Responding to the Foreclosure Crisis Presented by Jeremy Rosen, Executive Director, National Policy and Advocacy Council on Homelessness. (202)

Responding to the Foreclosure Crisis Key messages –Despite everything you just heard, Congress and the Administration have mostly focused on “big picture” solutions to the crisis. –No meaningful relief so far for homeowners with bad mortgages, or renters evicted because a landlord was foreclosed on. –But there is some good news to discuss. –And we have a strong 2009 Policy Agenda.

Foreclosure Response Two bills – Fannie Mae / Freddie Mac regulatory bill this summer (“housing bill); Wall Street “bailout” bill this fall. The housing bill did two important things: –$4 billion neighborhood stabilization fund. –National Housing Trust Fund. The “bailout bill” did only one thing – bare bones language protecting renters. EFSP – More $$$.

Neighborhood Stabilization $4 billion in Community Development Block Grants (CDBG) with special rules focused on using the money for purchase of foreclosed properties in blighted neighborhoods for rehabilitation and use as affordable housing. Communities are required to submit plans for using $$$ to HUD, by December 1.

Neighborhood Stabilization $$$ could for example be used to rehab housing and put homeless families in it. Get involved – some cities have real windfalls. HUD has info on how you can do this. Unfortunately, NSP doesn’t keep people in their homes.

National Housing Trust Fund NHTF has been a long standing goal of affordable housing advocates (there are over 300 state and local trust funds). NHTF concept – Get federal money, outside of the HUD budget, to pay for production, preservation, and rehabilitation of 1.5 million units of affordable housing over 10 years. Key idea – dedicated source of funds.

National Housing Trust Fund After nearly 10 years of trying, legislation finally passed in Summer, Money to be taken from Fannie Mae and Freddie Mac – a % of their “new business purchases.” Delayed implementation – money would begin to flow in Fall, 2009 – more would come in 2010, 2011, and beyond. Money would go to states and in turn from states to developers of affordable housing.

National Housing Trust Fund 75% of money will have to be spent on the lowest income people (at or below 30% of area median income). Key concerns: –Not enough $$$. –Fannie and Freddie have been taken over by new federal regulator – we are hopeful that by Fall of 2009 the regulator will allow them to make payments into the NHTF. –Doesn’t help people losing housing now.

Renter Protections Language from “bailout bill” Directs federal agencies holding troubled mortgages to coordinate “where permissible, to permit bona fide tenants who are current on their rent to remain in their homes under the terms of the lease.” Currently being tested in a Connecticut lawsuit; we’re concerned that it’s not strong enough to prevent evictions.

EFSP Emergency Food and Shelter Program –McKinney Act program housed at FEMA. –Communities get money to make emergency rent payments, help with moving expenses. –Current year funding up from $135m-$200m.

What’s next for 2009? Our goals? –Keep families from losing homes to foreclosure. –Protect “innocent” tenants where landlords are foreclosed on (keep them in their homes as long as possible). –Provide new housing for owners or renters who do lose their homes, so that they do not wind up in homeless shelters.

Candidate Goals? McCain –Plan to have government purchase troubled mortgages at full value then reduce homeowner exposure to fixed rate mortgage at current value of home. –Pros – Could really help many homeowners. –Cons – Very costly – taxpayers bear the full burden – banks and lenders who made irresponsible loans get all their money back.

Candidate Goals? Obama –3 month foreclosure moratorium. –“Fix” bankruptcy law so that judges can modify the terms on first mortgages to help people save their homes. –Ensure that federal agencies do more to modify loans held by Fannie / Freddie and banks or other entities under their control. –Pros – Comprehensive. –Cons – Will the loan modifications happen?

Our Agenda! Preventing foreclosures –3 month foreclosure moratorium. –Bankruptcy modifications. –Combination of candidate plans, to ensure that loans are modified to keep people in their homes without the full financial burden being turned over to taxpayers. –These are big ticket items where we can engage but won’t play a leading role.

Our Agenda! Protecting tenants –If a home is foreclosed on, any subsequent owner can choose to remove a tenant. –However, we can provide incentives to subsequent owners to keep tenants in place, and we can require a 90 day notice period at minimum, before tenants can be evicted. –$200m fund to help tenants move – flexible and cost effective homelessness prevention. –Opportunity for you to engage.

Our Agenda! Providing new housing –Use Neighborhood stabilization and NHTF. –Create a pool of new HUD Section 8 housing vouchers, targeted to families who are homeless under the broader definition used by ED (as opposed to narrow HUD definition). –Allow schools and other providers serving children to qualify families for assistance, in coordination with housing authorities. –Another opportunity to engage.