Housing Justice Now: Deposit Reform PASSES!

We’ve been pushing for months for the Seattle City Council to address the exorbitant move-in costs landlords charge tenants. In a housing report we published, high move-in costs were listed as the top barrier to finding affordable housing.

Monday, the Seattle City Council approved the bill that will put a cap on move-in fees and allow renters to pay installments. This is a huge win for Washington CAN! and for Seattle’s low-income communities and communities of color. We are so grateful for our members who stood in front of the council and put a face to this problem as they told their stories of rental struggles.

Councilmember Kshama Sawant championed this bill and her tireless efforts to push it through were admirable. The unanimous vote by council members sent a great message to the city that they recognize the housing crisis that’s happening now and they are here to do their part.

This bill goes into effect in 2017. We will have more details on how it will be enforced and what renters should know.

What the media is saying:

Seattle Times: City Council approves limits on renters’ move-in costs, taking aim at housing crisis

The Stranger: Your Next Landlord May Be Required to Offer You a Payment Plan for Deposits and Other Move-In Fees

Crosscut: Council makes life easier for renters, caps move-in costs

KOMO: Seattle approves plan to ease rental move-in fees

Seattle Weekly: Council to Vote on Limits to Renter Move-In Fees

My Northwest: Landlords lament: Council caps move-in costs for Seattle renters

Underwater homeowners need the city council to help fund a program to reset mortgages

Community & Editorial

By Chettie McAfee / Guest Writer

Chettie Speaks at Council Mtg

Chettie McAfee address the Seattle City Council

I’m like millions of other people across the country: Since the housing bubble burst in 2008, I have been fighting to save my home from foreclosure. I bought my home to care for my aging mother. When she passed, I decided to open up my home to those in need. I housed female veterans who were often homeless and struggling with post-traumatic stress disorder.

When the recession hit, my home’s worth cratered, losing nearly $100,000 in value. To make matters worse, I also lost my job. I continued to make mortgage payments, but I was stuck in my home because my mortgage was deep underwater. I contacted my bank, JPMorgan Chase, before I was ever behind on my payments. I was told that in order to qualify for assistance, I had to be three months behind on my mortgage. So I took the advice of my banker and stopped paying my mortgage. When I applied for a loan modification, I was denied. Because I was delinquent, my home is now owned by the bank.

While the economy is rebounding and home values are rising in many neighborhoods, underwater mortgages and foreclosures still plague low-income neighborhoods and communities of color. Since the collapse of the housing market, neighborhoods like Rainier Valley, South Park and Delridge have had more foreclosures than other parts of Seattle, and they still have the highest number of homes scheduled for auction.

Citywide, there are nearly 11,000 homeowners underwater on their mortgages and a disproportionate number of them are located in south-end neighborhoods. Many homeowners are so deeply underwater on their mortgages that they will never see positive equity in their homes.

Additionally, since being underwater is a leading indicator of foreclosure, many homeowners in these communities are still losing their homes. The only way the foreclosure crisis will end for communities of color is to reset the troubled mortgages to fair-market value.

For the past two years, homeowners facing foreclosure have organized in Seattle, eventually prompting the Seattle City Council to explore solutions that will achieve principal reduction for underwater homeowners. Councilmembers are now looking into programs in Oregon and Boston to see if such programs can be successful in Seattle.

Both the Oregon and Boston models have similar systems to help homeowners. First, homeowners are identified who are facing foreclosure but could afford to stay in their homes if they received principal reduction.

Then, either the government or approved private investors purchase the mortgage from the banks at near market value, and a new mortgage is issued to the homeowner at a slightly higher amount, with the difference helping to fund the costs of running the program. Eventually, the mortgages are sold to new private investors, revolving the funds and allowing more homeowners to be helped.

These programs have been so successful that virtually all homeowners in Oregon who received a principal reduction were able to stay in their homes. In contrast, the U.S. Treasury expects 40 percent of federal mortgage modifications to fail.

For homeowners like me, a program like this would mean permanently lower monthly mortgage payments, the ability to build equity and share in the economic growth of our city and an end to the distress we experience when we are on the precipice of homelessness.

The city council needs to do two things to make this happen. First, they need to fund the program. While the majority of the funds can come from either private partners or from the recent settlements between the U.S. Department of Justice and the nation’s largest banks, the city council should also provide funding to help start the program as soon as possible. Second, the city council needs to give banks reasons to participate in the program. By making the foreclosure process more difficult, the banks would be encouraged to participate in principal reduction.

We urge to the city council to get this principal reduction program off the ground as soon as possible.

Guest: How the Seattle City Council could help underwater homeowners (From the Seattle Times)

Originally published Thursday, October 30, 2014 at 5:46 PM

To help Seattle families whose homes financially are underwater, the city must adopt a program to recalibrate local mortgages based on current market value, write guest columnists LeeAnn Hall and Will Pittz.

Special to The Times

How many more Seattle families need to lose their homes in the foreclosure crisis that continues year after year? There are solutions, but they need champions and leadership — both locally and nationally.

Advocates are pushing the Seattle City Council to pursue a local principal reduction program to reset the value of mortgages based on their current market value. That local action could help thousands of homeowners in Seattle, but it must include strong buy-in from the City Council and include mechanisms to encourage big banks to participate. Proposals are outlined in a recent report by Reset Seattle and the Alliance for a Just Society.

Members of the City Council are making progress. The council commissioned a short study on the feasibility of principal reduction in Seattle, and councilmembers have publicly expressed their intent to pursue a program similar to one in Oregon. This action comes too late for homeowners who have already lost their homes, but it could still help many families throughout the city with underwater mortgages.

While Seattle is making slow progress, other families throughout the country also need champions. Leadership was expected from Mel Watt, the recently appointed director of the Federal Housing Finance Agency.

For more than 20 years, Watt served the people of North Carolina as a member of Congress. During that time, he earned a reputation of being on the side of working families in his district, including those who were struggling to make ends meet. Watt advocated for struggling homeowners, co-sponsored mortgage reform and promoted affordable housing.

However, as director of the agency, Watt has done an about-face. While he once urged the president to enact principal reduction, he has done nothing to take steps within his power to make that assistance a reality. Such steps would not even require congressional approval.

It’s too late for millions of homeowners across the country; it’s not too late for leaders at the local and national level to step up and take action for those homeowners still struggling.

The foreclosure problem hasn’t gone away. The need for assistance remains critical in Seattle and nationally, especially in urban neighborhoods and among people of color. In many cases, these mortgages were the result of predatory lending practices in the years leading up to the market’s collapse.

By not acting, Watt is making matters worse. Local leaders on the Seattle City Council are considering a great step to help homeowners in Seattle and especially communities of color, as in the International District and Delridge, which still have high rates of underwater mortgages. However, both local and national actions must happen soon before more families lose their homes.

It’s time for Seattle to move quickly toward a local principal reduction program, and it is well past time for Watt to remember the work that landed him in the nation’s capital and to take action to help homeowners.

LeeAnn Hall is executive director of the Seattle-based Alliance for a Just Society. Will Pittz is executive director of the Washington Community Action Network.