and for which they have no other viable housing option.

I call this the Daniel Boone ethic of homeowner freedom.

Compelling developers to provide decent subdivisions

In the mid-1990s the Texas Legislature acted decisively to compel border counties to adopt and enforce minimum subdivision development standards on colonia developers. The Legislature sought to ensure that future colonias had decent roads, proper drainage, and water and wastewater. In exchange for Texas border counties adopting and enforcing these new rules, existing colonia residents got help from the State of Texas in the form of bonds to bring in water, sewer and roads that earlier colonia developers had failed to provide.

The public improvements came at the price of driving up the cost of lots in new colonias significantly. Before the enactment of the so-called “model subdivision rules” a lot in a colonia could be bought for $5,000-$10,000 with very low monthly payments financed through a contract for deed. Today, that same lot could easily cost $25,000-$30,000. There are not many people around who would argue that the Legislature’s imposition in the 1990’s of minimum standards on future colonias was not the right thing to do. My point is that it came with a price. A price that was paid entirely by impoverished families.

During this year’s session of the Texas Legislature an organized group of colonia developers brought forward legislation to reduce the requirements imposed by the model subdivision rules that they provide roads, drainage, water and sewer in their new colonias before they start selling lots. The developers argued that the existing infrastructure requirements drove up the cost of the lots, making them less affordable to low income families. That is true.

Our position was to oppose all of the developers’ efforts to allow them to delay proper development of the colonia infrastructure until they actually sold a lot. I came to this position having watched the practices of many of these same developers 15 years ago. At that time they would often sell many of the lots in a colonia before roads and water were in place, promising the buyers that these improvements would be forthcoming shortly and would certainly be in place before they finished building their homes. I can cite literally dozens of examples where the developer never provided the roads, water or sewer, leaving the low-income residents of their colonias in desperate straits. It took years to get public funding to build the infrastructure the developers failed to provide. In many cases, colonia residents are still waiting for improvements.

Efforts by developers to weaken colonia quality standards

The colonia developers also proposed this session exempting five acre “ranchettes” from the subdivision laws requiring them to provide infrastructure. Existing law exempts ten acre tracts and larger.

We opposed this too. The legislation was a blatant attempt to get around the infrastructure requirements and would have opened up a large new market, creating large lot de facto substandard colonias. The consequences to orderly and proper urban development would have been disastrous. Imagine the problems of a city ringed with five acre lots on poorly drained dirt roads, with inadequate septic systems, lacking potable water, owned by extremely low income families.

As these areas built out there would be a compelling demand for public services. Yet the cost of providing those public services would be disproportionately large because of the low density of the housing. The cost of extending water and sewer lines per household would be greatly increased because of the large lot size and low population densities. The same holds true for the provision of paved roads, electricity and gas service, fire and police protection and on and on. The adjacent incorporated urban areas would not annex these new colonias because the cost of providing municipal services would far exceed the tax revenues that could be assessed on the impoverished property owners.

Legislation exempting five acre lots would have been an urban development disaster and was wisely rejected by the Legislature. Even the current law exempting ten acre lots from the subdivision rules and standards has proven to be a problem according to the Valley Morning Star newspaper in a June 6 story…

Call them “ranchettes” or grazing land or the site for a future dream home.

But Cameron County officials are not very optimistic about 10-acre tracts of land being offered for sale along Coco and Louisiana roads north of La Feria, the same area where county workers spent months after last July’s Hurricane Dolly, pumping around the clock trying to remove floodwater.

Alejandro Sanchez, assistant Cameron County engineer, said that, even though anti-colonia legislation was passed by the state in 1991, the size of the tracts of land being offered prevents the county from doing anything to stop their sale.

“The state basically assumes that, if it’s more than 10 acres, it will typically be agricultural use,” he said. “They don’t have to go through the subdivision process. They don’t have to file a plat.”

Land purveyor Art Ortega said he’s offering the 10-acre tracts for $50,000 each.

“Yes, you can build there,” he said. “There was a flooding problem out there last year. We’re disclosing it.”

Precinct 4 Commissioner Edna Tamayo said Thursday she was shocked to learn that more people might be sold land in the area for homesites.

“I was out in my precinct and I saw those signs and I was shocked,” she said. “It definitely floods there. I caution anyone to please check with the county first before buying anything there. I’m really worried about it,” the commissioner said. “I don’t want somebody to buy some land and then they can’t do anything with it.”

Because the tracts are 10 acres, there isn’t much the county can do, [Gustavo Olivarez, assistant director of the county's environmental health department] said.

“If it were a subdivision, it would be easy (to stop the development),” he said.

Colonia developers did not come away from this session empty-handed however. They convinced the legislature to establish a task force to study the model subdivision rules to see if they should be changed (HB 2275). We worked hard and succeeded, with the support of the bill sponsors, in amending this legislation. Originally, the bill said…

The legislature finds that the current law regarding the regulation of subdivisions in the unincorporated areas of counties contains numerous conflicts and is unnecessarily complex, particularly regarding the regulation of development in counties near the international border and in economically distressed counties, and that uniform subdivision standards in those counties serve an important purpose in promoting a high standard of living for the citizens of Texas.

Working with the bill sponsors we were able to have this amended to eliminate the presumption that development standards for colonias “contains numerous conflicts and is unnecessarily complex, as well as restating the goal of “enhancing the quality of living for the residents” of the colonias.

The legislature finds that the current law regarding the regulation of subdivisions in the unincorporated areas of counties near the international border and in economically distressed counties should be reviewed to ensure that statutory provisions are consistent and clearly achieve the goals of promoting uniform subdivision standards in those counties and enhancing the quality of living for the residents of those subdivisions.

The original filed version of HB 2275 would have included representatives of ”private interests in land development” but included no colonia residents or their representatives on the commission. The bill sponsors agreed to our request to provide six colonia residents and their representatives with seats on the commission. Despite these improvements, we are deeply concerned that this commission may become a vehicle for undoing the model subdivision standards that have served over the past decade to prevent the proliferation of new substandard colonias.

A problematic attempt to impose residential building standards

The other major colonia legislation this session had to do with the imposition of residential building standards outside of incorporated urban areas. In this area of legislation the “Daniel Boone ethic of homeowner freedom” becomes a matter of special concern.

It horrifies urban planners from other states when I explain to them that in Texas there is no county zoning authority, nor even county ordinance making authority. Texas counties, for the most part, cannot control development or even regulate the standards for constructing a home.

You still can be Daniel Boone in Texas and go out and build what you want, and build it how you want it, so long as you own the land. At least you could until June 1 if you live in a border county.

The complications began two years ago when the Texas Legislature authorized the changes to the law governing the Texas Residential Construction Commission (TRCC) that required builders to construct residential units in compliance with the residential building code. For good reasons this year the Texas Legislature abolished the TRCC and with it the imposition of the statewide residential building code.

We decided several years ago to support legislation by Senator Eddie Lucio (D-Brownsville) that new homes constructed outside of incorporated areas be built in compliance with standard residential building codes. These codes exist for a reason. They protect people from the dangers of electrocution, fires and disease caused by improper plumbing and electrical work. If a home is to be a financial asset and not simply be an ongoing financial liability then it needs to be built to comply with physical standards to ensure that the home does not prematurely deteriorate or fall down.

We advocate this violation of the Daniel Boone ethic of homeowner freedoom with some caveats.

First, we have insisted that any legislation imposing building standards on existing homeowners not impose harsh financial or criminal penalties on low-income homeowners who lack the financial resources to bring their homes into compliance with the new building codes. This is not an idle concern. When the Texas Legislature granted counties the ability to regulate septic tanks in unincorporated areas, El Paso County undertook an aggressive enforcement campaign. County inspectors went into the colonias and began assessing fines on residents of colonias for having improperly installed septic systems. When government begins fining poor people for their substandard living conditions something is obviously wrong. In the case of the septic system fiasco, low=income homeowners were at times spending all of their money paying fines for having bad septic tanks instead of fixing their septic tanks.

Hence, our insistence that any legislation requiring previously non-compliant homes in unincorporated areas to meet building standards had to contain a grandfather provision to protect existing low income homeowners from being fined out of their homes. Legislation offered by State Sen. Eddie Lucio (SB 1370), which we supported, contained such a provision. It prohibited county governments from fining homeowners with a substandard homes for being out of compliance with building codes unless the county made available low-interest loans or grants for home repairs that the homeowners refused to accept.

Sen. Lucio’s legislation was passed by the Texas Senate for the past couple of legislative sessions only to die in the Texas House. Over in the House the sentiment for protecting private property rights from government regulation has repeatedly blocked efforts to extend county government powers to regulate development, including Senator Lucio’s bill.

Yet a building codes bill did pass the session. HB 2833 by Rep. Marquez (D-El Paso) and Sen. Shapleigh (D-El Paso). [Both of whom worked with us to improve the bill, for which we are very grateful.]

HB 2833 was rushed through in the final days of the session and is far from a perfect bill. The saying goes that you don’t want to watch the process of legislation being made. That also applies in the case of HB 2833 to the final bill in itself. It is contradictory and will present a host of problems as counties try to implement it.

The bill applies to any house or duplex constructed on a vacant lot and also to any addition to a residence that increases the size of the residence or it’s value by more than 50%. The bill does not apply to mobile homes.

The bill permits counties within 50 miles of the Texas-Mexico border, with a population of 100 or more, to adopt the bill’s provisions by resolution of the commissioners court. Once adopted, a person who builds or adds onto a residence has to arrange for three inspections to be performed while the house is being built to ensure compliance with building codes. The inspector can be a licensed engineer, a registered architect, a professional inspector licensed by the Texas Real Estate Commission, a building inspector employed by the county or city or another certified inspector.

Precisely how this is going to work is unclear.

The first problem is how are colonia residents going to find out about this requirement in the first place? If they don’t know about the law, and don’t secure the necessary inspections at the three stages of construction they will be out of compliance and subject to injunctive action by the county. Conceivably, the county could seek an injunction to require the house to be demolished in that case.

Second, where does the colonia resident obtain a list of inspectors? Who regulates how much the inspectors can charge? Who handles disputes between the homeowners and the inspectors? If an inspector does not approve the work, can the homeowner just hire another inspector? How is the quality of the inspectors’ work overseen?

None of these questions are addressed in the legislation.

If this hire your own inspector approach seems strange, well, it is. A more traditional and straightforward approach would have been to provide that a homeowner to go to the county, apply for a building permit, and have a county employee inspect the home as it was being built. The hire your own inspector approach is the legacy of the Texas Residential Construction Commission, a state agency created of the Texas homebuilders’ lobby. The homebuilders did not want to subject themselves to review by government inspectors. They preferred to hire an inspector of their choosing, in their own employ, to review their compliance with building codes. This is a good deal for the builder but a bad one for the homeowner.

The TRCC itself was the creation of the Texas homebuilders lobby. It was created to force homeowners who were dissatisfied with the work of their homebuilder to go through a lengthy and drawn out dispute resolution process mediated by the TRCC. In the wake of widespread consumer anger, the Legislature this session did away with the TRCC.

This session’s new home inspection bill was sponsored by two members of the El Paso legislative delegation. “When we saw that regulations were disappearing, we knew we had to do something to ensure that substandard housing did not crop up overnight across the state. In the border counties, we have been fighting that very circumstance for years,” said Representative Marquez (D-El Paso), the House sponsor, said in a press release proclaiming the bill “a major victory” for herself and for Texas homeowners.

“Today, all of Texas wins. Border counties finally get some authority to regulate building and the rest of the state avoids the problems we have lived with in El Paso,” she said.

I am quite a bit more skeptical about the effect of the legislation.

The home builders lobby was not about to roll over and allow themselves to be subjected to government enforcement of building codes outside of incorporated areas. Hence, the requirements in this bill that a homebuilder hire their own inspector. The law was written to favor the interests of the homebuilders while ignoring the practical difficulties of forcing low income colonia residents, who build their homes with their own labor, to independently contract with home inspectors.

A second provision of the bill requires a person building a house to provide notice to the county of the location of the house, the date they intend to begin construction and the building code that will be used. The county can also require that the builder notify the county within 10 days of the final inspection that the house is complete.

Yet, in an apparent contradiction to the requirement that the homebuilder provide advance notice to the county that they intend to build a house, another section of the bill provides that the new law “may not be construed to require prior approval by the county before the beginning of new residential construction.” Apparently the Legislature is trying to distinguish between providing notification to the county and securing approval of the county. The difference between the two beats me.

The legislation grants the county the authority to bring suit in District Court to “obtain appropriate injunctive relief to prevent a violation or threatened violation of a standard or notice required under this subchapter from continuing or occurring.” It further provides that a violation of this law is a Class C misdemeanor. But the bill exempts (at our urging and thanks to the bill sponsors) from the misdemeanor fine new residential construction built by the individual or an individual acting as their own contractor provided that the individual intends to use the residence as their primary home.

This is important because the Texas Penal Code in Section 12.03(c) provides that conviction of a Class C misdemeanor is punishable by a fine not to exceed $500. We anticipate that compliance among colonia residents with this law will be spotty at best because, at least initially, they will have a hard time finding out that the new law exists.

We were were especially worried about the impact on homeowners with previous unrelated misdemeanor convictions. Cumulatively, the results could be serious, including the potential for jail time.

Daniel Boone and today’s colonia residents

The Daniel Boone ethic of homeowner freedom is dying in Texas.

Today’s colonia residents have more in common with Daniel Boone than one might suspect, not just by virtue of their self-reliant and independent character but by the way they are treated by their government.

As one historian has noted…

Boone the trailblazer was too unsophisticated for the civilization which followed him and which eventually defrauded him of his land. Boone was dogged by debts, lawsuits, and land-record technicalities until, as one of his kin said – exaggerating slightly – at the time of his death he did not own enough land to make a decent grave.

Once again the lack of oversight of a city housing department leads to waste and abuse and puts the federal funds in jeopardy.

The Fort Worth Weekly reported on May 19 that Jerome Walker the long-time deputy director of Fort Worth’s housing and economic development department was fired on May 7. Now the city’s funding from the US Department of Housing and Urban Development (HUD) is reported to be in jeopardy.

According to the FW Weekly…

The reasons for dismissal [of Walker] ranged from “poor quality work [in new and rehabilitated houses for the low-income and the poor], poor customer service [and] inappropriate use of grant funds to an overall disregard of management oversight and control.” Walker’s biggest sin was his misuse of millions of dollars of federal funds, which threatened the city’s future federal funding.

The housing deputy director’s termination memo outlines a disturbing range of problems with the City of Fort Worth’s housing programs.

According to the CBS TV station in Dallas, the city is now racing to rescue millions of dollars the city could lose because of sloppy paperwork. The US Department of Housing and Urban Development Department informed Fort Worth in May that it has not properly filed applications for the money, despite repeated warnings from the government.

If this year’s applications aren’t ready by noon today the city’s HUD funds could be lost.

Watch the CBS TV station’s story.

Here are two things I urge the City of Fort Worth to do immediately.

1) Many cities administer owner-occupied rehabilitation programs efficiently and effectively. It is a matter of hiring the proper management and holding them accountable for cleaning up the program. If necessary an independent auditor should be hired to oversee the city’s administration of this program until it operates effectively.

2) Housing programs would be better administered and problems will be avoided when they are operated in the clear light of day with adequate public scrutiny. To accomplish this, city housing departments should maintain on the Internet an ongoing accounting showing where all housing funds are being spent, delineating the goals for each program and continuously updating the accomplishments toward meeting those goals.

Not only Fort Worth but all city councils should put this later reform in place immediately. If they do not, the Texas Legislature should make this a requirement during the next legislative session.

I don’t know who, if anyone, is guilty in the Dallas Low Income Housing Tax Credit public corruption case that is set to get underway in federal court today. But I do believe that all of us who work in affordable housing in Texas are little guilty for not speaking up louder to demand a fix for the problem that lies at the root of this case.

If you aren’t not up to date on this mess, check out the summary of the cast of  characters the Dallas Morning News has prepared..

In a front-page story in today’s Dallas Morning News the Dallas corruption case was summarized as follows…

Jurors will hear how a change in state law opened the door for Hill, Lee and others to allegedly cash in on low-income housing deals.

In 2003, the Legislature passed a law that required developers wanting to build low-income apartments in cities already saturated by subsidized housing, like Dallas, to get approval from city councils and community groups before they could get tax breaks.

Ratcheting up the pressure was a ban on having two or more such complexes within one mile of each other.

Fast-forward to Oct. 27, 2004, a critical crossroads in the government’s narrative. That day’s council agenda contained proposals for dueling low-income developments from both Potashnik and Fisher [LIHTC developers]. Some of the developments were to be built on opposite sides of the road from each other.

Prosecutors contend that five days before [former Dallas Mayor Pro Tem Don]Hill led his council colleagues to favor Southwest Housing’s projects, the Potashniks cut Sheila Farrington [Hill's girlfriend] the first of a dozen $14,000 checks she allegedly funneled to her paramour, Hill.

According to prosecutors, Hill at one point had schemes involving separate groups of people hitting both Fisher and Potashnik up for cash funneled through phony contracts.

First, let me say that the Morning News is dead wrong in saying that Dallas is saturated with “subsidized housing.” Far from it. In 2009, 44% of Dallas renters can’t afford to rent a modest two-bedroom apartment. For rent to be affordable would require a full-time worker to earn $17.40 an hour. (These figures are according to the National Low Income Housing Coalition in a report entitled Out Of Reach, which is available on their website).

But it is true that state law awards critical scoring points to Low Income Housing Tax Credit developers who secure letters of support from elected officials at the state and local levels. This requirement should be repealed.

Sen. John Whitmire (D- Houston) attempted, unsuccessfully, to convince the Legislature this session to allow state elected officials the option of refusing to write letters of support without penalizing the points the developer would earn in the competition to get their development funded.

We really need to go further than Sen. Whitmire proposed however.

There is an elaborate process for assessing the worthiness of a Low Income Housing Tax Credit application already in place with the issuing entity, the Texas Department of Housing and Community Affairs. There are ways that this assessment process could be further strengthened, including making the market analyst assigned to the development completely independent of the developer.  The market analyst is responsible for preparing a report on the appropriateness of the project at its proposed location.

It is the appropriateness of the project that is the issue here. While local elected officials do have a general knowledge about the districts they represent, they are hardly experts in the intricacies of the market needs for of affordable rental housing among a narrow market share of low income renters. Thus, the letters of support from the local elected officials are not of great use in deciding whether the proposed housing development is needed or not. But because of the highly competitive nature of the LIHTC process, the scoring points awarded for a favorable letter from a public official often make or break a proposed development.

The Texas Department of Housing and Community Affairs will be reviewed by the Texas Sunset Commission over the course of the next year and a half. This is an excellent opportunity to repeal the requirement for local elected officials to write letters of support and to put in place a more sound and nonpolitical assessment of the need for a proposed LIHTC development.

In the meantime, we are all going to be treated to a sordid, painful and drawn out public accounting of just what is wrong with the current law through front page media coverage of this case. The association of affordable housing with public scandal will do much to further erode the public’s all too weak support for government efforts to assist the poor to find affordable housing.

Home in a flooded Texas colonia

Eight to ten years ago the colonias were subject to public attention and policy action. Funds were appropriated to provide water and sewer services, model subdivision standards were enacted to restrain the development of substandard colonias, legislation was passed to restrict exploitive contract for deed sales, state agencies worked to convert contracts for deeds into deeds of trust and provide more affordable financing, and housing funds began to flow into the colonias, especially through the Texas Bootstrap Owner Builder Loan Program.

Taken as a whole, these programs produced significant improvements in the lives of colonia residents. Yet they only begin to address the needs. The colonias remain arguably the most impoverished region in the United States with the worst living conditions.

Today colonias receive far too little attention despite serious ongoing problems, remaining deep-seated poverty and substandard living conditions.

For the past two legislative sessions organized efforts of large landowners and colonia developers sought to undo the model subdivision rules. Efforts to provide counties land-use control and the ability to enforce minimum construction standards in a manner not punitive to colonia residents were rejected. In their place the Legislature adopted this session a hastily written bill regarding home inspections which is liable to have widespread negative impacts on colonia residents.

The lack of attention to remaining colonia problems, the efforts by developers to roll back model subdivision standards and the enactment of county powers that will negatively affect colonia residents have occurred because our failure to effectively advocate and educate to legislators creative solutions to colonia problems.

Robert Doggett and I have done the best we could to derail affirmatively bad legislation or to blunt its impact. But frankly we are fighting a defensive battle and over the past two sessions have moved very few affirmative colonia issues forward either in the legislature or through the state bureaucracy.

This issue became critical to us this session when an organized group of colonia developers succeeded in gaining enough political support to come close to passing broad exemptions to the model subdivision rules. Now we face an interim in which the Legislature has directed that a committee will meet to propose a broad revision of the laws that govern the development of colonias.

During the 1990s the ad hoc border low income housing coalition played the critical role of bringing together public interest groups, government and colonia residents to identify colonia problems, advocate for solutions, and provide expertise in the deliberation of government bodies on colonia issues. Unfortunately, we have been unable to attract foundations with an interest in supporting the Border Low-Income Housing Coalition and its work. But we continue to look for this critical support.

Housing advocates, organizers, legal service attorneys and above all colonia grassroots leaders now must find a way to work on their own to advocate administratively and legislatively for the next set of initiatives to improve the quality of life for colonia residents.

President Obama adopted a fighting stance against the financial services industry today in his weekly radio address. He promised that his proposed Consumer Financial Protection Agency (CFPA) would protect Americans by banning unfair practices and enforcing strong new consumer protections.

I want to believe. But having studied the details of the president’s plan for financial reform I don’t. The new agency will be an easy target for the financial services industry.  The CFPA will lack the clout to enforce real consumer protection. It will find itself on the losing end of a struggle with the truly powerful regulatory institutions like the Federal Reserve whose political power, focus on maximizing indsrty profits to meet safety and soundness concerns and close (incestuous) affinity with the financial services industry will trump efforts at consumer protection.

You can see in the video the President has come out swinging at the industry. It is inspiring rhetoric and it is the right thing to do. The lifespan of his political capital to force consumer protections on the industry is growing short.

But he is swinging wild.

For the past two days I’ve posted blogs detailing my concerns about the inherent weakness of the new consumer protection agency that will make it unable to deliver on the president’s promises.

President Obama has made clear he is not afraid to aggressively challenge the financial service industry to get the reforms he is seeking.

If only the quality of his administration’s reform proposals were worthy of his effort.

In pondering the Obama administration’s Financial Regulatory Reform: A New Foundation plan announced this week I find myself agreeing with New York Times columnist Joe Nocera, who wrote on June 18:

“… the Obama plan is little more than an attempt to stick some new regulatory fingers into a very leaky financial dam rather than rebuild the dam itself. Without question, the latter would be more difficult, more contentious and probably more expensive. But it would also have more lasting value.”

“If Mr. Obama hopes to create a regulatory environment that stands for another six decades, he is going to have to do what Roosevelt did once upon a time. He is going to have to make some bankers mad.”

So far as consumer protections are concerned I fear they will not be effective. Let’s take a look at some portions of the president’s plan related to consumer mortgage protections that I have excerpted.

I have interspersed my editorial comments below in notes in blue text with my initials as such - JH:

Financial Regulatory Reform: A New Foundation

Banking regulators at the state and federal level had a potentially conflicting mission to promote safe and sound banking practices, while other agencies had a clear mission but limited tools and jurisdiction. Most critically in the run-up to the financial crisis, mortgage companies and other firms outside of the purview of bank regulation exploited that lack of clear accountability by selling mortgages and other products that were overly complicated and unsuited to borrowers’ financial situation. – page 56

JH: This is hardly an accurate overview of what went wrong. First of all, it wasn’t just mortgage companies that were engaged in subprime lending. They were some of the biggest offenders but the banks were in there along with them pushing bad loan products on consumers. Implicit in this statement is the idea that the loan products they were being marketed had some worth, when in reality many of them never should have been allowed to be marketed in the first place.

A. Create a New Consumer Financial Protection Agency

We propose the creation of a single regulatory agency, a Consumer Financial Protection Agency (CFPA), with the authority and accountability to make sure that consumer protection regulations are written fairly and enforced vigorously. – page 56

The CFPA should give consumer protection an independent seat at the table in our financial regulatory system. – page 57

Oversight of federally supervised institutions for compliance with consumer protection, fair lending, and community reinvestment laws is fragmented among four agencies. – page 57

JH: Having apparently concluded that the Federal Reserve and the banking regulatory agencies are never going to control the egregious practices of the financial service industry in the exploitation of consumers the administration proposes to create a new agency.

I fear that this agency will prove too weak to exercise effective control over the industry however. It’s true that the existing regulators had the opportunity and arguably the authority under existing law to exercise better control over regulated financial institutions but they never effectively exercised

that authority. But these regulatory agencies have far more authority and pose far more of a threat to the industry then does some new independent consumer protection entity. It would have been better to figure out a way to get the Federal Reserve and others to adopt the culture and the mission that emphasize consumer protection as being equally important as ensuring the smooth operation of the financial services industry.

Mortgage companies not owned by banks fall into a regulatory “no man’s land” where no regulator exercises leadership and state attorneys general are left to try to fill the gap. State and federal bank supervisory agencies’ primary mission is to ensure that financial institutions act prudently, a mission that, in appearance if not always in practice, often conflicts with their consumer protection responsibilities. – page 57

JH:  There’s no arguing with the observation that mortgage companies were virtually unregulated so far as their exploitation of consumers goes. Here the administration has identified a major problem that needs to be fixed.

I don’t really get the recurrent theme in the administration’s plan that there is some inherent conflict between prudent operations of the financial services industry and consumer protection responsibilities. I also don’t agree with the implication that state bank supervisory agencies in most states are effectively engaged inappropriate regulation of the industry. Their ability to control industry excesses is certainly weak in many states including Texas.

1. We propose to create a single primary federal consumer protection supervisor to protect consumers of credit, savings, payment, and other consumer financial products and services, and to regulate providers of such products and services.

2. The CFPA should have broad jurisdiction to protect consumers in consumer financial products and services such as credit, savings, and payment products.

3. The CFPA should be an independent agency with stable and robust funding.

JH:  As I observed earlier, separating consumer protection responsibilities from banking regulation is a perilous proposition. There are also built-in conflicts of interest between the consumer protection functions of this new agency and the regulatory functions of existing agencies that the plan noted earlier. What happens when these conflicts emerge? What happens when an institution depends upon continuing to engage in activities of offering loan products that the CFPA deems are undesirable but the regulators see as essential to maintaining the safety and soundness of the institution? The conflict the administration has identified between a financial institution’s ability to make money (safety and soundness) and the institution’s responsibility not to offer products which harm the public are not solved simply by creating a separate consumer protection entity.

If the financial services industry decides the consumer protection entity is compelling the industry to do things that the industry doesn’t want to do then the financial services lobbyists will have an easy target in the consumer protection entity whereas they would be more hesitant to directly confront their regulator.

In short, the  CFPA is inherently a weak entity and easy target.

4. The CFPA should have sole rule-making authority for consumer financial protection statutes, as well as the ability to fill gaps through rule-making.

The CFPA should have sole authority to promulgate and interpret regulations under existing consumer financial services and fair lending statutes, such as the Truth in Lending Act (TILA), Home Ownership and Equity Protection Act (HOEPA), Real Estate Settlement and Procedures Act (RESPA), Community Reinvestment Act (CRA), Equal Credit Opportunity Act (ECOA), and Home Mortgage Disclosure Act (HMDA), and the Fair Debt Collection Practices Act (FDCPA).

5. The CFPA should have supervisory and enforcement authority and jurisdiction over all persons covered by the statutes that it implements, including both insured depositories and the range of other firms not previously subject to comprehensive federal supervision, and it should work with the Department of Justice to enforce the statutes under its jurisdiction in federal court.

JH:  So the CFPA is granted enforcement authority over banking institutions as well as mortgage companies.

The regulation of mortgage companies and their practices is essential so it’s a good thing that somebody is going to be regulating them and stopping them from engaging in selling really bad loans to consumers. But relying on the Department of Justice for enforcement is not going to work. One need look no further than the pitifully inadequate enforcement of federal fair housing laws by HUD to see the disastrous consequences of a bifurcation of regulation and enforcement between an executive agency and the Department of Justice.

For a regulatory agency to be effective it has to be able to make an irrevocable decision to enforce its regulations. Under this scenario the CFPA must first discover a violation, then make a decision that enforcement action is warranted, then refer the enforcement request to the Department of Justice, then convince the Department of Justice that the enforcement action is merited and finally hope that the enforcement action is of sufficient priority within the Department of Justice to be acted upon in a reasonable amount of time.

As I said, this doesn’t work based on the track record of fair housing enforcement.

6. The CFPA should pursue measures to promote effective regulation, including conducting periodic reviews of regulations, an outside advisory council, and coordination with the Council.

JH:  In other words, an advisory council containing members of the regulated institutions will be given an ability to lobby internally with the new agency to weaken consumer protection regulations.

7. The CFPA’s strong rules would serve as a floor, not a ceiling. The states should have the ability to adopt and enforce stricter laws

We propose that federally chartered institutions be subject to nondiscriminatory state consumer protection and civil rights laws to the same extent as other financial institutions.

JH:  Pardon me while I get up off the floor from my hysterical fit of laughter.

A whole lot of us in states like Texas will never see any more strict regulations than those imposed by the federal government. Implying that many states will do so is naïve.

8. The CFPA should coordinate enforcement efforts with the states.

JH:  Excuse me while I get back up off the floor a second time.

9. The CFPA should have a wide variety of tools to enable it to perform its functions effectively.

Research and Data. Empirical evidence is critical to a well designed regulatory structure. The CFPA should have authority to collect information through the supervisory process as well as through specific data collection statutes, such as the Home Mortgage Disclosure Act.

Complaints.

Financial education.

Community Affairs. The CFPA’s community affairs function should promote community development investment and fair and impartial access to credit. It should engage in a wide variety of activities to help financial institutions, community-based organizations, government entities, and the public understand and address financial services issues that affect low and middle-income people across various geographic regions.

JH:  Expansion of the data collected under the Home Mortgage Disclosure Act would be most helpful in assessing the performance of financial institutions in serving community credit needs. The administration better plan to spell out exactly what regulated institutions are going to provide in the way of additional reporting at the time this bill is passed. That may be the one opportunity we have two expand reporting requirements because the industry will ferociously resist additional reporting. Once this weak CFPA is established there is no way it will have the political power to compel additional disclosure.

As for the financial education and consumer affairs functions they could prove useful. But they will require funding.

10. To improve incentives for compliance, the CFPA should have authority to restrict or ban mandatory arbitration clauses.

JH:  Finally we arrive at a specific recommendation that will do some good for consumers. Hooray!

11. The Federal Trade Commission should be given better tools to protect consumers.

JH:  This sounds like an honest acknowledgment that the CFPA is not going to be able to do the job protecting consumers on its own.

B. Reform Consumer Protection

1. Transparency. We propose a new proactive approach to disclosure. The CFPA will be authorized to require that all disclosures and other communications with consumers be reasonable: balanced in their presentation of benefits, and clear and conspicuous in their identification of costs, penalties, and risks.

Make all mandatory disclosure forms clear, simple, and concise, and test them regularly.

Require that disclosures and other communications with consumers be reasonable.

Harness technology to make disclosures more dynamic and relevant to the individual consumer.

JH: No quarrel with this.

2. Simplicity. We propose that the regulator be authorized to define standards for “plain vanilla” products that are simpler and have straightforward pricing. The CFPA should be authorized to require all providers and intermediaries to offer these products prominently, alongside whatever other lawful products they choose to offer.

“Plain vanilla” mortgages, whether they have fixed or adjustable interest rates, should be easy for consumers to understand. They should not include prepayment penalties and should be underwritten to fully document income, collect escrow for taxes and insurance, and have predictable payments. These products are also easy to compare because they can be differentiated by a single, simple characteristic, the interest rate. We propose that the government do more to promote “plain vanilla” products. The CFPA should be authorized to define standards for such products and require firms to offer them alongside whatever other lawful products a firm chooses to offer.

JH:  Of course consumers should be offered the chance to take out a conventional loan instead of some highly exploitive, subprime product. But giving consumers options doesn’t necessarily ensure that they will make the appropriate decisions. I blogged at length yesterday about my concerns that this provision, which seems to be a centerpiece of the administration’s reform plan, will do little to dissuade credit challenged and low income borrowers from diving into a really bad subprime loan.

The financial services industry has proven to be very aggressive in creating new types of risky credit for which it can charge high fees and high interest. The premise behind the Obama plan seems to be that the financial services industry should be able to offer risky types of credit to borrowers so long as the borrowers understand the risks involved and a prime loan is also included on the list of available products. Implicit in this is a belief that all consumers will act in an informed and rational manner if they are presented with the facts. Self-restraint on the part of consumers, the plan implies, will limit the exposure of our financial system to risky lending

That’s not a safe assumption about many low income borrowers.

We have so overhyped homeownership in this country that most people believe homeownership is an indication of their worth as an individual. They will risk anything to achieve it. They are told by the real estate And financial services industries that homeownership is the “American Dream.” For a significant number of lower income borrowers, and for borrowers as a whole for that matter, who are not able to qualify for a “plain vanilla loan,” no amount of government warnings or loan disclosure documents will dissuade them from taking out any loan, no matter how onerous the terms, to fulfill that dream.

3. Fairness. Where efforts to improve transparency and simplicity prove inadequate to prevent unfair treatment and abuse, we propose that the CFPA be authorized to place tailored restrictions on product terms and provider practices, if the benefits outweigh the costs. Moreover, we propose to authorize the CFPA to impose appropriate duties of care on financial intermediaries.

Give the CFPA authority to regulate unfair, deceptive, or abusive acts or practices.

Give the CFPA authority to impose empirically justified and appropriately tailored duties of care on financial intermediaries.

The CFPA should apply consistent regulation to similar products.

JH: This is definitely what is needed. But, once again, can a weak agency like CFPA effectively exercise this authority? How will it deal with conflicts with safety and soundness regulators when the CFPA proposes to outlaw a financial product other regulators and the industry itself deem important to the safety and soundness of the institution?

4. Access. The Agency should enforce fair lending laws and the Community Reinvestment Act and otherwise seek to ensure that underserved consumers and communities have access to prudent financial services, lending, and investment.

Some have attempted to blame the subprime meltdown and financial crisis on the CRA and have argued that the CRA must be weakened in order to restore financial stability. These claims and arguments are without any logical or evidentiary basis. It is not tenable that the CRA could suddenly have caused an explosion in bad subprime loans more than 25 years after its enactment. In fact, enforcement of CRA was weakened during the boom and the worst abuses were made by firms not covered by CRA. Moreover, the Federal Reserve has reported that only six percent of all the higher-priced loans were extended by the CRA-covered lenders to lower income borrowers or neighborhoods in the local areas that are the focus of CRA evaluations.

JH:  First, let me say that I agree wholeheartedly with the aside regarding the fact that the Community Reinvestment Act (CRA) had virtually nothing to do with the subprime meltdown in financial crisis.

I doubt that the CFPA will be an effective administrator of the Community Reinvestment Act however. The hammer, or enforcement authority of the CRA is the ability to block regulated financial institutions from taking actions like opening new branches, etc. These are actions that are so closely tied to the functions of the traditional regulatory agencies that it’s hard to see how the CFPA is going to be able to use them as an enforcement tool.

Texas Governor Rick Perry has vetoed three affordable housing bills passed by the Texas Legislature.

HB 3983 by Rep. Rodriguez (D-Austin) and Sen. Watson (D-Austin) – Relating to the imposition of property taxes on the residential homesteads of low-income and moderate-income persons.

The bill makes technical changes to the Homestead Preservation District law, passed by Representative Rodriguez two session ago. The changes were requested by the City of Austin.

The Austin City Council has committed to establishing a Homestead Preservation District in East Austin. It is not clear whether the veto of this bill will jeopardize the adoption of that Homestead Preservation District.

Here is Governor Perry’s veto statement…

Pursuant to Article IV, Section 14, of the Texas Constitution, I, Rick Perry, Governor of Texas, do hereby disapprove of and veto House Bill No. 3983 of the 81st Texas Legislature, Regular Session, due to the following objections:

I am vetoing House Bill No. 3983 because I have serious concerns about language in the bill that requires the comptroller to conduct a study of “circuit breaker” property tax programs used in other states.

“Circuit breaker” programs are designed to provide property tax relief to certain individuals based upon their income. The cost of this type of program is usually borne by the state, while the local governments still receive their full share of the property tax. In some states, renters are also eligible for rebates despite the fact that they do not directly pay the property tax.

These programs have several negative effects. One negative effect is that it breaks the link between what taxpayers pay and what they receive in local services. Under a “circuit breaker,” some taxpayers will effectively pay no tax but receive the same services and amenities as other taxpayers who do not benefit from the program.

Such a program would also have a significant cost to the state, since the purpose of the program is to allow local governments to enjoy the political benefits of a tax break without having to carry the cost. This allows them to avoid tough decisions about the level of taxation that the community can bear and what services the voters want them to provide.

Finally, if such a program were to be adopted in Texas, it would make the distribution of the property tax burden less equitable by shifting it to middle-class property owners. This would make the property tax function more like a progressive income tax, in that the tax burden would slowly be pushed upwards until only the owners of the most valuable property paid any actual tax.

Texas property owners could use additional tax relief, and I have worked hard to ensure that they receive relief; however, any solution must be one that makes all property owners better off. This study would undermine all the efforts made to ensure that the property tax has a low rate, is broad-based and is equitable for all Texans.

HB 2888 by Rep. Martinez (D-Austin) and Sen. West (D-Dallas) – Relating to financial assistance administered by the Texas Department of Housing and Community Affairs.

HB 2888 would have done two things.

First. require that the Texas Department of Housing and Community Affairs adopt policies to ensure that each housing development that receives financial assistance administered by the department, including financial assistance from the proceeds of bonds issued by the department:

(A) reserves a certain number of units in the development for individuals and families of very low income, to the extent that the reservation does not conflict with any requirements for the development under 26 U.S.C. Section 42; and

(B) except as otherwise permitted by law, accepts as tenants individuals and families receiving rental assistance under Section 8, United States Housing Act of 1937 (42 U.S.C. Section 1437f), or some other form of rental assistance from a political subdivision of this state or from the state or federal government.

Second, directs TDHCA to establish volunteer income tax assistance programs operated through a collaboration of the Internal Revenue Service and another entity under which taxpayers eligible for the Free File program receive free assistance in preparing federal income tax returns.

The second provision is an initiative designed to help lower-income taxpayers get free assistance to file their taxes from volunteers who are trained to help them get the full tax refund benefits they are entitled to under state law.

Here is Governor Perry’s veto statement…

Pursuant to Article IV, Section 14 of the Texas Constitution, I, Rick Perry, Governor of Texas, do hereby disapprove of and veto House Bill No. 2888 of the 81st Texas Legislature, Regular Session, due to the following objections:

House Bill No. 2888 would take funds away from the Temporary Assistance for Needy Families (TANF) program to fund a Volunteer Income Tax Assistance grant program to be administered through the Texas Department of Housing and Community Affairs. Taking TANF dollars away from their intended purpose of serving clients to fund this program is unnecessary. These funds should be used to benefit people, not create more government bureaucracy.

Furthermore, tax assistance and Earned Income Tax Credit education programs are already provided by the Texas Workforce Commission, Texas’ 28 local workforce development boards, and numerous nonprofit organizations and community centers.

I asked a supporter of the bill, Walter Moreau, executive director of Foundation Communities, a major nonprofit housing provider for his reaction to the veto.  Here is what he says…

This is the most fiscally conservative stupid thing I can imagine.

Working Texas families annually miss out on over a billion dollars in tax credits and deductions. Volunteer tax filing programs around the state help these families get the refund they are due. With the stimulus bill another $7 billion in education, homebuying, child care and other credits are coming to Texas, but only if folks fill out the forms correctly. A tiny investment of money from the State would reap millions in the pockets of hard working Texans.

This year we had 500 volunteers doing 17,000 tax returns in Austin.

…..What does Perry have against church volunteers, Junior Leaguers, business school students and retirees giving their time to help working poor families file their tax returns correctly? Does he want working families to just forgo the $7 billion in tax benefits in the stimulus bill?

A veto on this bill is just plain stupid. Volunteer income tax programs help common, working Texas families to file their income tax return correctly.

HB 2692 by Rep. Rodriguez (D-Austin) and Sen. Watson (D-Austin) – Relating to certain municipal requirements regarding sales of residential properties in certain areas.

H.B. 2692 would have given the city of Austin a tool to ensure that low to moderate income households have the opportunity to live near commuter rail stations by promoting affordable housing within one mile of a commuter rail station.  It does this, specifically, by creating a waiver from the existing state code preventing cities from setting price ceilings on property.  This exemption applies only to multifamily development intended for sale, located less than one mile from a commuter rail stop.

In essence it would have repealed the state prohibition against inclusionary zoning, enacted by the Legislature two sessions ago, in this narrow circumstance.

Here is Governor Perry’s veto statement…

Pursuant to Article IV, Section 14 of the Texas Constitution, I, Rick Perry, Governor of Texas, do hereby disapprove of and veto House Bill No. 2692 of the 81st Texas Legislature, Regular Session, due to the following objections:

House Bill No. 2692 would allow the City of Austin to set a price plan on multifamily developments located less than one mile from a commuter rail station.

However, current law states, with very few exceptions, that a municipality may not adopt a requirement that establishes a maximum sales price for a privately owned housing unit or residential building lot. House Bill No. 2692 would also interfere with the Austin real estate market by artificially capping housing prices. The market should be allowed to thrive without unnecessary government interference.

I will blog the statements of the supporters of the other vetoed bills next week.

The New York Times reported today that President Obama’s nominee to the Supreme Court was a passionate low income housing advocate as a board member of the state housing finance agency for New York.

Time and again, Sonia Sotomayor challenged her fellow board members at the State of New York Mortgage Agency, asking pointed questions about its work: What of the poor? As we help build new neighborhoods upon the rubble of the old, are we abandoning those with the lowest incomes?

Sotomayor served on the agency’s board before she was appointed as a federal judge.

“Ms. Sotomayor voiced her continuing objection to the rehabilitation of projects in low-income areas without providing for a higher component of low-income families,” according to agency minutes from March 1990. “She repeated her request for an analysis of the various economic groups in the neighborhood affected by the project.”

Sotomayor was appointed to the board by Governor Mario M. Cuomo.

You don’t have to work long in the field of affordable housing to find out how strong the desire is among many low income families to own a home. “How to I get a loan to buy a house,” is one of the most frequent questions I get asked.

Often the question comes from people who have extremely low incomes, virtually no savings and no established credit record. These folks often know someone in a similar economic circumstance to theirs who got a subprime mortgage loan, seen ads posted on telephone poles or watched infomercials telling them that anyone can qualify to get a loan to buy a home.

Of course, the right answer to the question, “how do I get a loan to buy a home,”  is to get a dependable source of income, save up some money for down payment and build up your credit rating so you can qualify for a conventional loan. Yet for a period of time from about 1995 until the financial crisis hit hard in 2008 the answer a lot of low income people got to their question from the financial services industry was, ” we can get you a (subprime or predatory) mortgage loan.”

It isn’t just only subprime lenders who were offering low income families a perilous shortcut to homeownership. Sometimes it is city and state housing agencies and nonprofit organizations. I’m sad to say that some, in particular government housing agencies at the local level, still don’t seem to appreciate that they aren’t doing low income families any favors by helping them to circumvent prudent qualifying criteria to get a home loan. They offer “rent to own” plans, huge down payment assistance grants and advice on circumventing conventional loan underwriting standards. I blogged about these practices by the City of Houston a few weeks back.

We’ve seen that the consequences of getting people into a loan they can’t afford are disastrous for both the family and also for our financial system.

The federal government spent trillions of dollars of public money to bail out our financial system when it got drunk on the profits of junk home mortgage loans. This week the White House proposed a plan to reform the home mortgage industry.

The blueprint for reform, announced by President Obama, is entitled Financial Regulatory Reform: A New Foundation. I’ve been spending a little time reading the 89 page report. [ I'll post my analysis of the plan soon].

The Obama plan is cautious and restrained regulatory reform. It is not radical reform. It’s a set of more efficient ways to enforce existing laws and regulations. So far as the protections for consumers go there’s nothing wrong with the administration’s proposal so far as I can see.

Yet, the reforms in the Obama plan will do little to address or rein in the proliferation of highly complex financial credit offerings that got us in this mess. While subprime lending has temporarily been shut down, I’m worried that the reforms in the president’s plan do not sufficiently curb risky home mortgage products and as a result  they will resurface and wreak havoc in the future.

The financial services industry has proven to be very aggressive in creating new types of risky credit for which it can charge high fees and high interest. The premise behind the Obama plan seems to be that the financial services industry should be able to offer risky types of credit to borrowers so long as the borrowers understand the risks involved. Implicit in this is a belief that all consumers will act in an informed and rational manner if they are presented with the facts. Self-restraint on the part of consumers, the plan implies, will limit the exposure of our financial system to risky lending.

That’s not a safe assumption about many low income borrowers.

We have so overhyped homeownership in this country that most people believe homeownership is an indication of their worth as an individual. They will risk anything to achieve it. They are told by the real estate And financial services industries that homeownership is the “American Dream.” For a significant number of lower income borrowers, and for borrowers as a whole for that matter, no amount of government warnings or loan disclosure documents will dissuade them from taking out any loan, no matter how onerous the terms, to fulfill that dream.

If we are truly going to create a “foundation” of regulatory reform as the Obama administration promises were going to have to create some more realistic expectations and desirable housing alternatives for lower income families. That includes creating rental housing in desirable communities, at affordable rents that families actually want to live in. It also must include what I’ve been describing as “safe, clearly marked pathways to homeownership.” By this I mean setting out clear expectations for low income would-be homebuyers to meet such as demonstrating an ability to save a modest amount of money, achieve a reasonable, if modest level of income and demonstrate responsible credit behavior. If a family can meet these standards then a “foreclosure resistant mortgage loan” should be made available to them.

Texas Representative Yvonne Davis and Senator Eddie Lucio proposed an initiative we developed in the last session of the Texas Legislature that the Texas Department of Housing and Community Affairs undertake a pilot program to develop and test this approach to making homeownership affordable, achievable and secure to lower income working Texas families through a new mortgage loan product. These would be families that followed the “safe, clearly marked pathways to homeownership” of achieving a reasonable income, saving a modest amount of money and maintaining decent credit. This “Texas Secure Loan” would allow for interest rate and long-term adjustments to be made based on the changing economic circumstances of the borrower. A temporary job loss or illness would not leave the family facing foreclosure.

While the bill did not pass, TDHCA has indicated that they are still interested in exploring the idea.

Lets hope they do. It does not look like we are going to get a solution like this from Washington anytime soon. The best that the Obama administration’s plan offers is a requirement that lenders offer borrowers “plain vanilla mortgages” in addition to exotic subprime mortgages. But that does nothing to address the problem of the many families who cannot qualify for a plain vanilla mortgage and who are going to opt for a subprime mortgage as a shortcut to homeownership.

Buying a home used to be pretty straightforward.  There was no alternative to the plain-vanilla mortgage. The loan offerings were limited to an FHA loan, a VA loan or a conventional loan with a fixed interest rate and term but varied little from institution to institution.

The Obama administration’s reforms do not simplify the home mortgage process. There is no housing policy behind the administration’s reforms. No new safe form of mortgage lending for families of limited income, such as that put in place with the establishment of FHA many decades ago is offered by this administration. Highly complex mortgage instruments will continue to be allowed under the administration’s plan, with a goal of holding highly risky loans in check through restrictions placed on a handful of the most egregious lending practices and through more intense enforcement of existing laws.

There is reason to hope that the administration understands the need for broader housing reform. Treasury Secretary Geithner told Congress Wednesday that policymakers had to “fundamentally re-think” the government’s role in the housing market. He implied that the vehicle for implementation of the new housing policy would be the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. The Obama administration’s financial reform plan states it is not yet ready to make a recommendation on the restructuring and future of the GSEs. According to the Wall Street Journal, Geithner testified that the Treasury Department and the Obama administration “couldn’t do it carefully enough, thoughtfully enough in this timeframe.”

If we don’t do something to address the understandable aspirations and legitimate needs of lower income Americans for housing they will remain a ready market for exotic financial products developed by our highly innovative and greedy financial services sector.  A new housing policy for low income Americans must go hand-in-hand with financial reform.

Otherwise, sooner or later we’re going to wind up back at the same spot where we are today, with teetering financial markets, huge outlays by the taxpayers, widespread home foreclosures and plenty of suffering all around.

You can’t help these days being struck by the amount of government and media attention heaped on the plight of people facing home foreclosure.

I Googled “housing counseling” to see what advice was available to a low income person about finding subsidized rental housing. I had to search through several pages of listings of home foreclosure counselors and various nonprofit and government assistance programs to find the meager offerings available to poor renters.

The federal government is disproportionately focused on the plight of homeowners in economic trouble to the exclusion of the long-term poor who never even got close to buying a home. These long-term, working poor families suffer far greater than recently economic challenged homeowners.

Barbara Ehrenreich, the author of Nickel and Dimed: On (Not) Getting By in America makes the case very effectively in her June 13 New York Times Op-Ed.

Ehrenreich points out that the working poor have long been living in an economic depression of their own. For them things were “bad before the recession, and in ways that are disconnected from the larger economy. But yes, the recession has made things palpably worse, largely because of job losses.”

The long-term working poor in this country could be excused if they harbored resentment at the government and the media attention heaped upon struggling homeowners who Ehrenreich dubs “the Nouveau Poor.” Housing advocates for many years have rolled their eyes as government officials defined the affordable housing crisis as being about the inability of people with middle-class jobs and incomes such as police officers, firefighters, nurses and teachers to afford to buy a new home. The effect of this rebranding of the affordable housing crisis as a middle-class phenomenon has been the redirection of a large portion of government housing subsidy from providing basic rental housing for the poor. The meager supply of government housing assistance is often used for the politically popular cause of providing down payment assistance to help the middle class by a home.

And now that these middle-class households are losing their homes, government and the media have sought to direct public attention and resources to once again bailing out the middle class. Once again, the affordable housing crisis we are told is a middle-class problem. Barbara Ehrenreich quotes Davin Corona of Strategic Actions for a Just Economy saying that if there is a symbol for the current recession it’s “the policeman facing foreclosure in the suburbs.”

The recession of the ’80s transformed the working class into the working poor, as manufacturing jobs fled to the third world, forcing American workers into the low-paying service and retail sector. The current recession is knocking the working poor down another notch — from low-wage employment and inadequate housing toward erratic employment and no housing at all. Comfortable people have long imagined that American poverty is far more luxurious than the third world variety, but the difference is rapidly narrowing.

How about a little more honesty about the affordable housing crisis?

How about a little compassion and a little help for those at the economic bottom who suffer most?

Representative Michael McCaul (R-TX) wants to know why so many Hurricane Ike survivors in Texas were denied FEMA housing assistance

The pieces are slowly coming together to answer the question, why were so many applications for FEMA housing assistance in the wake of Hurricane Ike denied by FEMA?

While more than 82,000 households affected by Ike have received almost $371 million in FEMA funds for repairs, more than 730,000 families requested help from FEMA, meaning that almost 650,000 registrants received no housing assistance.

Here is the emerging picture.

First, we learn from a story written by Mike Snyder of the Houston Chronicle that the damage inspectors hired by FEMA to review claims were poorly trained, often lack a background in construction and are under pressure to perform inspections quickly and to deny applications for assistance.

Snyder’s article states…

With varying levels of training and experience, these inspectors are motivated to work quickly because they’re paid a flat fee per inspection and must cover most of their own expenses.

These factors and others have created a flawed inspection system that withholds assistance from many deserving families, according to a former FEMA inspector and lawyers representing families who say they were unfairly denied assistance or didn’t get enough to repair their homes.

Second, there is the apparently illegal practice that FEMA engages in of denying assistance completely because of “deferred maintenance” to the home. Texas Rural Legal Aid (TRLA) has sued FEMA in federal court and a federal judge has ordered FEMA to explain the standards it uses to deny benefits to families whose homes had maintenance or structural problems prior to a disaster.

A FEMA official explained the high denial rate as follows: “A lot of the homes built were built from second hand materials. So the damage was, in most cases, caused from the faulty building of the house, and not the storm.”

This a curious and apparently illegal standard that FEMA is applying. It may be true that the homes of these families were not in good shape before Hurricane Dolly. But their homes were providing them shelter and as a result of the hurricane their homes are now uninhabitable.

The FEMA program is intended to help people regain a place to live. It has systemically failed low income families because of the illegal decisions by FEMA to deny assistance to these families, in essence, because of their pre-existing shelter poverty.

Finally, members of Congress have begun asking questions.

During a House Homeland Security Subcommittee on Emergency Communications, Preparedness, and Response hearing held on June 9, Representative Michael McCaul (R-TX) said he would request that the General Accounting Office (GAO) look into the cause for the high rate of Hurricane Ike damage claims and would also request that the subcommittee hold a future hearing to investigate a large disparity between the response to hurricanes Ike and Katrina.

Subcommittee Chair Henry Cuellar (D-TX) indicated in response to Rep. McCaul’s request that hearing would be likely.

Here’s Representative McCaul’s question to newly appointed FEMA administrator Fugate about the issue…

Representative McCaul: I also want to make a comparison between Katrina and hurricane Ike. There appears to be a large disparity in the amount of payments.

Now granted Katrina was a larger scale type hurricane, there were a lot of differences between the two hurricanes, but I just wanted to throw out a few figures. For instance, under housing assistance there were 506,000 applicants under Ike and under Katrina there were 939,000 applicants. Under Ike, only 17% of the applicants received assistance and under Katrina 74% received assistance. That’s a fairly wide disparity when you talk about 17% were actually granted versus 74 in Katrina.

Under other needs assistance a total of 65,000 applicants were approved under Ike and about 265,000 under Katrina. The average payment, when you compare Katrina to Ike, Katrina was about $5600, Ike was about $1700. So there is about a three times variable there in assistance granted between Katrina and Ike.

Finally, total assistance for the average payment per registrant for Ike came to $722 versus Katrina that came in a number of $4000, almost $5000. So $5000 versus $722. It seems to me a big discrepancy.

I have asked the GAO to look at these numbers, explain why this disparity, and I know there are probably reasons for it and dancers for it. But I have asked the GAO to do a study and Mr. Chairman I intend to send a letter to you asking for a hearing on this issue so we can find out, number one did we learn something from Katrina, maybe we’re saving the taxpayers money and there’s a good story here.

But I’d also like to know, being from Texas, and having my constituents hit by hurricane Ike, I’d also like to get the answer to the question: why such a big disparity?

FEMA Administrator Fugate: The short answer is I would have to look into it.

What I would recommend in asking for this review is, one of the things I’d like to know, I’d like to ask is, given the payouts, what kind of damage was incurred per household. Was it a household destroyed or household damaged and what that percentage was.

The other thing is that the bias in our controls now is filtering out people who would otherwise be eligible. It’s always a balancing act, the more accountability the more checks and balances the more people who are outliers who don’t fit the definition perfectly but are eligible who fall out. And we saw this in our ‘04 hurricane season. We had to devote tremendous staff time just to work with people so that the automatic systems that would kick them out, and they were still eligible, we’d have to go back and work casework on each one of those to make sure.

Our goal is that if it’s based upon the eligibility and it’s warranted we should award that as effectively as possible. We should do everything we can to monitor and control fraud, but it’s a balancing act so to me it would be interesting to look at what the household damages percentagewise, that would reflect payment. But also by the controls were putting into place to control fraud penalizing people and how do we strike the proper balance between speed and effectiveness but not having the runaway situation where there are lack of fiduciary controls on who is getting assistance who’s not warranted and that actually takes away from the people who are most vulnerable.

Representative McCall: I agree there’s a balance you need to strike and right after hurricanes hit as they have in our state we advocate on behalf of our constituents to make sure they get the assistance they need and sometimes we don’t think that comes fast enough.

I know the chairman mentioned that people were still in these rental assistance properties in New Orleans. I don’t know what the status of the trailers are but at some point we need to kind of move on and close the chapter. I’d be interested in your thoughts on that and be interested in what the GAO has to say as well.

Mr. Chairman, I do hope that we could have a hearing on this issue.

The committee should conduct a hearing. They should specifically look into the issue of the qualification and training of FEMA inspectors and in the FEMA policy of denying hurricane survivors assistance because of “deferred maintenance”. Congress should direct FEMA to take a second look at all those who were denied assistance due to “deferred maintenance” or other questionable causes.

While market analysts search vainly for glimmers of hope in the housing industry, foreclosure rates continue to soar. Efforts to help sinking mortgage holders require time and much paperwork, ideally done by a specialist.

Meanwhile, scammers claiming those special skills emerge everywhere and take several thousand dollars from desperate homeowners while not improving their situations.

For a pdf version of the full articles, plus contextual articles in economics, health and legal issues, contact Bo McCarver at bmccarver@austin.rr.com

Housing, CPI may feed early recovery hopes

By Caroline Valetkevitch Reuters June 12, 2009

NEW YORK – Stock investors will watch housing starts, CPI (Consumer Price Index) and other data next week for signs that hopes for economic recovery will not turn out to be false.

If recent weeks’ activity is any indication, stocks may stay in a narrow trading range, as recovery hopes have been met with concern about an uncertain job market, rising gasoline prices and higher borrowing costs.

The three major U.S. stock indexes ended just slightly higher for the week, even though the Dow Jones industrial average .DJI broke into positive territory for the year for the first time since early January.

“We’ve been in a slow, upward drifting trading range,” said Fred Dickson, market strategist at D.A. Davidson & Co.

in Lake Oswego, Oregon. “Investors are going to be looking to see … if the green shoots in the economy have sprouted a little bit further or are languishing, waiting for some more water.”

The benchmark S&P 500 .SPX is up 39.86 percent since the 12-year closing low of March 9, and investors have been eager for more definitive signs that the recovery is going to be strong enough to sustain a rebound in corporate profits, which probably would underpin stronger gains in the market.

Besides data on construction of new housing, which has been among the weakest parts of the economy, investors will scrutinize readings on inflation at the wholesale and consumer level, when the Producer Price Index and the Consumer Price Index for May are released next week. Wall Street also will note the numbers on industrial production and capacity utilization as well as weekly initial jobless claims.

State to receive $1.7 billion in hurricane relief

By Mike Snyder        Houston Post June 10, 2009

Texas will receive an additional $1.7 billion to help local communities recover from three hurricanes that struck the state last year, the Department of Housing and Urban Development announced Wednesday.

Combined with the $1.3 billion provided to Texas last November, the new allocation brings the state’s total disaster relief to more than $3 billion — about half the funds appropriated by Congress in response to the 2008 national disasters.

Homebuilder sentiment index slips 1 point

By Alex Veiga        Associated Press June 15, 2009

LOS ANGELES — The National Association of Home Builders says its housing market index slipped by one point in June, reflecting many builders’ uncertainty about when their business prospects might improve.

The Washington-based trade association said Monday the index fell to 15 – the first decline since January, when the index dropped to an all-time low of 8.

Index readings lower than 50 indicate negative sentiment about the market.

The report reflects a survey of 548 residential developers nationwide, tracking builders’ perceptions of market conditions.

The index readings for current sales conditions and traffic by prospective buyers remained unchanged from May. The reading on expectations for sales over the next six months dropped by a point. [End of story]

Rising Mortgage Rates Leave Refinancers Behind

NPR June 14, 2009

In recent weeks, mortgage rates have shot to the highest levels since Thanksgiving. That rise has left procrastinators wishing they had refinanced their home loans last month, when interest rates on 30-year fixed mortgages were below 5 percent.

Today, with rates at roughly 6 percent, the mortgage refinancing boom is cooling.

Economists and financial planners are trying to predict where rates go from here. Many believe the Federal Reserve will allow long-term rates to keep rising. Earlier in the housing crisis, the Fed purchased huge amounts of mortgage-backed securities, a strategy intended to help hold down interest rates. But Fed watchers say the central bank is likely to stand aside now, allowing market forces to nudge up rates.

Penetrating the Maze of Mortgage Relief

By Vivian Toy      New York Times June 12, 2009

SINCE President Obama unveiled a mortgage modification program in March to help people who are at risk of losing their homes, housing counselors in the New York area have fielded hundreds of calls along the lines of: “How do I get one of those 2 percent mortgages?”

The answer has often been, “Well, it’s not that simple.”

Housing advocates who work with homeowners in foreclosure or on the verge of it say that while the loan modification program could help thousands of New Yorkers, it has been slow to get off the ground and a majority of people who have applied for help have yet to hear whether they will receive it.

One thing is clear: Homeowners who have a HUD-approved housing counselor championing their cause are more likely to get a modification than those who try it on their own. Housing counselors say they often understand the program’s guidelines better than the people answering phones for lenders, so they know how to pursue a case aggressively.

Mortgage fraud cases cover state

Texas AG confronts rising crime in Austin

By Enrique Rangel       Amarillo Globe-News June 14, 2009

AUSTIN – Last week, a San Antonio man was sent to prison for six years and three months after pleading guilty to running a mortgage scam that bilked lenders out of nearly $1.7 million. In February, his wife and partner in crime received a similar sentence.

Two weeks ago, in a separate case, a federal grand jury indicted eight people in a $14 million mortgage fraud ring in the Dallas area. They were accused of setting up straw buyers for homes in upscale neighborhoods at high prices, obtaining inflated loans based on misrepresentations about planned repairs, then paying the original owners and splitting the remaining proceeds among themselves. Then, after making a few payments, they defaulted on the loans.

And in March, an East Texas woman was sentenced to 99 years in prison for her involvement in a similar scheme.

Anti-foreclosure help called a scam

By Guillermo Contreras       San Antonio Express-News June 16, 2009

Jacquelyn Guerrero and her husband handed over their $3,000 tax refund to try to stop the impending foreclosure. Guadalupe Dominguez handed over her monthly $1,400 Social Security income and more money she borrowed.

They testified Monday that they still lost their homes because of the misrepresentations of Rosario Castro Divins, who sent dozens of direct-mailed advertisements claiming she could stop foreclosures.

Tenants evicted as apartment owner faces foreclosure

By Allen Essex        Valley Morning Star June 14, 2009

HARLINGEN — Apartment dwellers on Sonesta Drive were shocked Thursday to find eviction notices on their doors telling them to move out by July 5.

Such occurrences have been common lately, said their landlord, John Sanchez of “For RENT Inc.; The Property Management Company.”

Only four tenants out of eight apartments in two buildings were affected this time, Sanchez said.

But it’s a national trend that is affecting Harlingen and the rest of the Rio Grande Valley, as well as many other parts of the United States, he said.

Foreclosures: They’re up in the county, state

By Jullieta Chiquillo        Laredo Morning Times June 14, 2009

Hugo Lozano’s youngest son used to play with his Hot Wheels on a windowsill in his parents’ one-bedroom apartment on Clark Avenue.

But Lozano had bigger dreams for his family. In 2003, Lozano and his wife bought a $125,000 house in Village Heights, where their two boys would each have their own room to play in. They invested a lot in the house. The Lozanos retiled the floor and did some other maintenance work themselves The house also welcomed a daughter, now 9 months old.

“It wasn’t only a house or a dream to own a house,” said Lozano, a customer service manager at a local bank. “It was our home.” But by the end of 2007, the bills were piling up as the couple struggled with their mortgage payments. Facing the risk of foreclosure, they sought help from local nonprofit Laredo-Webb Neighborhood Housing Services and managed to work out a deal with their mortgage company.

They’re among the lucky ones.

Homeowner associations filing more foreclosures

By Paul Weber      Associated Press June 14, 2009

IRVING — Thousands of Americans who have generally kept up with their mortgages in a rough economy may still be in danger of losing their homes because they made a fateful trade-off: They let their homeowner association dues slide.

Many homeowners are learning to their surprise that condo and neighborhood associations — which oversee security patrols, mow lawns, plant flowers and clean the community swimming pool, among other activities — might have the right to foreclose when dues aren’t paid. That right is often written into the purchase agreement signed by the homeowner.

Among those who have been threatened with foreclosure is Lacey Pilat, who lost her job catering corporate parties and nearly lost her two-story house in Irving, a suburb of Dallas.

“Basically, our landscaper was foreclosing on the house,” said Steve Pilat, her husband. “That’s the way we looked at it.”

Major developer files for bankruptcy in Austin

Crescent Resources lists $1 billion in both assets, liabilities.

By Claudia Grisales Austin American-Statesman June 10, 2009

Crescent Resources LLC, the North Carolina-based developer of high-end residential and mixed-use projects in 10 states, including the Austin area, filed a massive bankruptcy case in Austin on Wednesday.

The developer listed both assets and liabilities of more than $1 billion and dozens of properties in the Southeast and Southwest.

The company said it had received $110 million from existing lenders to keep going during the Chapter 11 bankruptcy and expected to continue operating without any “significant disruption.”

American Housing files bankruptcy

Foundation’s actions voluntary

By Kevin Welch       Amarillo Globe-News June 12, 2009

LUBBOCK – American Housing Foundation changed course Thursday by willingly filing for bankruptcy and asking a judge to investigate at least $21 million in life insurance proceeds allegedly reassigned by founder Steve Sterquell in an effort to defraud creditors of the foundation.

American Housing filed for voluntary bankruptcy, ending an attempt by investors and lenders since April 21 to force it into involuntary bankruptcy. The move takes some legal pressure off the foundation.

Slump leads to fewer teardown fights between Dallas preservationists, builders

By David Flick       Dallas Morning News June 16, 2009

For preservationists, sometimes the best that can happen is nothing at all.

Katherine Seale, director of Preservation Dallas, said the most striking change she has noticed recently in her North Dallas neighborhood has been the lack of change – the teardowns of nearby ranch-style houses has all but ceased.

The reason is the recession.

“There’s an old joke that goes: ‘A bad economy is a preservationist’s best friend.’ People get hurt in times like these, so it’s not particularly funny,” Seale said. “But it is true.”

Fewer houses and buildings are under construction, so fewer older ones are torn down. The decrease in threats to historically significant structures is hard to quantify but impossible to miss.

For several years, Seale’s organization regularly sent out frantic – and, ultimately, futile – alerts:

In December 2006, the art deco house of architect George Dahl in Highland Park was leveled. In 2007, the Georgian-style YWCA building in Old East Dallas was knocked down for a rehabilitation center. In April 2008, bulldozers appeared on a Sunday morning to demolish a vintage insurance building on Turtle Creek Boulevard.

This year – silence.

The Battle Over This Old House

By Amy smith        Austin Chronicle June 11, 2009

Even after reaching an impasse during a grueling mediation process late last year, both parties in a historic Hyde Park zoning dispute have agreed to take six more months to try to reach a settlement agreement ­– or else square off in a December trial. At this writing, a trial may be the only way to settle the emotionally charged debate pitting historic preservation against property rights. Until then, the six-month cooling-off period provides a reprieve of sorts for the Hyde Park Neigh­borhood Association, which last month secured a temporary restraining order to block the demolition of a 100-year-old home at 4213 Avenue G. Property owner Helen Nohra and her now-grown children have owned the Bradford-Nohra property for more than 60 years. They want to bulldoze the time-worn neoclassical home and build townhomes on the spacious corner lot at 43rd and Avenue G.

The South(side) Rises Again

By Dan McGraw     Fort Worth Weekly June 11, 2009

Sitting in the foyer of Fort Worth architect Bob Kelly’s office, Eddie Vanston doesn’t look like a big-time real estate developer. He’s slumped in a chair, dressed in bulky gray sweat shorts, a well-worn “Kinky Friedman for governor” t-shirt, and old work boots that look like they’ve slogged+ through years of construction sites.

The only sign that he might be involved in anything having to do with the top side of real estate development is a tape measure clipped to his waistline of his shorts. But that just makes him look like one of the guys who hangs drywall. At 53, his dishwater-blond hair is fading in the front, gathered in a long ponytail in back.

It’s not the look of a Columbia University grad who once taught English at a ritzy New York private high school. He’s meeting at the South Main Street office of Kelly, his partner in some projects on the Near Southside, because he doesn’t have his own office down there. His office is actually his car, the front passenger seat piled high with paperwork, the back seat awash with his kids’ toys.

The unconventional look is likely a product of his unconventional approach to his business. The Dallas native (he still lives there) has been redeveloping run-down historic structures on Fort Worth’s Near Southside for more than 10 years now. Plenty of Dallas developers were lured to Cowtown’s high-end condo market in the years before the housing bust, but Vanston was here long before most of them, always working in the world of market-rate rentals.

East Austin subdivision sets new bar for green design

Homes, some set aside for lower-income buyers, designed to produce as much energy as they use.

By Shonda Novak Austin American-Statesman June 14, 2009

Three miles from downtown in East Austin, the first homes are rising at a project that aims to set a precedent by combining green building, affordability and aesthetics.

Architect Chris Krager is undertaking his biggest project to date with Sol (for Solutions Oriented Living), a subdivision with 40 homes on Perry Road, near Airport Boulevard and Bolm Road.

Several more homes are expected to break ground in the next few weeks. The first home-

owners could move in by August, and about half of the homes should be finished by the end of the year, Krager said.

Through solar power and other energy-saving features, the two- and three-bedroom homes are designed to produce at least as much energy as they consume over a year.

They will have efficient heating and cooling systems, spray-foam insulation, natural lighting, metal roofs and other energy-saving features. Those measures are expected to reduce the total energy demand to about half of that of a standard-built home.

Public housing: location matters [Beaumont]

By Dan Wallach      Beaumont Enterprise June 14, 2009

The urge to draw is as old as cave paintings, so it’s no shock to see bright pink chalk scrawls on an urban basketball court.

But the neon curlicues on the city-owned concrete court at Cottonwood Park across from the Beaumont Housing Authority’s Concord Homes spell out the harshness of the street in juvenile script.

Obscenities, in a column like a hopscotch grid, land like fists as the eye reads them.

“It hurts me to hear babies say that,” said Rasheka Haley-Simpson as her children, Anthony, 5, Gabriella, 4, and Brianna, 2, clambered on the playground, burning off afternoon energy at top speed.

“I tell them, ‘I don’t care what other people say. I don’t want to hear that come out of your mouth,’” Haley-Simpson said.

After four years at Concord Homes, one of Beaumont’s public housing communities, Haley-Simpson is aching to leave.

“A lot of people get caught up in not trying to push themselves,” she said. “They’re not trying to improve. Some people are shocked I live here. But you do what you’ve got to do. I’m not trying to remain in the system.”

But a lack of affordable housing hems in families like Haley-Simpson’s.

Houston’s homeless get nighttime help

By Cindy George      Houston Chronicle June 14, 2009

It was still daylight and oppressively hot for almost 7 in the evening as down-on-their-luck folks gathered at Gray and Jackson in downtown Houston.

With dusk approaching, they followed the smell of baked chicken to the building with the sunshine logo on its sign.

While other homeless agencies had wrapped up their services for the day, Bread of Life at St. John’s Downtown was just opening its doors.

Not so long ago, evenings meant that some of the same people in the dinner line would have been settling into their sleeping spots on the church lawn.

Now, the nonprofit’s effort to usher the homeless to self-sufficiency has switched from day hours to a nighttime program called After Dark.

FEMA Administrator Craig Fugate

I liked what I heard from new FEMA Administrator Craig Fugate in his June 9 testimony before the House Homeland Security Subcommittee on Emergency Communications, Preparedness, and Response.

In response to a question from Homeland Security Committee Chair Bennie Thompson (D-MS) regarding evidence that FEMA trailers cost upwards of $75,000 each, Administrator Fugate responded…

Mr. Chairman, if we’re to spend $75,000 on a temporary, 18 month solution there ought to be a better way to meet the housing needs that will a long-term and not just a temporary fix.

Because that’s where I have the same concerns sir. We’re spending an awful lot of money on a temporary solution and we know in these big hits these are long-term challenges and in 18 months we’re just not going to have every house rebuilt. We’re investing a lot of money in a patch that isn’t getting us through and helping the community move through to recovery and keeping a community viable if all our options are based on a very short timeframe. And we’re looking at things that don’t provide a housing solution and we’re not partnering for the long term so that people have a home, so we can reestablish the tax base of a community.

That is something I’m earnest about.

I hope that FEMA is indeed earnest about this. It is critical to the long-term housing recovery of low-income people that the money FEMA invests goes to solving the long-term housing needs of families.