EAST ORANGE, NJ - The U.S. Department of Housing and Urban Development (HUD) has announced significant improvements to their delinquent mortgage sales program.
The changes include:
· Making principal reduction the first strategy in modification processes
· Increased non-profit participation — with a goal of tripling the number
· Far greater provisions for transparency in the sale process
· A commitment to work with local governments and non-profits on targeted sales
These reforms come on the heels of an aggressive community pressure campaign, led by local elected officials affiliated with Local Progress, a national network of progressive elected leaders, and community groups affiliated with the Center for Popular Democracy.
The East Orange City Council passed a resolution sponsored by First Ward Councilman Christopher James in April 2016 calling on HUD to make reforms along these lines. In September of 2015, Councilman James traveled to Washington, D.C. to join others in meeting with top officials at HUD about this issue.
“This is one giant step in the right direction toward helping residents get back on their feet and rebuilding our communities,” said James. “Mutual understanding of the process and greater transparency will allow us to assist our residents in avoiding foreclosure.” As a city, East Orange has taken aggressive steps to reduce the lingering impact of the foreclosure crisis in its neighborhoods.
“My administration, with the support of the City Council, has taken progressive action to address the foreclosure crisis and stabilize our neighborhoods. In November 2014, we established a Division of Vacant and Abandoned Properties solely dedicated to identifying, registering and collecting fees and fines from agencies, such as banks and other creditors, who violate our city code,” said Mayor Lester E. Taylor III. “With these new reforms, we continue to take advantage of every opportunity – including the enforcement of new state laws – that will help us to revitalize our city, boost property values and restore community pride.”
Last summer, Local Progress members led a successful effort to get a resolution passed at the June meeting of the U.S. Conference of Mayors, calling on HUD to prioritize selling these troubled mortgages to mission-driven purchasers, not Wall Street speculators.
With public events, reports and lobbying, these leaders put HUD, and specifically its head Secretary Julián Castro, in the spotlight for running a program that has been benefitting Wall Street at the expense of communities. HUD’s “Distressed Asset Sales Program” (DASP) has been conducting bulk auctions of delinquent mortgages to the highest bidder, which has meant 98% of these troubled mortgages have been sold to Wall Street speculators. Local elected leaders and stakeholders now plan to make sure that HUD sells delinquent mortgage pools to mission-driven purchasers.
The persistence of local elected officials and community groups has paid off, and the major changes announced last week are proof of their hard work. This campaign proved particularly timely as prominent Wall Street speculator Blackstone has recently become the largest single family landlord in the country. With more homes in the hands of non-profits instead of Wall Street speculators, communities will gain further control over their neighborhoods and be less at the mercy of Wall Street. Leaders from the Center for Popular Democracy and Local Progress plan to continue to apply direct pressure on HUD on this issue, and continue the fight for housing justice and community control to strengthen and protect neighborhoods across the country.