August-Sept 1999- ---------------Volume 9, Issue 4


 Table of Contents

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 Financial Modernization at the Expense of Neighborhoods?

While the proposed giant tax cut has been the most publicized piece of legislation waiting to be dealt with following Congress’s August recess, a Congressional Conference Committee will also be re-convening to reconcile two versions of Financial Modernization legislation. Passed in the Senate and House just before the break, the legislation will have major impacts on financial services in this country, legalizing the Travelers Insurance/Citicorp merger and opening the door for similar mega-mergers in the future.

The future of the Community Reinvestment Act (CRA) may also be at stake as there are amendments impacting it within the financial modernization bill. If the final legislation fails to hold these new mega-institutions accountable to CRA, the ability of non-profit/community groups to bring private sector resources into neighborhoods like ours will diminish. Furthermore, any reduction in the existing scope of CRA will hurt our neighborhoods all the more.

The Senate legislation (S. 900) ushered through by Senator Phil Gramm (R-TX) would, in many ways, severely restrict the ability of community organizations around the country to use CRA for neighborhood improvements. For example, more than 60% of all banks in the country would gain immunity to any charge that they did not comply with CRA, as long as they had a past CRA-rating of Satisfactory from their bank regulator. The House bill (H.R. 10) is viewed as CRA neutral, because it does little to expand the scope of CRA.

Either bill could reduce the amount of loan money and banking services in our area. For more than 20 years, the Community Reinvestment Act has been a major tool in the successful preservation and improvement of communities in the Bronx as well as in other communities around the country. CRA states that “regulated financial institutions have a continuing and affirmative obligation to help meet the credit needs of the local communities in which they are chartered.” Under CRA, regulators can deny or delay a bank’s application to merge with another bank or expand its services if the bank’s CRA review is found inadequate. Community groups around the country have utilized this language to convince banks to open new branches, make loans and create programs to preserve and improve neighborhoods. In the past 22 years, CRA is credited by the National Community Reinvestment Coalition with leveraging $1 trillion in community reinvestment around the country. Millions of those dollars and two of those new branches have come into the neighborhoods of the Northwest Bronx.

Many community and religious leaders in the area have worked to bring renovation money and banks back to our neighborhoods. That success cannot be taken for granted. Nor should it be demeaned as it has been by Senator Gramm on the floor of the Senate when he labeled CRA activists as “extortionists”.

The estimated $1 trillion in CRA loans may have fostered an atmosphere of over-confidence about the continued availability of money for community development. Moreover, the strong economy has resulted in large amounts of funds being made available for real estate development, and a good deal of it is coming into neighborhoods from unregulated sources. However, private investment funds will disappear in many of our communities as soon as the economy tightens again, and without the legal framework of CRA, there is no regulatory means of ensuring the continuation of any reinvestment work.

A weakening of CRA as per the Senate bill would reduce communities’ leverage to bring money back into their neighborhoods. Maintaining the status quo and failing to expand CRA to apply to the new bank affiliates will allow financial institutions to keep moving resources away from CRA regulation. In turn, the ability of communities to attract bank dollars for affordable housing and community development will also diminish.

Senator Charles Schumer (D-NY) sits on the Congressional Conference Committee that will be reconciling this legislation, as does Rep. Rick Lazio (R-NY). Senator Schumer has reassuringly responded to a letter from UNHP, but in the end all of our Congressional representatives and ultimately the President will vote on the final piece of legislation. Now is the right time for community people to register their feelings on the importance of the Community Reinvestment Act with the powers that be.

President Clinton (202) 456-1414
The White House, Washington, D.C. 20500

Senator Schumer / Moynihan (202) 224-3121
U.S. Senate, Washington, D.C. 20510

Congressperson _______, (202) 224-3121
House of Representatives, Washington, D.C. 20515  

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 Federal Housing Appropriations Threaten Section 8

 The National Low Income Housing Coalition (NLIHC) has issued a call to action urging citizens to contact their congressional representatives regarding the Housing Appropriations bill. The alert states that “the bill cuts virtually every housing and community development program. It funds no new [Section 8] vouchers . . .” The combined impact of the impending tax cut along with the budget caps will decrease HUD funding for years to come. For more information, you can check the NLIHC web site: www.nlihc.org

The New York Housing Conference is also calling on Congress to provide new Section 8 vouchers and has stated strong opposition to diverting housing funds to disaster relief or the Kosovar efforts. Congress will be voting on the appropriations when it reconvenes in the coming weeks.

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 State Budget Brings New Housing Money
 The New York Housing Conference reports some good news on the State housing budget front. $15 million dollars in new funds are in this year’s recently announced budget. Among the increases were the following: $4 million will be added to the Housing Trust Fund, $3.5 million to the Affordable Homes Program, $2 million to the Homeless Housing Assistance Program and $3 million for the DHCR Homes for Working Families Program.

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 Meter or Pay:

 The Department of Environmental Protection (DEP) is moving ahead with plans to issue surcharge bills to owners who have not installed water meters by June 30, 2000. The surcharge is equal to 100% of the frontage bill. Owners should contact Warren Liebold at DEP to get their meters installed. (718) 595-4657

This does not mean that owners will automatically be billed on a metered basis. There are still programs available to keep metered bills from starting right away if the bills far exceeds the current frontage bills.

UNHP is scheduling another
CUSTOMER SERVICE OUTREACH NIGHT
with DEP for
Thursday, October 14, 1999
5:00 - 8:30 PM.

At that time, UNHP will also have
information available to property owners
on lending programs that are available to them, including the Mini-Loan Program
that UNHP worked on with Fannie Mae.

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 Fighting Predatory Lending

The New York State Banking Department has proposed new regulations to curb the abusive practice of predatory lending by mortgage lenders and brokers. The proposed regulations would be among the strongest in the nation, and any broker or lender found violating the regulations would lose their license.

The regulations would apply to “high cost loans” — any loan with an interest rate 8% above the treasury rate or with points and fees surpassing 5% of the total loan. Some of the proposed restrictions include preventing lenders from charging higher interest rates when a loan is in default, as well as requiring lenders to disclose to the borrower that he/she should consider counseling and provide them with a list of credit counselors in the area.

The NYS Banking Department recently held hearings on these proposed regulations, and the following is an excerpt from UNHP’s testimony:

“In our years of multi-family work in the Bronx, we have seen the negative impact of poor mortgage practices . . . We have seen unknowing owners struggle to keep ownership of their properties . . . In some cases they lost the buildings through foreclosure . . .”

“The regulations attempt to assist existing and prospective homeowners in their dealings with lenders. The regulations create an obligation on the lender to ascertain the owner’s capacity to repay the debt, which in our own experience with lending is simply a matter of due diligence. Limitations on the payment of points and fees and the financing of the same is critical. In a moment of desperation, an owner will feel obligated to accept higher fees if they can roll them into the debt and are not watching the money come out of their check book.”
 

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 UNHP Staff Awarded Fellowship

 UNHP Director, Jim Buckley, was selected as one of the first year James A. Johnson Community Fellows, a program established by the Fannie Mae Foundation to recognize community development efforts around the country. Six community development leaders from all parts of the nation were selected for the award. The fellowship will allow Jim to expand his skills in the community development field via a self-designed program of travel and study. He plans to look at various efforts around the country with the hope of bringing back some new ideas to UNHP.

For more information and a photo of the award recipients, visit Fannie Mae Foundation’s web site at www.fanniemaefoundation.org/home

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 Third Party Transfer in Effect

 Forty-six “distressed” Bronx properties in the Hunts Point neighborhood were transferred to Neighborhood Restore HDFC, a non-profit entity established by LISC and Enterprise to take title to properties being transferred by the City from their current owners to pre-approved, qualified third parties. This represents the first transfers accomplished via the City’s passage of Local Law 37 in 1996. While plans are still developing on the future of the properties, the City is discussing additional transfers in the coming months.

The residential properties will be disposed to one of several pre-screened and selected owners that responded to a Request for Qualifications and whose applications were reviewed by LISC and Enterprise and who were ultimately determined by HPD.

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 Following Up on Home Buyers

 Our second round of home buyers’ workshops came to a conclusion this past month. However, a follow up session for prequalified buyers will be held in the upcoming weeks at Concourse House. The session, run by one of our partners, Neighborhood Housing Services, takes the potential buyers through a four hour in-depth seminar on the home-buying process.

Bank of New York will also continue their participation by taking pre-approval applications from interested attendees. Fannie Mae has also contributed to organizing the upcoming session.

Part of our follow-up includes connecting potential buyers with real estate brokers and agents in the Bronx. UNHP has met with a number of such realtors who have expressed their willingness to cooperate with us in our efforts. Our final goal is to assist potential buyers from the beginning of the home buying process through to the completion of a deal.

 FREE HOME BUYING FAIR

Saturday, September 18
10 AM – 5 PM
Madison Square Garden

Sponsored by
Fannie Mae Foundation and the Knicks.

 Special thanks to CON-EDISON
for their support of Fordham University’s
URBAN INTERNSHIP PROGRAM
which has provided UNHP with Alexsa
Morales, our Home Buyers Coordinator.

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