National Coalition Criticizes Sec. Julian Castro For “Wall Street Giveaway” by Rootstrikers
Sec. Julian Castro Criticized for “Wall Street Giveaway” Program by National Coalition of Housing Advocates and Progressive Groups
Recent HUD Sales Have Sent 98% of Distressed Mortgages to Wall Street, Following Promises to Prioritize Selling to Nonprofit Community Organizations
Today, a national coalition of 14 housing advocacy, civil rights, and progressive groups launched a campaign urging HUD Secretary Julian Castro to “stop selling our neighborhoods to Wall Street.”
The advocates launched a petition to Secretary Castro housed at DontSellOurHomesToWallStreet.org criticizing the management of the Distressed Asset Stabilization Program (DASP), which they say has operated as a “Wall Street giveaway.”
In 2015, 98 percent of loans sold through DASP were sold to Wall Street, at highly discounted rates, despite the program’s intended purpose of helping stabilize communities and homeowners threatened with foreclosure.
The campaign follows a letter from Co-Chair of the Congressional Progressive Caucus Rep. Raul Grijalva (D-AZ) to Secretary Castro urging fundamental reforms to that program.
The petition to Julian Castro at DontSellOurHomesToWallStreet.org reads:
Secretary Julian Castro,
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, even after HUD pledged to prioritize nonprofit community organizations.
Please follow through on your agency’s mission, “To create strong, sustainable, inclusive communities and quality affordable homes for all.” Selling off our neighborhoods to Wall Street – at a steep discount – does not help keep people in their homes.
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.
The full coalition includes the Alliance of Californians for Community Empowerment (ACCE) Action, American Family Voices, ColorOfChange.org, Courage Campaign, 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.
“Julian Castro’s Wall Street giveaway lets the bankers that helped create the foreclosure crisis profit off of struggling homeowners’ mortgages,” said Matt Nelson, managing director at Presente.org, the nation’s largest Latino online organization. “For years, the banking industry has made billions by displacing Latino neighborhoods and looting our assets. Mr. Castro should be helping people stay in their homes, not helping Wall Street bankers profit from economic inequality. Unless he changes course and improves HUD’s practices, he’ll become a toxic asset to the Democratic Leadership,” concluded Nelson.
The just-released letter from Rep. Raul Grijalva (D-AZ) to Secretary Castro advocates fundamental changes to HUD’s mortgage sales, stating, “Your Department’s mission is to create stable, inclusive communities and quality affordable homes for all Americans. Selling thousands of empty homes across the country to investment banks with little interest in the fate of those neighborhoods is not consistent with that mission.”
Several groups noted the disconnect between the actions by HUD under Secretary Castro, a widely rumored potential vice-presidential nominee, and a Democratic Party and national mood skeptical of powerful Wall Street interests.
“This Wall Street giveaway is either a massive oversight by Secretary Castro or a sign he genuinely believes enriching Wall Street is the key to helping struggling homeowners,” said Rootstrikers Campaign Director Kurt Walters. “With Americans searching for leaders they can trust to take on Wall Street, this program is a clear red flag from an official aspiring to become vice president.”
The DASP sales have received earlier scrutiny from high-ranking officials and community advocates have taken their concerns to HUD and other government entities for months.
In 2015, Sen. Elizabeth Warren said HUD was “lining up with the Wall Street speculators” through its sales of distressed mortgages.
Amidst this type of criticism, Secretary Castro’s HUD announced reforms in 2015 intended to “encourage greater non-profit participation in our sales.”
But an analysis of the two most recent DASP sales, which occurred in 2015 after that pledge, shows that 15,309 out of 15,624 mortgages (98 percent) were sold to Wall Street firms, while only 1 percent went to Community Development Financial Institutions. The mortgages sold to Wall Street totaled $2.2 billion in value.
These sales came at a large discount – 45 percent off the unpaid principal balance of their loans – a nearly 50 percent discount from what homeowners would have to pay to erase their debt. More than 60 percent of the sales made in 2015 went to the Blackstone Group, one of the world’s largest private equity firm, and a notorious landlord.
Rootstrikers is a new generation of activists taking a stand against the corrupting influence of money in politics and Wall Street’s attempts to rig the game against everyday Americans. We are a project of Demand Progress, led by executive director David Segal.