Home Politics 110,000 Petition Signatures Call For End To HUD “Wall Street Giveaway”

110,000 Petition Signatures Call For End To HUD “Wall Street Giveaway”

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110,000 Petition Signatures Call for End to HUD “Wall Street Giveaway,” Fundamental Reforms of Mortgage Sale Program

HUD Lags Behind After FHFA Announces New Rules to Improve Community-Building Outcomes

A petition organized by a national coalition of homeowner advocates and progressive organizations at DontSellourHomesToWallStreet.org reached 110,000 signatures today, urging Secretary Julián Castro to immediately reform HUD’s distressed mortgage sales program.

Housing advocates are urging improvements to the Department of Housing and Urban Development’s delinquent mortgage sales they call a “Wall Street giveaway,” such as principal reduction for homeowners and selling significantly higher percentages of mortgages to nonprofit and other mission-driven entities.

The coalition’s petition launched last Monday to considerable press attention from outlets including the Wall Street Journal and Politico.

Over the past one and a half years the campaign’s call for fundamental reforms have been picked up from quarters as varied as Sen. Elizabeth Warren, the New York Times editorial board, and 45 members of Congress who signed a congressional letter to HUD and the Federal Housing Finance Agency (FHFA) in March of this year.

“It makes no sense to sell these loans back to the same predators responsible for the housing crisis in the first place,” said Ana Maria Archila, co-executive director for CPD Action. “Wall Street speculators have a goal of making as much money as possible from our communities, destroying the wealth and stability of neighborhoods of color in the process. This stands in direct conflict with HUD’s mission to create strong, sustainable, inclusive communities and quality affordable homes for all.”

On Thursday, FHFA announced reforms to its similar sales of non-performing loans, adding greater principal forgiveness and increasing the chances that homeowners will have their loans modified by their new owners. HUD has yet to make these changes to its distressed mortgage sales program.

The petition to HUD Secretary Julian Castro housed at DontSellOurHomesToWallStreet.org reads in part:

We are disappointed to see that under your leadership, 98% of the delinquent mortgages sold in 2015 through the Department of Housing and Urban Development’s (HUD) Distressed Asset Stabilization Program went straight to reckless Wall Street banks…

We call on you to immediately cease sales through the Distressed Asset Stabilization Program until the program is fundamentally reformed so that loans are sold to nonprofit and mission-driven organizations and qualified buyers meeting high standards, not just reckless Wall Street banks.

Homeowner advocates who have campaigned for changes to HUD’s sales of distressed mortgages say the response to-date from HUD has been inadequate.

This disconnect was highlighted by Sec. Julián Castro’s comments to NBC News on Thursday that the campaign was “baffling” because “on the policy, what we have done is actually have made the program much better for homeowners. So we’ve done basically a lot of what they are asking for.”

In fact, over half of the mortgages HUD trumpets as avoiding foreclosure end up in short sales or as deeds in lieu, meaning the homeowners end up losing their homes.

“Many of us were sold toxic loans and have been struggling to hold on to our homes and recover,” said Jose Vega, a community leader and struggling homeowner with Alliance of Californians for Community Empowerment (ACCE) Action. “Latinos and African Americans were targeted for predatory loans and have had particularly high rates of foreclosures. It is shameful that, instead of helping us, HUD is helping Wall Street speculators make more money off of the pain and suffering of homeowners and communities.”

In April 2015, HUD pledged to prioritize sales to Community Development Financial Institutions (CDFIs). However, since that date, 98 percent of the loans sold – 15,309 out of 15,624 – went to Wall Street speculators such as private equity giant Blackstone. Only one percent was sold to CDFIs.

“Latino communities are still recovering from the predatory subprime mortgage crisis that stole more than two-thirds of our collective wealth,” said Matt Nelson, Managing Director at Presente.org. “Homeowner advocates have urged serious reforms to this HUD program for the past 18 months. Now it’s up to Sec. Castro to end HUD’s Wall Street giveaway and reorient the program toward its goal of helping homeowners instead of increasing Wall Street profits.”

“Enough is enough – this selling of our neighborhoods wholesale has got to stop,” said Christina Winslow, a New York Communities for Change member and homeowner from Southeast Queens who lost her home to a short sale after Lone Star bought her mortgage. “This is about the people in my community: We had dreams, and when we needed assistance we were pushed to the side and sold off. My family and my business, like so many others in communities of color, suffered greatly when we were uprooted by the same people who first sold us predatory loans. The federal government needs to realize that you don’t put out a fire by calling the arsonist!”

Among the organizations participating in the national coalition are Alliance of Californians for Community Empowerment (ACCE) Action, CPD Action, Daily Kos, Democracy for America, MoveOn.org Civic Action, New York Communities for Change, Other 98% Action, Presente.org, RootsAction.org, Rootstrikers, and the Working Families Party.

Call For End To HUD “Wall Street Giveaway” – Key Steps

Some key steps in this effort include:

  • September 9, 2014: Community groups launch campaign and release report:Vulture Capital Hits Home: How HUD is Helping Wall Street and Hurting Our Communities.
  • June 22, 2015: U.S. Conference of Mayors passes resolution that was co-sponsored by 17 Mayors from across the country.
  • September 30, 2015: Community groups and local elected officials converge in D.C.  Rally with Elizabeth Warren and Congressman Capuano, and meetings with senior officials at HUD and FHFA. Covered in Bloomberg and the New York Times.
  • October 6, 2015:The New York Times editorial board says these mortgage sales should be suspended until government agencies put real reforms in place and actually increase the proportion of nonprofit buyers.
  • March 1, 2016:Letter sent to HUD and FHFA signed by 45 Members of Congress.
  • April 7, 2016: Rep. Grijalva’s letter to Sec. Castro.
  • April 12, 2016:Coalition of national groups launch petition at DontSellourHomesToWallStreet.org urging immediate changes to HUD’s mortgage sales, focused on Secretary Julián Castro, head of HUD.

Julian Castro’s Wall Street Giveaway

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