Report: Program aids Wall Street, hurts communities
New York [September 9, 2014]— Today, in coordinated actions in more than 10 cities including Los Angeles, San Francisco, Boston and Chicago, community organizations and struggling homeowners rallied at local offices of the U.S. Department of Housing and Urban Development (HUD) to call for a halt to a controversial program, that auctions off delinquent loans to investors until problems with the program are fixed.
The community groups released a new report, Vulture Capital Hits Home: How HUD is Helping Wall Street and Hurting Our Communities that details how the HUD Distressed Asset Stabilization Program (DASP), created in 2012, is auctioning pools of delinquent loans to the highest bidders. The groups say these sales are detrimental to neighborhood stabilization goals such as homeownership preservation and affordable housing. The report was researched and authored by the Center for Popular Democracy and the Right To The City Alliance.
“We’re seeing an unprecedented rise of the corporate landlord, and HUD’s DASP is just facilitating the process,” said Rachel Laforest, Executive Director of the Right To The City Alliance. “HUD should employ a credit system that favors nonprofit bidders whose sole mission is community investment—and implement stronger requirements for bid winners that preserve homeownership and give struggling families affordable housing options. With today’s actions, we are making our voices heard across the nation that we want the FHA to put a halt to DASP until it can change to meet its mission.”
Corporate winners of the auctioned loans include Lone Star Funds, Bayview Asset Management, and LVS I SPE, whose principal is facing real estate fraud charges brought by the SEC in 2012.
“DASP claims to have two purposes—fund the Mutual Mortgage Insurance (MMI) fund and aid in the stabilization of distressed American communities; it’s failing to meet its second goal,” said Connie Razza, Director of Strategic Research at the Center for Popular Democracy and report author. “Our analysis found that close to 97 percent of the loans have gone to private equity firms and other profit-driven entities as opposed to Community Development Financial Institutions that also want to buy them. HUD’s own figures demonstrate less than 3 percent of the homeowners with resolved loans in the program have managed to keep their homes with the DASP process.”
The report describes how investors are raising billions of dollars to buy distressed residential assets using business strategies and tactics that undermine neighborhood and economic stability. Distressed residential mortgages exist disproportionately in working class communities of color, which the report explains have been systematically targeted for more expensive loans by the predatory lending practices of American financial institutions.
Events throughout the country today call on the FHA and HUD to halt the DASP program until concrete improvements are made in order to strengthen—not hurt—communities.
In addition, a letter was sent to HUD Secretary Castro today regarding the concerns of all those involved.
“We have already seen what unchecked corporate greed can do to communities,” said Gisele Mata, a California community organizer who fought to save her own home from foreclosure. “Many of us are still fighting to keep our homes and stay in the communities we love after the harm done by Wall Street. The federal government has a responsibility to protect our right to housing—not to help sell our homes to the highest bidder.”
The report highlights three key problems with the DASP program:
1. The current structure of DASP auctions hampers community stabilization by considering only the highest bid without weighting the bidders’ track record of good outcomes for homeowners and communities.
2. The current outcome requirements and reporting structure fails to hold purchases accountable to neighborhood-stabilization goals and provides insufficient transparency and prevents community oversight.
3. The current pre-sale certification phase does not ensure that the FHA mortgage modification process has been followed before loans are included in DASP auction pools.
To download the full report, click here.
Spokespeople are available for media interviews in English and Spanish. Groups participating in actions around the country include:
ATLANTA – Occupy Our Homes Atlanta (Deanne Dunbar, firstname.lastname@example.org)
BOSTON – City Life/Vida Urbana, Lynn United for Change (Isaac Simon Hodes,isaac@LynnUnited.org)
CHICAGO – Centro Autonomo, Chicago Anti Eviction Campaign, Communities United Against Foreclosure and Evictions (Antonio Gutierrez, email@example.com)
DETROIT – People Before Banks (Steve Babson, firstname.lastname@example.org)
LOS ANGELES – ACCE, Strategic Action for a Just Economy (Carlos Jauregui, email@example.com)
MIAMI – Miami Workers Center (Adrian Madriz, firstname.lastname@example.org)
MINNEAPOLIS – Neighborhoods Organizing for Change (Anthony Newby, email@example.com)
NEW YORK CITY – NY Communities for Change NYC (Zack Lerner, firstname.lastname@example.org)
ROCHESTER NY --Take Back the Land Rochester (Ryan Acuff, email@example.com)
SPRINGFIELD, MA – ARISE for Social Justice (Michaelann Bewsee, firstname.lastname@example.org)
To download the full report, click here.
Spokespeople are available for media interviews in English and Spanish.
The Right to the City Alliance is a national alliance of over 50 racial, economic, housing advocacy and environmental justice organizations in 13 cities in the USA. Through shared principles and a common frame and theory of change, RTTC is building a national movement for housing justice, racial justice, and urban justice, through our Homes for All campaign. For more go tohomesforall.org.
The Center for Popular Democracy promotes equity, opportunity, and a dynamic democracy in partnership with base-building organizations, organizing networks and alliances, and progressive unions across the country. CPD builds the strength and capacity of democratic organizations to envision and advance a pro-worker, pro-immigrant, racial and economic justice agenda. Visitwww.populardemocracy.org and www.twitter.com/popdemoc.