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Free Financial Education Workshops
In hopes of preventing you from falling victim to predatory financial services such as high-interest Credit Cards, Check Cashers and Credit Scams, that are costing everyone hundreds of dollars a year University Neighborhood Housing Program will provide Free Financial Education Workshops, during several Tuesdays and Thursdays this summer. Join us in learning how to budget despite the national turmoil.
Workshops will cover:
Learn how to save by…
SESSION ONE:
1. Psychology of Money and Basic Banking
Tuesday, June 16
Workshop will discuss Spending, decision making and how to choose a bank that’s right for you2. Personal Spending Plan (Budget) and Debt Management
Thursday, June 18
Will go over the steps to begin developing a Budget
and show you how to pay all debtWorkshops are provided to English & Spanish speakers
*Its not mandatory to attend both workshops*Location: The Chapel at Concourse House
2751 Grand Concourse Ave
Time: 1-2:30PMRSVP!
SPACE IS LIMITED
Jumelia Abrahamson,
Advocacy Coordinator
718- 933-2539
jumelia@unhp.org
Free Tax Preparation Asisstance
UNHP is helping to organize free tax preparation services for northwest Bronx residents. Working together with ARIVA and the Food Bank for NYC, as well as neighborhood partners and financial sponsors, local residents making less than $72,000 will be able to file their returns without any fees. Every year, Bronx neighborhoods lose millions of dollars in tax preparation fees and refund anticipation loan interest. Much of this coming out of the federal Earned Income Tax Credit.
In 2006, about one-third of all applications for Refund Anticipation Loans in New York City (more than 71,000 filers) were made by Bronx residents. The total fees paid by these filers for tax preparation, the loans themselves and any other miscellaneous fees totaled approximately $19.5 million dollars, based on calculations made by the Neighborhood Economic Development Advocacy Project using the Consumer Federation of America's estimate of $273 for an average filer. More than 80% of these Refund Anticipation Loan applications were made by low income Bronxites, who paid more than $16 million for these services. Two-thirds of applications came from households who received the Earned Income Tax Credit, one of the largest federal anti-poverty programs.
Even at the neighborhood level, the amount of money paid for tax preparation and Refund Anticipation Loans exceeds $1 million in many northwest Bronx zip codes. For instance, more than 5,600 filers in 10453 spent more than $1.5 million on tax preparation and Refund Anticipation Loans.
By providing free tax preparation services in these same neighborhoods, much needed money will stay in the pockets of Bronxites. Services begin this Saturday, January 24th at the Heiskell Enterprise Technology Center in Refuge House, 2715 Bainbridge Avenue, and run through March 28th. Services will also be offered at Mosholu Preservation Corporation, 3400 Reservoir Oval East, and Ridgewood Savings Bank, 3445 Jerome Avenue, and are by appointment only.
Contact University Neighborhood Housing Program at 718-933-2539 for more information or to schedule an appointment.
Place: Refuge House
2715 Bainbridge Avenue (corner of 196th St.)
Saturday, January 24th, 10am - 4pm
Saturday, January 31st, 10am - 4pm
Thursday, February 12th, 12pm-7pm
Wednesday, February 25th, 12pm-7pm
Thursday, March 5th, 12pm-7pm
Wednesday, March 18th, 12pm-7pmPlace: Ridgewood Savings Bank
3445 Jerome Avenue
Date: Saturday, March 28th
Time: 10am - 4pmBy Appointment Only.
Contact UNHP to Schedule an Appointment.
Jumelia (718) 933-2539 Ext. 12 (Hablamos Español)
Jumelia@unhp.orgPlace: Mosholu Preservation Corporation
3400 Reservoir Oval East
Date: Saturday, February 7th
Time: 10am - 4pm
Contact Number: 718-324-4461Sponsored by
Chase/WaMu Acquisition: Could the Bronx Lose 13 Branches
(Also posted on the West Bronx Blog)
As of this summer, the Bronx had 146 full service bank branches (source: FDIC), 10 more than it had a year earlier (plus a number of credit unions). That may sound like a decent number, but when we ran the numbers last year (when there were 136), our branch to household ration was at 1:3,443 -- dead last in the City, three times off Manhattan's pace (where many were complaining about too many bank branches), and lagging behind all 50 states (and, for good measure, Puerto Rico).
Also important to consider is that branches tend to cluster around each other: think of all the branches on Fordham Road and in Norwood on Bainbridge/204th and Jerome. Now how many branches are in between? Two. It's much worse in South Fordham where there aren't any branches until you get to Burnside Ave (where there happens to be a brand new Amalgamated Bank branch).
If you lived at Third Ave and E. 168th Street in Morrissania there wouldn't be a branch for nearly a mile away in any direction. The same would hold true if you lived around Southern Boulevard between Longwood Ave and E 149th Street. (See the map image below for "The Black Hole of Banking in the Bronx" where a densely populated square mile is isolated from any branch presence for at least a half mile away in every direction.)
Despite the presence of decent sized commercial strips in these areas, banks are very hesitant to open up new branches in areas that have no branches. Instead we have heard many of them state they would rather open up on strips where they face major competition from other branches.
In addition to leaving large swaths of the borough without a branch (where fringe financial services like check cashsers and pawn shops have filled the void and thrived), this strategy leaves the borough vulnerable to branch closings when mergers and acquisitions take place. For instance, with WaMu's failure and acquisisition by Chase, it's very plausible the Bronx will lose 13branchesin the near future. While the neighborhoods affected will still have at least one bank branch, it will undoubtedly lead to longer lines for a teller.
We have mapped out all the full service bank branches in the Bronx, and there are 12 areas highlighted where a Chase and Washington Mutual branch are within a short walking distance of each other, including Fordham Road where there are two WaMu's and one Chase within that distance.
And finally, if you want to keep score on who had the most bank branches in the Bronx as of June 2008, here were the standings with Chase and WaMu in the top spots:
30 - JPMorgan Chase Bank
20 - Washington Mutual Bank
14 - Capital One
13 - Citibank
11 - HSBC Bank USA
10 - Bank of America
9 - Ridgewood Savings Bank
5 - Banco Popular North America
5 - Emigrant Savings Bank
4 - Apple Bank for Savings
4 - Ponce De Leon Federal Bank
4 - TD Bank (Formerly Commerce)
3 - Amalgamated Bank
2 - Country Bank
2 - Hudson Valley Bank
2 - New York Community Bank
2 - New York National Bank
1 - CheckSpring Bank
1 - NorthEast Community Bank
1 - Signature Bank
1 - Sovereign Bank
1 - The Dime Svgs. Bank of Williamsburgh
1 - Wachovia Bank (Soon to be Wells Fargo?)
Note: I didn't count ATM only branches or Capital One's branch at the Roosevelt Campus.
UNHP's Foreclosure Prevention Work in Fordham Bedford Featured on CBC Radio
Canadian Broadcasting Corporation (CBC) Radio (think Canadian NPR) came to the Bronx last week to find out about how the financial crisis is affecting neighborhoods througout New York City. Reporter/Producer Deen Karim took a walk with UNHP Deputy Director Gregory Lobo Jost through some of the streets of Fordham Bedford to look at foreclosed homes and talk about the impact they are having on the neighborhood. Listen here at Part 2: Broken Dreams.
Is the Bronx Real Estate Bubble Finally About to Burst?
(Also posted on the West Bronx Blog)
The morning after the 2000 election, when many of us were learning about the fascinations of the electoral college and wondering who would be our next president, University Neighborhood Housing Program convened a forum at Fordham University's Lincoln Center campus on the early signs of a housing bubble in the Bronx. While no one knew just when such a bubble might burst, we were able to document a growing disparity between sales prices and the profitability of apartment buildings or, in other words, the emergence of a speculative bubble. With the help of the Citizens Housing and Planning Council, we refined the research and in 2003 released a report, A Real Estate Bubble in the Bronx? that showed it was impossible to prove we weren't experiencing a speculative bubble.
Fast-forward to 2007 and the release of another UNHP report on the topic, Shrinking Affordability, documented how the disparity between profitability and sales prices was continuing to increase to previously unimaginable levels, fueled primarily by private equity investor groups. In the west Bronx, private equity groups such as SG2, Pinnacle, Prana, Ocelot and Normandy have purchased large numbers of rent stabilized buildings, often paying significantly more per unit than other owners. In 2007, for instance, Private Equity groups paid on average about $83,300 per unit while the rest of the purchasers paid an average of about $76,000 per unit. Adjusted for inflation, the overall average sales price had more than doubled since 2001. Yet the buildings themselves are only about as profitable as they were back in 1990, as the operating expenses have climbed at least as fast as rents (according to Income and Expense Studies from the Rent Guidelines Board).
Our main concern on this issue has been the potential for owners to cut back on services to buildings in order to handle their huge debt service (mortgage) payments and rising operating costs (e.g., fuel, water, insurance). The worst case scenario involves a building going into foreclosure -- a losing situation all around not just for the owner, investor and lender, but more importantly for the building, the tenants and the neighborhood. As we saw in the late 1980s with the rash of multifamily foreclosures in Bronx buildings overfinanced by Freddie Mac, these properties often fell into serious disrepair and communities as a whole suffered.
Is history about to repeat itself? A story in the New York Times earlier this week discusses how the owners of the Riverton, a large middle income and mostly rent stabilized housing complex in Harlem, are warning their lenders that "they are in imminent danger of defaulting on their mortgage." While a number of small Bronx apartment buildings (6 - 15 units) have already gone into foreclosure in recent years, the Riverton may signal a wave of larger defaults stemming from faulty logic made by private equity investor groups in the West Bronx and Upper Manhattan, as a follow-up article in today's Times discusses:Until a few years ago, places like Upper Manhattan and the Bronx held little allure for investors in residential property. But as the New York real estate market heated up, major real estate companies began competing vigorously for rent-regulated buildings in these neighborhoods in the belief that they could manage them more professionally and, hence, more profitably.
The recent disclosure that the owners of Riverton Houses, a 1,228-unit apartment complex in Harlem, might default on their loan has shocked the real estate industry. And it has raised fears about other apartment building deals from the not-so-distant past, when the frenzy in the market was reaching its peak.The strategy in these types of investments has been to achieve high levels of turnover in apartments (i.e., force/encourage as many tenants to move out as possible, especially the ones with lower rents) in order to take advantage of rent stabilization laws that allow for a 20% increase in an apartment's rent upon vacancy. Coupled with increases from Major Capital Improvements and the allotted annual increase approved by the Rent Guidelines Board, getting a tenant to move out of an apartment could easily translate into a 25 - 35% jump in the allowable rent for the next tenant. In a gentrifying neighborhood (e.g., northern Manhattan), creating high levels of turnover could dramatically increase a building's income, thereby justifying the high price paid for the property.
With the example of the Riverton leading the way, we are able to see how this strategy might not pan out the way the Private Equity groups are hoping for. First and foremost, tenants are being organized and educated about how to keep their apartments and avoid being forced out. As long-time owner/manager of Bronx and Upper Manhattan buildings Frank Anelante points out in the same Times article today, turnover in his units is closer to 2%. By way of contrast, private equity groups have documented in their filings with the S.E.C. plans to reach turnover rates as high as 30% of the apartments in the first year and 10% percent annually in the following years. With the example of the Riverton, we are beginning to see what may happen to more owners when they can't meet this outlandish target.
And if private equity groups are having a hard time in gentrifying upper Manhattan, their troubles may end up being even worse here in the west Bronx where tenants already typically pay half of their income on rent. For the sake of our neighborhoods, let's all hope for a soft landing.UNHP Deputy Director Testifies in front of House Subcommittee on Consumer Protections in Financial Services
UNHP Deputy Director Gregory Lobo Jost testified on February 28th in front of the Financial Services and General Government Appropriations Subcommittee. The committee, chaired by Congressman Jose Serrano, heard testimony from the Department of Treasury, the Federal Trade Commission, the Center for Responsible Lending, Nataion Council of La Raza, and the American Financial Services Association in addition to University Neighborhood.
The focus of the hearing was on protections against subprime lending abuses, but UNHP also brought significant attention to the issue of Refund Anticipation Loans.
Download the full testimony here (PDF).
Center for NYC Neighborhoods Will Bring Needed Resources to Distressed Bronx Homeowners
Nearly two years ago at a forum on the State of Homeownership in the Bronx, University Neighborhood Housing Program called on the City and bank partners to expand their pilot foreclosure prevention on 311 program citywide. Finally, that day is arriving, and it will benefit Bronx homeowners (and their neighbors) tremendously.
In December, the Mayor, City Council and NEDAP announced the Center for NYC Neighborhoods (CNYCN), a new nonprofit entity that will "fund a major expansion and coordination of counseling and referral services, legal assistance, loan remediation, preventive outreach and education, training, research and advocacy around sub-prime lending and mortgage foreclosures."
The reason that this program offers real help for homeowners is not just that it streamlines the process onto 311, but that it provides resources for existing counseling agencies to expand their work, hire new counselors, and funds legal assistance for homeowners throughout the five boroughs. The $1 million from HPD and $1.8 million from the City Council will be the base of the organization's $5.3 million budget for its first year, with financial and philanthropic donations making up the remainder. These resources will allow counseling groups to take on more volume instead of turning people away who need the help. Instead of another hotline referring distressed homeowners to the same over-strapped groups, CNYCN will offer real assistance for New York's homeowners and neighborhoods.In all, 24 new homeowner counselors along with 22 new legal services staff and five or six community educators. will be hired throughout the City at various nonprofits. The Center itself with have an initial staff of five to coordinate foreclosure prevention efforts around the City, and they will be supported by three program partners focusing on legal services, counseling and education/outreach.
For the Bronx, this assistance comes not a moment too soon. For years, the only homeowner counseling group in the Bronx had been Neighborhood Housing Services of the North Bronx, where one counselor had been responsible for foreclosure prevention for an entire borough. Recently, through a City Council earmark, the Neighborhood Initiatives Development Corporation (NIDC) took on homeowner counseling, but their counselor also can't handle the volume.
Until new staff are hired, Bronx homeowners can still call 311 for a referral to a counseling agency, but it could be difficult to receive assistance just because of the overwhelming volume. If you can't get assistance through 311, Bronx homeowners can contact UNHP's hotline at 718-933-2539 or a national hotline that may be able to help you (1-888-995-HOPE), although they don't provide legal assistance.
Most Bronx Loans in Foreclosures are Less than Two Years Old
Our recent analysis of foreclosure data for Bronx 1-4 family homes shows that the majority of loans going into foreclosure are less than two years old. For the first three quarters of 2007, 63%, 66%, and 64% of all loans going into default (having a lis penden filed) were made in the previous 24 months, respectively.
This data shows the extent of poor underwriting by lenders in 2005 and 2006, where clearly many loans were made in the Bronx without regards to the borrower's ability to repay. A good chunk of these loans could probably be considered predatory for this very reason, while others may just be bad loans. Based on research by a number of national groups, it's likely that many of these borrower's qualified for better loans but were steered into mortgage products that maximized profits for brokers and loan officers.
It also is important to consider when thinking about solutions to the problem. Many proposals (including this one from the FDIC) call for freezing the introductory interest rates on so-called 2/28 and 3/27 mortgages, where a lower interest rate resets after the first two or three years to a higher rate for the remaining years on the 30 year mortgage. While this is not a bad idea and will help a percentage of homeowners, it will do no good for many Bronx borrowers.
2006 HMDA Data Shows Subprime Lending Concentrated in Low Income Outer-Borough Neighborhoods
Newly released Home Mortgage Disclosure Act data shows that subprime lending in New York City was concentrated in low income (predominately Black and Latino)
neighborhoods in the outer boroughs in 2006. The Furman Center at NYU analyzed the data by Sub-Borough Areas, showing that the highest percent of home purchase loans that were subprime was in the University Heights/Fordham section of the Bronx (comparable to Community District 5). The northeast Bronx, central Brooklyn, and southeast Queens also had very high rates of subprime purchase loans.
UNHP was also able to obtain the raw HMDA data and did an analysis of allsubprime lending (purchase, refinance and home improvement loans)
by census tract for all of New York City. Similarly, high rates of subprime lending permeate most of the Bronx, central Brooklyn, and southeast Queens. The map also shows circles that represent the number of subprime loans made, showing concentrations in neighborhoods with large numbers of Black and Latino homeowners.
Click on the maps for larger versions, or here for a zoomable PDF of the census tract map.
UNHP Responds to DEP’s 18% mid-Year Water Rate Proposal
DEP’s threat to go to the Water Board for an 18% mid-year rate increase has placed the cost of water in New York City back in the spotlight. City Hall and DEP are apparently hoping to get the City Council to enact legislation to allow the sale of stand alone water liens to bolster revenues from water bills. (Currently, water liens can only be sold if there is an accompanying tax lien.)
Everyone interested in maintaining a safe water supply that is affordable to all New Yorkers should take advantage of the opportunity offered by this political gamesmanship to publicly raise the real issue: the cost of water is out of control and threatens the economic futures of many New Yorkers.
Water bills currently pay for (1) the operation of the system, (2) the debt service on bonds for capital projects related to water and (3) a rental payment to the City of New York. Better collections will help DEP’s financial picture, but other steps must be taken. For instance, the Water Board’s rental agreement with City could be re-negotiated. Few people know that the Water Board’s rental payment this year is $154 million; reducing or eliminating that payment would be a big help this year for the Water Board budget.
Additionally, DEP’s capital budget needs to be examined to determine the necessity of certain projects, the timing of projects and the real costs of projects in construction. For example, the filtration plant in Van Cortlandt Park started out as a $1.2 billion job and now the costs are estimated to be $2.8 billion.
The importance of preserving the infrastructure to maintain an ample source of clean water is obvious. But the existing housing stock is an equally important part of the city’s economic infrastructure. Neither can be replaced and both require long-term capital investment. The housing infrastructure’s capital needs will be starved by the cumulative effect of water rate increases that are now being forecast.
We urge the Mayor and City Council to work with the community to develop a comprehensive answer to the water issue.
Governor Spitzer Tightens "Unique and Peculiar" Rent Hike Loop Hole
City Limits is reporting that Governor Spitzer has "moved to limit how the state housing agency interprets the 'unique and peculiar' clause of state housing law." Under this clause, landlords can apply for an exemption to rent stabilization and bring rents up to market amounts. Affordable housing advocates are praising this change to stricter interpretation of the clause that will immediately help protect 5,000 apartments whose owners are currently applying for the exemption. This change is also much more cost effective than creating 5,000 or more new affordable housing units.
The law was originally written in 1974 and intended for owners who had rented to family members at preferential rents. Its interpretation has since been stretched by some owners to encompass entire buildings exiting the Mitchell-Lama program. Under these new stricter guidelines, the exemption will hopefully mean many affordable rent stabilized units will not be lost in the near future.
To read more about the threats to affordable housing in New York City, see UNHP's report on Shrinking Affordability.
New York State Enacts Law to End “Foreclosure Rescue" Scams
State Responsible Lending Coalition Praises New LawNew Yorkers for Responsible Lending, a state coalition of 122 groups, praised New York State Governor George Pataki for signing into law on July 27 the Home Equity Theft Prevention Act, which protects vulnerable homeowners from “foreclosure rescue” scams.
The bill, introduced in response to the alarming rise in home equity theft across New York State, reached the Governor’s desk after it was unanimously passed by both the NYS Senate and NYS Assembly.
“AARP commends the Governor for his leadership, Senator Hugh Farley and Assemblyman Darryl Towns for their dedication, and the New York State Banking Department for working to protect what is many New Yorkers’ most valuable asset – their homes,” said Lois Aronstein, AARP New York State Director.
“I was pleased to sponsor this important consumer protection bill,” said Senator Farley. “We have seen an increasing number of cases in which scam artists take advantage of desperate homeowners. While they promise to help the family save their home, they actually engage in abusive practices which drain the equity from the home and leave the homeowner in even worse shape. By providing new statutory protections, this law will help eliminate these abuses and will help ensure that homeowners are treated fairly.”
The Home Equity Theft Prevention Act requires written disclosure to homeowners regarding the terms of a title transfer that occurs when a home is in foreclosure, and provides the right to cancel the deal for five days after signing the contract. It prohibits making false statements with intent to defraud the homeowner and provides for a consumer education notice to be sent to all homeowners in foreclosure warning them about such scams. . The legislation establishes civil and criminal penalties for violating the law.
“I am so thankful to the New York State Legislature and Governor for cracking down on these criminals who steal people’s homes. No one else should have to go through this,” said Michell Fayez Olabi, a mother of seven, who is fighting to get back the home she lost in the Rosedale section of Queens to a foreclosure rescue scam.
“This new law provides crucial protections for vulnerable homeowners from foreclosure rescue scams, which have become epidemic in New York,” said Josh Zinner, Director of South Brooklyn Legal Services’ Foreclosure Prevention Project. “This law will prevent unscrupulous speculators from stealing millions of dollars in homeowners’ hard-earned equity.”
“This is, without a doubt, a victory for the New Yorkers for Responsible Lending coalition, which has been at the forefront of exposing these abusive practices,” said Sarah Ludwig, Director of the Neighborhood Economic Development Advocacy Project in New York City. “More important, this is a tremendous victory for seniors and other vulnerable homeowners who have built up precious equity in their homes.”
“New Yorkers can be proud of the fact that we have some of the toughest anti-predatory lending and deed theft laws in the country,” said Kirsten Keefe, Staff Attorney with the Empire Justice Center, in Albany. “Foreclosure rescue scams are a huge problem all over New York State, and this new law will curb these abuses.”
New Yorkers for Responsible Lending (NYRL) is a state coalition of 122 members, including UNHP, which promotes access to fair and affordable financial services and preservation of assets for all New Yorkers and their communities.
