April 24, 2015 - Exciting news from our partners at Right to the City, Center for Popular Democracy, and Alliance for Community Empowerment:
Following a six month campaign led by the community groups working with the Right to the City Alliance (RTC) and the Center for Popular Democracy (CPD), the Federal Housing Administration (FHA) of HUD announced significant changes to the Distressed Asset Stabilization Program (DASP).
Following the changes announced today, the DASP’s new plan will include:
- A commitment to selling more loans through special pools that require investors to achieve a certain percentage of outcomes that help the surrounding neighborhood;
- The creation of special auctions for nonprofit bidders only;
- A 12-month foreclosure moratorium on all loans sold through the program;
- Higher standards for loan modifications;
- Improved reporting requirements; and
- A 20-day first look period in which owner occupants, government entities, and nonprofits have the opportunity to buy a real estate owned property before an investor may bid.
“Wall Street has demonstrated how little they care about the stability of our neighborhoods,” says Giselle Mata a community leader with the group ACCE (Alliance of Californians for Community Empowerment). “The federal government shouldn’t be putting us back into the hands of Wall Street vultures when there’s a clear alternative. We noticed that HUD has listened and is making changes to help more non-profits, with a commitment to our communities, get these mortgages.”
HUD, now joined by Fannie Mae and Freddie Mac, have been contributing to the Wall Street buy-up of neighborhoods across the country, through their bulk sale of delinquent mortgages. The private equity firm Blackstone is now the largest landlord of single-family housing in the country. Community groups have been calling on the FHA to prioritize selling troubled mortgages to non-profits with a program to offer loan modifications with principal reduction and an affordable housing plan for vacant properties. Instead, 90% of the 117,000 delinquent mortgages the FHA has sold since 2012 have gone to for-profit entities, largely private equity firms and hedge funds. A status report on the program, released by the FHA, showed that borrowers resumed payments on fewer than 13 percent of the mortgages as of February.
While Right to the City Alliance and the Center for Popular Democracy applaud the FHA’s movement in the right direction, they say there is still a lot more to be done.
Most importantly, the FHA needs to establish a “first look” program so that purchasers with a plan to offer modifications with principal reduction and to create affordable housing get a first chance to purchase all of the loans that the FHA is selling. In addition, the FHA needs to strengthen affordability requirements for properties put on the rental market.
Over the past six months, community groups across the country have held rallies and protested at local HUD offices multiple times, in addition to national meetings with FHA staff.
“We’ve been strong, united and consistent in the work to defend our communities,” said Rachel Laforest, RTC’s Executive Director. “But this work is also about helping shape a housing economy that provides safe, dignified and long-term, truly affordable housing options for all families. We’re happy to see HUD take steps in the right direction, but more is needed to truly protect struggling homeowners and communities.”
- New York Times: Federal Sale of Troubled Mortgages Draw Criticism from Community Groups
- Los Angeles Times: FHA is urged to reform loan sale program
- The Hill: Communities lose when HUD sells loans to Wall Street
In September 2014, Right to the City Alliance and the Center for Popular Democracy launched a national campaign calling on HUD to reform DASP. Read our report, Vulture Capital Hits Home: How HUD is Helping Wall Street and Hurting Communities.
RTC is working collaboratively across sectors to develop national housing policy that ensures that our communities and future generations have homes that are truly affordable, stable, and dignified. Our Homes For All campaign aims to protect, defend, and expand housing that is truly affordable and dignified for low-income and very low-income communities by engaging those most directly impacted by this crisis through local and national organizing, and winning strong local policies that protect renters and homeowners, and shifting the national debate on housing.