Wednesday, May 22, 2013

WAMU commonly known as The American University Radio recently published an article written by Julie Patel detailing some of the overarching issues with government subsidies in the District of Columbia. The article touches on a number of different reoccurring problems in Washington, DC highlighting some of the glaring affordable housing issues. Manna is one of the top affordable housing organizations aiming to rebuild neighborhoods and preserve diversity. A link to the article is posted below. Enjoy!

Wednesday, May 8, 2013

Wealth Divide Update: 20% Downpayment Requirement?

The Urban Institute recently published this video creatively depicting the current wealth divide.

The question at hand among financial analysts, mortgage industry experts, congress persons, federal banking advisers and housing non-profits is as follows: Should banks require a 20 percent downpayment for all housing purchasers in order to ensure the safety of the financial institutions and prevent future financial crisis?

Click here to read the complete "Wealth Divide Update: 20% Downpayment Requirement?" article on the HAT DC blog!

Wednesday, February 20, 2013

Affordable Housing Revitalization through Home Ownership

Contributions by: Frank Demarais, Sarah Scruggs & Diane Richardson Spaite
For three decades Manna, Inc. has effectively, “…helped low and moderate income persons acquire quality housing, building assets for families through homeownership, revitalized distressed neighborhoods and in effort to preserve the racial and ethnic diversity” of the District of Columbia. Mission success occurs when Manna develops and builds affordable housing, with an emphasis on homeownership. The non-profit provides free high-quality financial literacy training/ homebuyer education services and fosters continued, multi-faceted post-settlement support for owners. Without partnership with government agencies, sister nonprofits and for-profit companies all of Manna’s efforts to advocate for public policies and affordable housing resources would be in vain.
Manna, Inc. assists each potential home owner with a counseling assessment followed appropriate home buyer education. Counseling and education are structured to inform home buyers of the fundamentals of qualifying for mortgage lending; choosing appropriate loans; property purchase options; and successful long-term ownership obligations. Potential owners are served based on their needs upon the point of contact. The Home Buyers Club program is recommended for those who need basic information and longer-term support on credit, income or other elements home purchasing. Individual assessments are offered for potential owners close to mortgage ready and interested in property. Manna provides resources for those Manna buyers and connects other potential owners to appropriate mortgage lenders.  In the last 30 years, the non-profit has developed over 1,000 homes ensuring every purchaser participated in the home buyer education process.    
When potential owners move from the Home Buyer’s Club to becoming home owners, Manna offers ongoing advice upon owner’s request.  The Home Buyer Club has an open door policy for all its meetings. Existing home buyers who have financial difficulty are always welcome. All Manna Home Buyer Club owners were contacted twice in the last 5 years with reminder list of items to review and a health checkup for the home owner for money savings options regarding loan, insurance and tax issues. Manna specifically mailed five year reminders to owners to prepare them for HPAP payments, beginning 5-years post purchase and DC real estate taxes, abated for lower income buyers for the 5-year period. Other affordable housing nonprofit organizations also performs similar outreach, including mailings by the Greater Washington Urban League affiliated HPAP community-based organizations. 
At the end of 2011, Manna reviewed all home buyers from its 30 year history and documented a less than 2% foreclosure rate, and the purchasers from 2002 – 2011 had zero foreclosures, in the worst real estate/ economic recession where even the standard Fannie Mae programs had foreclosures on over 5% of their originations from 2005-2007.  This achievement is attributed to Manna, Inc. requiring all home buyers receive home buyer education; fixed rate, fully disclosed mortgages and confirming their documented income. Manna’s professional services supporting 30 to 50 home owners annually is a part of significant baseline contributing to the overall health of the market. Through two recent campaigns: 2012 Own Now and the CityLIFT program, Manna has significantly increased its support of homebuyer hopefuls.
Over 90% of the Manna home buyers received DC Government down payment loans as part of their purchase.  The predominant program is the Home Purchasing Assistance Program (known as HPAP) for DC residents, but also included Employer-Assisted Housing program loans for DC Government Employees, and the Homestead Preservation Program.  Each of these loan programs requires 8 to 10 hours of face to face home buyer education, with additional support in the form of property inspections.
HPAP supports 250 to 400 new home owners, and other DC government homeownership programs support others.  This is in a real estate market that totals about 6,200 transactions last year, with about 2,000 under $400,000.  These programs provide about 10% of the buyers to the overall market and about 25% of the buyers to the under $400,000 market (market data from GCAAR Housing Reports posted on their website).
HPAP has partnered with over 13,000 DC residents as they move out of systems of dependency and ongoing subsidy, and currently generates $2 million in repayment every year. Even through the housing crisis, HPAP recipients have only a 2% foreclosure rate. HPAP is not money the District spends, but rather an investment the City makes in homes all across DC, an investment with infinite return. Homeownership offers a way for prepared families to build wealth through the equity in their home, helps reduce crime in neighborhoods, and improves children’s educational performance.
The impact is very specific to the neighborhoods where ownership happens, creating opportunities for longtime residents to stay in higher cost neighborhoods. Investment in new home owners statistically gives way to changing the citizen involvement pertaining to safety, school and overall quality of life in the neighborhood.  More significant is the impact on individual families, providing the only tangible wealth creation and a financial stabilizing tool for many.
As part of the one-time CityLIFT program, Manna was granted $7 million by Wells Fargo to lend as downpayment assistance. Over 1300 people came to the kickoff event in early October 2012 and 527 of those prequalified for a mortgage and left with downpayment reservations, while the others were scheduled for counseling appointments at Manna. Of the 527 with reservations, 198 were DC residents who made fewer than 80% of the Area Median Income, which, again, is the income group that HPAP serves.  Each week 20 new persons make contact about the LIFT program, which has allocated all of its funds, and all DC residents are directed to the HPAP program.
 Manna, Inc. believes firmly access to homeownership provides stable housing expenses to populations who have most impacted by steadily increased rent costs. Although home ownership involves costs such as ongoing maintenance and real estate taxes, the overall cost over time is still well below unpredictable rent increases. Therefore, families are empowered to plan for their housing expenses and contribute substantially to the overall health of their neighborhoods and the District.

Wednesday, August 1, 2012

Manna Raises Important Questions about Long-term Resale Restrictions

Manna gave testimony at a public hearing on July 25 for the DC Department of Housing and Community Development. The hearing was to provide the public an opportunity to respond to the proposed FY2013 Consolidated Action Plan. This plan will guide the Department of Housing and Community Development (DHCD) through most of 2013.
This post covers the testimonies of homeowners and Manna regarding long-term resale restrictions administered by DHCD. Long-term resale restrictions require buyers to sell to someone else in their income category for 15-30 years and restrict equity access and build-up during that period of time. Click here for more information. 
Manna began by explaining why the entire Manna Board of Directors and staff believe that the long-term resale restrictions implemented by DHCD are unfair and make it difficult to sell units:

·         Family circumstances—death, marriage, divorce, kids, health problems, job transfers—change over time. Long term and resale requirements by their very nature severely limit equity buildup. The fact is that most affordable units are 1 and 2 bedroom types. If you cannot build equity, you cannot trade up when a life-changing circumstance occurs and you need more space. You are really a glorified renter, and can easily end up losing money. You may have to become a renter again if you need a larger home.

·         Since these life-changing circumstances often cost a lot of money, very restricted asset buildup effectively prevents low-income owners from obtaining home equity lines of credit to handle emergencies.

·         Our experience indicates that low-income prospects are educated about this issue and many refuse to buy units with restrictions. They will accept having a subsidy recaptured, but want to be treated fairly like others. They do have options, e.g. buying from for-profit developers with no restrictions or simply staying where they are currently living.
·         With little potential for asset building, there is no incentive to maintain the condition of their properties.

·         Neither DHCD nor any of the advocates on the other side of the issue have been able to produce data that justifies their positions on this issue.

The proponents of the current DHCD-imposed resale restrictions would have you believe that losing an affordable unit is sacrosanct and that making long term restrictions fairer would lead to the decimation of the affordable housing stock. They would have you believe that low-income owners will make quick resales and flip units for a quick profit. They would have you believe that there are ways for low-income families to build substantial equity under the current system. Yet they haven’t produce data supporting these assertions, and Manna’s experience indicates the opposite.”

“Many ADU owners are now facing unexpected hurdles. Often unaware of the actual impact that these restrictions would have on them, these homeowners certainly didn’t know that they would become social pariahs in their buildings or that their condo fees would increase by around 75% in just three years of ownership (as opposed to the standard 3-5% annual increase that normally occurs with market rate units). They didn’t realize that when an emergency came up that warranted relocation, they would face an extraordinarily tedious resale process that would require them to do the work of a realtor, a lender, a home inspector, an appraiser, and a housing counselor, as well as vet each potential buyer with DHCD, draft a real estate contract, and ultimately assume the District’s role of preserving affordable units for other low and moderate income families. These homeowners spent months working to purchase their units and after years of making mortgage payments and managing escalating condo fees, real estate taxes, and other expenses, they thought they would be entitled to some reward for their hard work and assumed risk. This hasn’t been the case, and with long-term restrictions in place, will never be.”

ADU owners dealing with long-term resale restrictions and rising condo fees also testified:

Sarita - ADU owner in Ward 3
“My condo fee was originally set at $324 [in 2008]. This spiked to over $500 11 months later. Since that time, the condo fees I am required to pay have only risen further...I am now burdened with a monthly condo fee of $700. Not only does this represent a 116% increase from the original amount but it is also higher than my monthly mortgage payment. While I do recall some discussion regarding potential projects within the building that might require greater condo fees, I was never informed that such drastic increases would be in the works. Why did the City not plan for this? Never in my wildest dreams did I imagine the possibility of paying a higher amount for condo fees than for my mortgage payment. I stand assured that if this were to be conveyed to me before settlement, I would never have agreed to [purchase in my building].

Tanya - ADU owner in Ward 1
“I’ve always wanted the opportunity to become a home owner in this area and that opportunity presented itself in 2007 when I purchased my condo... At that time I couldn’t have imagined how much my life would change: taking in an elderly friend, getting married and having a baby... As most at DHCD know, I was not given a free home. I had to qualify with credit and finances in order to even be eligible to purchase this unit.  I pay the escalating condo fees associated with living here as well as utilities.  Currently I rent a parking space because we were not allowed to purchase parking with the ADUs...What bothers me is that when we face economic difficulty as others do, our homes that we worked hard to pay for can’t work for us as they do for every other homeowner...I’m not asking DHCD to dismiss all requirements, but to instead reconsider the amount of time the restriction is tied to our property and work with owners, the City Council and others to address this situation. Life happens!  It’s not easy to remain the same for 20 years and if you do, something is wrong.  Buying your first home should be a stepping stone, not a road block.”

Monday, July 30, 2012

Manna Staff address Director Michael Kelly

Manna gave testimony at a public hearing on July 25 for the DC Department of Housing and Community Development.  The hearing was to provide the public an opportunity to respond to the proposed FY2013 Consolidated Action Plan.  This plan will guide the Department of Housing and Community Development (DHCD) through most of 2013.  This is Part 2 in a series of articles on the public hearing and Manna’s involvement.  This article covers the testimony of Willamena Samuels, the director of Manna’s Homebuyers Club (HBC) for the past 15 years. This year, Manna's Homebuyers Club, which provides homebuyer education and financial literacy training, celebrated its 25th anniversary. Ms. Samuels thanked Director Michael Kelly (head of DHCD) for the partial funding for the Homebuyers Club.  She noted what the program had accomplished:  “The Homebuyers Club has helped to break the cycle of poverty and allowed families to live the American dream of homeownership through housing counseling and financial literacy education.  In addition, it has helped to build confidence in potential owners through peer support, which has enabled them to achieve common and individual goals.  Often this support has carried them through difficult times as they have become homeowners.  As a result, the stability and quality of life improves neighborhoods through the hard work of committed, knowledgeable and financially stable new homeowners.”

HBC is a monthly, ongoing, peer support program which consists of single adults, couples and senior citizens with incomes ranging from $10,000 to $70,000.  The curriculum covers topics such as: working with a budget, establishing good credit and maintaining it, building savings for a down payment, applying for down payment assistance, understanding the home purchase process, and being an asset to your community. 

Each HBC member participates in a one-on-one counseling session, as well as group counseling workshops which are held in the evening in an interactive seminar setting.  Clients who primarily attend group sessions typically receive between upwards of 10 hours of counseling services, depending on the type of service.  This includes group sessions and individual counseling. 

HBC currently has 253 people enrolled in the Homebuyers Club, 90 of whom joined since the beginning of the year.  Ms. Samuels noted, “The interest in affordable homeownership and people who are putting in the hard work to get their finances in order is huge and continuing to grow - and homebuyers education works.  No matter your income, with the right education, first-time homebuyer resources such as the Home Purchase Assistance Program (HPAP), and good fixed-rate mortgages, you can be a successful homeowner.”  Manna has sold over 1,000 homes in the last 30 years, with only a 2% foreclosure rate and zero foreclosures in the last 8 years.

To learn more about Manna’s programs for homebuyers, contact 202-832-1845 extension 222.

Friday, July 27, 2012

Improving a Lifeline for Successful First-Time Homebuyers

Manna and homeowners gave testimony at a public hearing on July 25 for the DC Department of Housing and Community Development.  The hearing was to provide the public an opportunity to respond to the proposed FY2013 Consolidated Action Plan.  This plan will guide the Department of Housing and Community Development (DHCD) through most of 2013.

Manna gave testimonies concerning the Home Purchase Assistance Program (HPAP).  HPAP is DC’s homegrown down-payment assistance program.  It has helped 13,500 DC residents purchase their first home. Manna and HPAP recipient’s trumpeted the program’s success, addressed issues, and offered steps for improvement. DHCD is accepting comments until close of business on Monday, July 30, 2012.  You can email your comments to DHCD.EVENTS@DC.GOV with a subject line “Consolidated Plan comments.”

Manna Testimony
“Though the numbers are lower for fiscal year 2013 [due to federal cuts], we are delighted that 275 first-time homebuyers will be able to access down-payment assistance through the Home Purchase Assistance Program...[HPAP] continues to be one of the most important ingredients in helping low and moderate income DC residents become successful home owners and lifting up neighborhoods.

As you know, the Washington Post expose by Debbie Cenziper on the use of federal funding through DHCD unjustly disparaged many of the tools used to fund affordable housing in the District. I would like to speak specifically about the article on HPAP, which cited a 1.8% foreclosure rate amongst HPAP recipients as evidence of a ‘Million Dollar Wasteland’.  If it is true that fewer than 2 % of the HPAP loans have been lost to foreclosure, the District should be extremely proud of such a low foreclosure rate, especially through the worst years of the housing crisis. FHA and Fannie Mae foreclosures on loans originated in the last 10 years are many times greater than that, and reflect home buyers with higher incomes and greater household assets than the typical HPAP borrower.  We believe this very low loss rate reflects the benefits of the education required to receive HPAP, along with the full documentation underwriting by the Greater Washington Urban League, the low fully disclosed fixed rate payments and the property inspections.  HPAP home buyers often have payments lower than comparable rent, and have reasonable payments to income. 

The article and other reports have cited high delinquency rates, which are troubling statistics though consistent with the FHA and Fannie Mae data on increased delinquencies in this recession. We would like to share some suggestions on how to assist these home owners and help the District reduce the delinquencies which affect HPAP cash flow. HPAP only truly loses the District’s money when a foreclosure wipes out the HPAP principal, though the loss of principal cash flow diminishes the pool of funds for current period HPAP lending.

Before we offer suggestions, [let’s hear from] HPAP recipients.”

Testimony by Pablo, Ward 1 Homeowner and HPAP recipient
“The month before our fifth year anniversary of our HPAP loan, when we were scheduled to begin payments toward the loan, we received notification by e-mail from Amerinational Community Services. We made our first payment on time and immediately scheduled monthly automatic deductions.  At the same time, we decided to begin the process to refinance. It wasn't until our agent pulled our credit report that we discovered that Amerinational Community Services had notified the credit agencies six months prior to when we were supposed to begin payments and indicated to them that we were delinquent in our payments, thus negatively affecting our credit score...By then, we were already part of the statistics mentioned in the [Washington Post] article and now I question the accuracy of the HPAP repayment process.  It was the servicer who had it wrong, not me and with a 1.8% foreclosure rate in the HPAP history, I think not the overwhelming majority of those recipients as well.” 

Testimony by DeLisa, Ward 5 Homeowner and HPAP recipient
“I recently started paying back my HPAP loan; I wouldn’t have been able to purchase my home without it. Before I received repayment documentation, I happened to speak with Frank Demarais at Manna. He told me to be on the lookout for a letter from Amerinational Community Services, which is the HPAP loan repayment servicer. When I received the letter, the envelope didn’t mention anything about HPAP, and neither did the enclosed letter or payment coupons. If I hadn’t spoken with Frank, I would have thought it was junk mail. I possibly would have thrown the letter out. I’m lucky; not every HPAP recipient has a Frank.”

Manna Testimony
“In short, Manna believes there are basic things that DHCD can do with the servicer and with current HPAP counseling agencies to lower the default rate:

1.  Change the initial letter and payment coupons to clearly demonstrate that these documents are for HPAP repayment. HPAP recipients do not start repayment until year six of being in their home, so it is essential that the documentation is clear.

2.  Once an HPAP recipient is marked as delinquent or in default by Amerinational, DHCD should contact the homeowner to alert them to the missed payments and contact the HPAP counseling agency the recipient received counseling from and have the agency follow-up. This procedure offers a way to catch reporting mistakes by Amerinational or to provide needed counseling and budgeting assistance to HPAP recipients.

HPAP has been and continues to be an extremely successful program and a vital tool for low and moderate income DC residents to build wealth and independence through homeownership. DHCD has the opportunity to make the program even stronger and more efficient.”

DHCD is accepting comments until close of business on Monday, July 30, 2012.  You can email your comments to DHCD.EVENTS@DC.GOV with a subject line “Consolidated Plan comments.”

Tuesday, July 17, 2012

Taking Away the “Straw” That Builds Lives and Neighborhoods!

On Monday, July 8th, the Washington Post published a story by Ylan Q. Mui entitled, “For Black Americans, Financial Damage from Subprime Implosion is Likely to Last.”   What the article did not say explicitly, but implied was that a crime was committed against Mrs. Ida Mae Whitley and her family and that of many thousands of other minority and lower/modest income borrowers like her by unscrupulous, predatory lenders, brokers and others on Wall Street who, evidently legally, swindled Ms. Whitley out of the equity in her home and good credit—her one ticket out of low income/wealth status. They also are responsible for targeting and wiping out 50% of black home equity and wealth in this country. All these lending and real estate predator/crooks need to do is file for bankruptcy, as Ms. Whitley’s  lender did, walk away and start a new company to find new ways to legally beat more vulnerable people and groups like Ms. Whitley and future generations out of their money. These crooks names were not even published in the article! We publish sexual predators’ names, why not financial, real estate and lending predator’s names living in our midst and preying on the vulnerable?
Rather, what we do is blame the victims, which is occurring now by policymakers, pundits, lenders and many in the public. How convenient. And what is the solution? To punish this income group even more, by making it even harder, almost impossible, for them to get loans, repair credit and by severely limiting the equity they can build up on their new homes with very discriminatory, unjust and predatory resale restrictions that trap them in low income/low wealth status such as is the case now in DC and promoted by “enlightened” Government and private policy groups.  It’s reminiscent of what Pharaoh did to the Hebrew slaves in Egypt when he forced them to, “Make bricks without straw, because they are lazy.” (Exodus 5: 7-8)
As of last week, another major mortgage lending bank officially ended their programs that support community and mortgage lending business for lower income people and the communities they live in, leaving no major mortgage lending bank operating any programs for third party originations in low and moderate income neighborhoods. The banks themselves have not opened mortgage operations or dedicated staff to these neighborhoods, and shutting down broker originations shuts down lending. Now what we have are lawsuits that force banks to pay paltry sums of money in comparison to their earnings and amounts in reserve, rather than forcing long term, institutional commitment to making good long term, low interest loans to very qualified, counseled and credit worthy buyers over years to come as the Community Reinvestment Act was designed to do, but is being ignored now.  The vacuum of lending in lower income areas asks these markets to recover and build back up without any straw for the building. 

We and other successful producers of affordable for sale homes know what works. In 30 years Manna has sold over 1,000 homes to lower income, very low down payment 1st time home buyers in the District of Columbia with less than a 2% foreclosure rate among them. In the last 8 years, through the worst recession and foreclosure melt down since the depression, Manna has a 0% foreclosure rate among our buyers! What works is:  1) Good Homebuyer training and counseling, 2) Down payment Assistance such as DC’s highly successful H-PAP program. 3) Good 30 year fixed rate Mortgages and 4) Accessibility to good ongoing counseling when problems arise. It’s not rocket science. Now is the best time for lower and modest income people to purchase a home. Prices and interest rates are at their lowest in many years. In the District, one can own a home cheaper that renting in most neighborhoods. There are many qualified, excellently counseled and trained, credit worthy lower income people eager to move up the economic ladder, improve their neighborhoods, reverse falling home prices due to foreclosures. They are our ticket to a better more equitable society. Now is not the time to make it impossible for them to do so. 

-          Reverend Jim Dickerson
Founder & Chair, Manna Inc.