tagged w/ Affordable Housing
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by Zach Carter, Media Consortium blogger
Over the past decade, Fannie Mae and Freddie Mac transformed themselves into some of the worst-run companies in recent history. But contrary to current talking points, the firms’ failings had almost nothing to do with their programs for low-income borrowers. As policymakers debate what should be done with the mortgage giants, a battle is now beginning in which the very availability of affordable housing for the middle class may be at stake.
A history of affordable housing
As Tim Fernholz emphasizes for The American Prospect, before the U.S. government created Fannie Mae in 1938, mortgages were very pricey 5-year loans, so expensive that only very wealthy Americans could ever hope to own a home. Fannie Mae changed all that by rolling out the 30-year mortgage, which lowered monthly payments for borrowers by providing a government guarantee against losses for banks. It worked.
But as Fernholz notes, without some kind of government involvement in the housing market, home ownership will revert to its pre-Depression status a privilege reserved for elites. Policymakers will have to implement significant changes in the mortgage finance system to ensure stability in the U.S. housing market, but whatever changes may come, a robust role for the government in housing will be essential.
Fannie and Freddie have been justifiably but inaccurately maligned in the aftermath of the mortgage crisis. In recent years, their executives ran the firms like out-of-control hedge funds, lobbied Congress like arrogant Wall Street banks and did nothing beyond the bare minimum required by law to help low-income borrowers. But Fannie and Freddie did not go headlong into subprime mortgages—the primary source of their losses came from loans to relatively high-quality borrowers.
The terrible mortgages that crashed the economy were issued by banking conglomerates and Wall Street megabanks—Fannie and Freddie were almost entirely divorced from that line of business. The problem with Fannie and Freddie was largely structural– investors and managers saw the potential for big profits from taking on loads of risk, but believed (accurately) that the government would eat losses if those risks backfired. So Fannie and Freddie ramped up risk, taking on as many mortgages as they could while keeping as little money as possible on hand to cushion against losses. Eventually the strategy destroyed them.
Fixing the mortgage system
Exactly how the government stays involved in the mortgage market is still open to debate, as Annie Lowrey emphasizes for The Washington Independent. Nearly every member of the private sector who testified at a recent housing forum sponsored by the Treasury Department endorsed some kind of government backing for the housing market. This was a meeting of private-sector bigwigs—no community groups or affordable housing advocates were invited to speak at the meeting. Proposals ranged from scaling back government support for some types of mortgages, to the full nationalization of Fannie Mae and Freddie Mac (Fannie was a nationalized entity for the first 30 years of its existence).
In other words, the government is going to have to keep subsidizing housing, but it will have to find new ways to do it. The old Fannie and Freddie model didn’t work, but the private sector will be unable to get the job done by itself. Private-sector banks and mortgage brokers, after all, were the source of all the predatory loans issued during the subprime crisis, and the source of all of the most offensive loans that drove the economy off a cliff.
Inefficient and often predatory players on Wall Street are still causing problems today. As Ellen Brown highlights for Yes! Magazine, the mortgage system is so bizarre that banks are finding themselves unable to document their right to foreclose on properties—and courts are (fortunately) refusing to let them do it.
It’s a rare situation in which borrowers may actually hold the higher legal ground against powerful corporations. About 62 mortgages are registered through an electronic documentation system called the Mortgage Electronic Registration System (MERS), which helps banks with the foreclosure process. But MERS has repeatedly been unable to show proper documentation assigning a mortgage to a specific bank, and courts are now challenging its right to foreclose on behalf of big banks.
That’s good news, Brown notes, because MERS’ shoddy documentation has made it very difficult for borrowers to figure out who actually owns their loan. If you don’t know who owns your mortgage, it’s impossible to modify it if you find yourself unable to pay it off.
As Shamus Cooke argues for Truthout, even successful innovations like the 30-year mortgage are beginning to look a little outdated in an era of heavy, chronic unemployment. Many people can no longer expect to be gainfully employed for three decades on end. If the government refuses to repair our damaged jobs infrastructure, even simply maintaining the status quo in housing could become impossible.
Deficit reduction is not a cure-all
That brings us to another favorite conservative bogeyman, the federal budget deficit. The deficit and jobs generally stand in direct opposition. Creating jobs costs money, and spending that money expands the deficit. Cutting the deficit, by contrast, means cutting support for jobs.
As Steve Benen emphasizes for The Washington Monthly, conservative lawmakers are still harping on deficit reduction as a cure for everything that ills the nation, when the real solution to our problems is a serious jobs bill.
Even if the deficit were a huge problem, trying to cut important social services in the middle of a deep recession is not a good way to go about solving it. Drastic cuts to government spending in a recession result in lower tax returns for the government, which can often be self-defeating, especially in the face of expanding joblessness. The resulting push for deficit reduction—known in economic circles as an “austerity policy,” is better understood as the active pursuit of economic decline. As economist Robert Johnson notes in a New Deal 2.0 piece carried by AlterNet:
Deterioration of government services is bad enough, but imposing austerity due to lack of trust in a time of high unemployment and slack resources is tragic. It is a means to accelerate the decline of living standards of those who have taken a beating since 2007. Double dip or stagnation is too subtle a distinction. We are amidst an unfolding collective choice to pursue a downward spiral.
The government has taken several dramatic steps to repair the nation’s financial system, but it has done almost nothing to help troubled borrowers and not nearly enough to create jobs. Some of this is due to misguided policies enacted by President Barack Obama, and much of it is due to cynical obstructionism. But we cannot repair the economy without fixing jobs and housing. Both are still in a full-blown crisis, and policymakers should feel an urgent need to deal with them.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.by Zach Carter, Media Consortium blogger
Over the past decade, Fannie Mae and... more
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The evolution of the design of a zero energy modern cost effective housing concept & the challenges faced along the way. Two guys pursue a dream to revolutionize the way we look at "affordable housing" without any capital resources whatsoever.
After more than a year and a half of struggling to materialize the vision into reality the company is finally capitalized.
This is our concept.
This is our story.The evolution of the design of a zero energy modern cost effective housing concept... more
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Una Casa Digna ( A decent Home) shoot and edited by : Christian Peña
The city of Lota in the 8th region of Bio Bio is another example of the destruction the 8.8 earthquake to this small forgotten mining town. Maria Angelica Huerta Pino Presidente of the Casa de Mujer of Lota took me on a tour of the town where she works to show the state of the homes that residents live in and their need for better homes for their citizens.
http://web.mac.com/christian.penaUna Casa Digna ( A decent Home) shoot and edited by : Christian Peña
The... more
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24P
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added this
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1 year ago
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The story of a two community groups that pulled together to rehabilitate a decrepit 75-year-old home. The original materials were recycled, and the home was brought up to LEED standards of sustainability and energy efficiency. Now the house is fresh and clean, and ready to be an affordable home for a low income family in the Tallahassee area.The story of a two community groups that pulled together to rehabilitate a decrepit... more
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If you’re allergic to black mold, living in a house that has black mold hidden in the walls could actually kill you.
Lead paint, still found in old houses built and painted before the 1970s era law that removed lead from paint, can cause brain damage and learning disabilities in kids.
But what do you do about the thousands of houses that were former methamphetamine labs? According to a story in the New York Times, home buyers who purchase houses formerly used as meth labs could find their health and wealth damaged by leftover drug residue that has seeped into the walls and floors
Read the full article on my CBS Money Watch blog by clicking here.
Going forward, what happens to former meth lab houses that become part of a new wave of foreclosures? Will it be the bank’s responsibility to let buyers know that the house comes with its own unique set of problems?If you’re allergic to black mold, living in a house that has black mold hidden... more
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Because the federal government approved a $7,500 first time home buyer tax credit for 2008 and an $8,000 first time home buyer tax credit for 2009, and each tax credit has different rules, there has been some confusion for home buyers as to which loan must be repaid.
Here's how to qualify for the 2009 $8,000 first time home buyer tax credit and where to find the rules for the 2008 $7,500 first time home buyer tax credit.
Those who bought in 2008 received a $7,500 tax credit that must be repaid at $500 per year for 15 years. If you bought in 2009 (closing before December 1, 2009), you were eligible for an $8,000 first time homebuyer tax credit that did not have to be repaid.
According to the IRS website, the $8,000 first time homebuyer tax credit does not need to be repaid only on homes purchased after December 31, 2008 and on or before December 1, 2009.
The full $8,000 tax credit is available to home buyers who have not owned a home for the last three years and who buy the home as their primary residence between January 1, 2009 and December 1, 2009 and whose modified adjusted gross income is less than $170,000 if filing jointly or $95,000 if filing as a single person.
If the home value is less than $80,000, the tax credit is reduced and if the income you earn is higher than the amounts listed, the credit is phased out.Because the federal government approved a $7,500 first time home buyer tax credit for... more
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The Treasury Department announced that another almost half billion dollars will go to the American Recovery and Reinvestment Act to help state housing agencies with affordable housing development. The money will be distributed to non-profit organizations to hire contractors to build the affordable housing. The money from the American Recovery and Reinvestment Act should help create jobs and provide affordable housing for more families.The Treasury Department announced that another almost half billion dollars will go to... more
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A factory-built home that creators say is a model for being affordable and green will be on display by appointment in Wailuku beginning Monday.
Francesca Carey, president of FABMAC Homes, Affordable Housing Solutions, said the model home exceeds state and county building code requirements and has an Energy Star designation, indicating it is energy efficient.
"We see FABMAC Homes as one more tool in the effort to have quality-built, durable, energy-efficient affordable housing for Maui's local families," Carey said. "It is not designed to meet the needs of the entire housing market, but we see it as a real option for many who want a home they can afford to buy and that has been built to be energy efficient so that it is also affordable to keep."
This is without photovolatic cells, starting at $189,000 Fully Furnished? Energy Star Rated? Check out maybe in your neighborhood.A factory-built home that creators say is a model for being affordable and green will... more
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Kepano
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added this
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3 years ago
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CORRALES, N.M. - It was a side trip through a destitute, ramshackle neighborhood in Ciudad Juarez, Mexico, that detoured Brian McCarthy from building houses in Albuquerque to an idea to offer the very poor a chance to own a home.
His answer lies in a humble steel shipping container, 40 feet long, 8 feet wide, 8½ feet tall.
McCarthy, 30, and three partners, Pablo Nava, 22; Kyle Annen, 23; and Mackenzie Bishop, 22, have made a prototype out of a standard shipping container that hauls goods worldwide — a 320-square-foot home with a kitchen, bath with toilet, sleeping areas, windows and a bright blue door. The exterior is painted with a white epoxy coating that has light-reflecting properties to prevent the sun's heat from penetrating.
Each small house includes hookups for air conditioning, ventilation, electrical and water systems — and the units ideally could be set up in small communities to make accessing utilities more efficient.
The idea began to take shape several years ago, when McCarthy went to the Mexican border city on a field trip as part of an executive MBA program. He found himself impressed by the sophistication and rapid growth of industry in Juarez, but shocked when the bus cut through a poor neighborhood on the way out of the city.
"We saw hundreds of homes that are made out of wood pallets and cardboard and scrap metal and scrap building material," McCarthy said. When he questioned the bus driver, "he said, 'Well, all the people who live here work in the places you just visited.'"
"It was amazing to me that in an area where there was such growth and economic prosperity, that these employees of Fortune 1000 companies were living in such poor conditions."
With Juarez growing by 50,000 to 60,000 people a year and wages low, it was evident traditional homebuilding couldn't respond, said McCarthy, who'd worked in various facets of building homes in Albuquerque.
An idea began taking shape about a year and a half later when he saw an article about a shipping container converted into guest quarters.
"They talked about the merits of the construction, how strong they are, how affordable they are, and how plentiful they are," McCarthy said.
He called Nava, his cousin, with the low-cost home idea. A year later, Nava, then a junior at Notre Dame University, suggested entering the university's business plan competition.
Their initial three-quarter page concept expanded as they advanced in the contest. Along the way, Nava invited his roommate, Annen, to join. As the group's acknowledged computer graphics whiz, Annen added drawings to give the presentation more life.
Continue reading through the link...CORRALES, N.M. - It was a side trip through a destitute, ramshackle neighborhood in... more
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