Congress Passes Trade Deals while Families Suffer

A blog post by Mark Price, originally published at Third and State.

Unemployment in most places is higher than it has been in decades, and worse still unemployment rates have started rising again as private-sector job growth has stalled and the public sector continues to shed jobs. The economy needs a boost, but Congress is making no progress towards passing a jobs bill. You might be tempted to think Congress can agree on nothing. Well, it depends on what you mean by nothing.

The economic benefits are projected to be small [blogger's note: even according to people whose models capture gains from trade but not the downside]. A federal agency estimated in 2007 that the impact on employment would be 'negligible' and that the deals would increase gross domestic product by about $14.4 billion, or roughly 0.1 percent.

This 112th Congress is building a solid record of having a negligible effect on employment. Meanwhile, back in the real world, a story that just breaks your heart.

What [Chelsea] Hines wants most are answers — and the confidence that one day she would be able to support a family.

Cheri Honkala for Sheriff announcement - Thursday at 11 AM

From the Green Party of Philadelphia, via Hugh Giordano:

Cheri Honkala for Sheriff

Join Us on Thursday, February 17, 10:00 am

Cheri Honkala,, will announce her run for the
Green Party nomination as Sheriff of Philadelphia .

718 Market St, Home of Casino Free Philly, 10:00 am


Cheri Honkala for Sheriff
Keeping Families In Their Homes

Veteran Philadelphia Activist for the Poor to Run for Sheriff on No Evictions Platform

Cheri Honkala Says Appealing to the Banks to Restructure Loans for Families Facing Foreclosure Did Not Work So She Will Run for Sheriff and Refuse to Evict Families.
If Elected, Honkala Would Suspend Sheriff Sales of Properties Indefinitely.

PHA Director Faces Foreclosure

A sign of the times?

Carl R. Greene, the director of the Philadelphia Housing Authority, has certainly had a bad couple of weeks. Since last week, the Inky has revealed his salary ($305K base plus another $40K-some odd bonus for this year), where he lives (Naval Square), that Wells Fargo has filed for foreclosure, and today it's revealed that Carl had to pay back $52,000 to settle an IRS lien against him.

Jump to the Inky article.

Since that $52K IRS payment was back in winter or so and that coincides with when he stopped paying on his mortgage, it seems that nobody, not even long-time public servants, are immune from this economy.

Property Taxes (Again): Why the "sides" kills smart policy

Behind my home there is a burned out shell. A family of possums, several dozen pigeons and an occasional raccoon call it home. Before the fire a few years ago a very nice family called it home. It was a rental property and in the fire the family lost everything. It turns out that their landlords, who lived in a well to-doish part of Montgomery County had gerry-rigged a decidedly unsafe kitchen in the former dining room to avoid dealing with some minor structural problems in the back room where the "old" kitchen was. Exposed wires, a propane fueled make do range set up on raw plywood - a fire danger waiting to happen for several years that finally did consuming a family of fours entire possessions. Luckily noone was seriously injured. Several neighbors on the block have asked about the property, what to do about gaping holes in all the windows, etc. Investigating the property on the BRT website the landlords had not paid property taxes for 12 years prior to the fire and certainly not paid any in the 4 or 5 years since the fire that the house has sat empty.

Tracking down the landlords via information on the BRT site, they weren't necessarily bad people, though they obviously had set up an unsafe condition for their tenants and in my mind bear the main responsibility for the fire and the risk to their tenants lives. Adult children of an elderly grandmother who had long since moved out of the neighborhood from a neighborhood that saw a serious downswing in the late '80s and 90's under the reign of crack and more recently a new but serious upswing. Calling repeatedly to inquire about the status of the property, various adult children and boyfriends would always say "You need to talk my mother" take down the information and then never call back. Eventually the number was disconnected and googling the address in MontCo it turns out after being only a few years tax delinquency on their home in the burbs, the MontCo house had been sold at a tax foreclosure auction with no forwarding information for the former landlords. There is no sign that shell will ever go up for auction to a possible rehabber (which in my opinion could be done profitably at current housing prices despite the fire damage) to recoup whatever uncollected taxes here in the city they could.

I take this little detour because its an example of the gray area that many of the properties that fall through the cracks of the city's longtime defacto policy of not collecting property taxes fall into - how the policy helps situations that should have not gotten as bad they do fester and become small catastrophes. I'd argue that the tenants, the landlords, Philly's schools and my neighborhood would all have been better off if the city had intervened earlier - given the landlord's a financial incentive to do some hard thinking about their attachment to a house none of them had seen in years and that all they could do to maintain was hire the worst unlicensed handyman they could find to set up a dangerous unsafe kitchen.

When people talk about property taxes people rarely talk about these muddled gray areas. Its usually black or white. You either are on the side of seniors on fixed income on the verge of being forced from their home or you are (like the role I sometimes play) complaining about the hundreds of deadbeat real estate specualtors and horrible, horrible absentee landlords getting a free ride. Because of the divide, dialog on the topic is often broken and clear and simple policy solutions get passed over again and again.

For example in today's Inquirer:

For a city and nation in the grip of the home-foreclosure crisis, Barbara Pearsall's situation seems like a familiar one: She is hopelessly behind on her bills, and barring some sudden financial windfall, the recovering stroke victim will lose her small South Philadelphia rowhouse in a matter of months.

But it's not a big mortgage lender that would turn the 67-year-old Pearsall out of her house. It's the City of Philadelphia.

City Hall is in the midst of an aggressive crackdown on tens of thousands of real estate tax delinquents. Those who won't or can't pay - like Pearsall - are losing their properties, to the tune of more than 100 tax-foreclosure filings a month.

The city has every legal right to seize the land of those who haven't met the most basic of civic responsibilities. And the collective debt the delinquents owe is massive: about $290 million, money the city and school district badly need.

Yet by getting tough at a time when mortgage foreclosures are hitting Philadelphia hard, the city runs the risk of putting further stress on already shaky neighborhoods.

One standard response is "the city should not collect the taxes because foreclosing on properties in shaky neighborhoods makes things worse"

"What the city is doing doesn't make sense. Market values are tumbling, homes are being boarded up, neighborhoods are being disrupted," said Irwin Trauss, an attorney with Philadelphia Legal Assistance who runs the city's mortgage-foreclosure hotline.

"The city ought not be adding fuel to this fire. The city ought not be taking this opportunity to collect its debt, certainly not from low-income folks, by selling people's houses and making them homeless."

But I would argue that not collecting the taxes for so long has in the instance of the house behind me has in its own way poured fuel on the fire: underfunding our schools, reducing the number of up-to-code safe rentals on the market, helping to build blight.

The city's response:

The city promised an extensive safety net for low-income homeowners when the stepped-up collection program was introduced. There was to be a $1 million loan fund, and $500,000 more for tax-foreclosure housing counseling. Neither materialized.

"The safety net doesn't exist," said Monty Wilson, an attorney for Community Legal Services who has specialized in tax-foreclosure cases.

The Nutter administration disputes that, but Pritchett acknowledged the city had not done everything Street promised. The difficulty, he said, is that the prior administration did not set aside enough money to meet the promises.

The city does offer payment plans to delinquent low-income taxpayers, which Pritchett said was perhaps the most important part of any safety net.

But attorneys such as Wilson say the agreements are part of the problem. Those who sign up, Wilson said, waive their due-process rights, in essence giving the city permission to take their homes without notice or the right to a court hearing if the homeowner misses so much as a single payment.

"It would be a national scandal if the mortgage companies tried to do what the city is doing," Wilson said.

City officials dismissed Wilson's concerns, suggesting he was misinterpreting the agreement's language.

"Community Legal Services is wrong," said Cynthia White, chief deputy city solicitor. "This is an agreement we've been using for 25 years."

In practice, White said, the city is highly accommodating to low-income homeowners who have signed payment agreements. Fine, Wilson and CLS respond, then change the agreement language to better reflect that.

Now here's the problem, without taxes to fund L&I inspectors or social workers or education programs to reach out to homeowners starting to get in a pinch before it hits a crisis the city is definitely running the risk of putting lots of homeowner's in dire straights.

The thing thats craziest about the predicament is the city already has a model praised for how it should be dealing with its own tax foreclosures based on its recently passed mortgage foreclosure laws. Why aren't we doing this already? I would submit - the "divide".

What really worries community lawyers, however, are homeowners like Pearsall, who sought help just a little too late.

Pearsall inherited her modest brick rowhouse from a sister around 1980. Undereducated and unemployed, Pearsall said her average monthly income was $500, all of it public-assistance money. On that she raised three children and three grandchildren.

"I didn't have the money," Pearsall said. "I didn't have the money for the taxes. And I didn't pay them."

By last year, she owed the city $27,000, and the foreclosure warnings were arriving in the mail at a furious pace. She sought help in November, but it was too late. Her home was sold at sheriff's auction days later.

Pearsall still lives there, but her time is running out. The redemption period, in which she can get her home back (by making good on her debts, plus interest, rent and attorneys' fees), ends in December.

Monty Wilson, who now represents Pearsall, says it all could have been avoided. If the city did for her and other tax delinquents what it does for those with mortgage trouble, Pearsall would still have the title to her home, Wilson said.

The city's new and innovative mortgage program, which was featured in a Wall Street Journal front-page story earlier this month, mandates that no home can be auctioned without a court-mediated conciliation session between the homeowner and the lender. Had Pearsall had access to the same program, Wilson said, she could have signed on to a payment plan, or gotten a reverse mortgage to make good on her debts.

Pritchett, the mayor's policy adviser, says it's an idea worth considering.

"But let's remember the big picture, which is that there are many people in the city who can pay their taxes who aren't," Pritchett said.

He is no doubt right about that. Many of the deadbeats are thought to be absentee landlords or speculators. Others are regular folks who haven't paid because, until now, there were no consequences. And these aren't property owners who are past due by a few months. Most haven't paid their taxes in years, or even decades.

But it is also true that there are low-income homeowners, largely elderly and on fixed incomes, who are now squarely in the city's tax-collection sights. Exactly how many is impossible to say, however. White said the city didn't even keep track of which delinquent homes were occupied by their owners, much less their household incomes.

In a few months, the city's contract with the Texas-based tax-collection firm Lineberger, Groggan, Blair & Sampson will expire. The city is using the opportunity to think about changing its approach, Pritchett said.

"We are going to do an evaluation of exactly what the new contract will look like, who they'll go after, what kind of people should we be targeting," Pritchett said. "We'll ask if in light of the change in the economy should we maybe have a different approach."

For many homeowners caught in a pinch "a few months" is too late.

So that my pitch for a "middle ground" on smart property tax policy. I might go a step further and say we should make a serious case for suspending tax forclosures (on owner occupants only) till a decent well-funded program for mediation was put into place.

Sometimes a "middle path" is the way to go. Others here may differ.

Philadelphia Unemployment Project in four parts

If you guys are curious about PUP, here's a little video an intern put together for us. This is the first part, which captures a clip from a rally we did to get a woman access to a hospital. It's the first of four parts.

Part 2 - Unemployment Compensation

Part 3 - Foreclosure Prevention

Part 4 - Workers' Campaigns

Give Loan Modifications a Chance: Philadelphia's innovative plan, for homeowners and for lenders

Judge Darnell Jones anounced an innovative plan to stem foreclosures in Philadelphia Wednesday. Philadelphia homeowners will have a chance to modify the terms of sub-prime and predatory loans so that they can again afford the payments. It's a modification, not a re-finance, which means that they don't have to reapply or accrue new settlement fees. The lender simply agrees to lower the interest rates and change the terms on the existing mortgage. The deal only applies to owner-occuppied residences. It also only applies if the owner-occupant takes advantage of the court-mandated opportunity to meet with attorneys for their lender within 45 days of the foreclosure filing. If they don't, foreclosure will proceed like it always does.

In Harold Brubaker's story on the deal in yesterday's Business Section of the Inquirer, Tobi Walker of the Pew Charitable Trusts said, "This is one of the more innovative approaches we've seen."

The situation for lenders has been bad enough that they have been willing to pursue modifications with homeowners, but the process has been so cumbersome that many homeowners have still lost their homes because the foreclosure moved faster than lenders' workout staff could get through the volume of cases. Philadelphia advocates had a key insight: we have a large workforce of housing counselors available and willing to manage the lion's share of the modification process, if only the lenders would agree to give them that authority. Now, the court is requiring it.

Common Please Court has made this happen procedurally. It now simply requires lenders to give homeowners the opportunity to modify loans before permitting a foreclosure to go forward in court. There's no case or decision to look up. The court has simply changed the way it conducts the business of foreclosure.

Here's how it happened: late last year The Philadelphia Unemployment Project began calling Philadelphians holding mortgages through Countrywide. We invited them to meet as a group with our housing counselors, discuss their options as individuals and ask them to join with us as a group to press for a better deal through our Foreclosure Crisis Committee. Then, in December, the Save Our Homes Coalition convened in the PUP offices. Community Legal Services, ACORN, Philadelphia Legal Assistance and various Housing Counseling Agencies from around the city.

Meanwhile, the whole economy began teetering badly as the collective misjudgement of America's housing market by the world financial industry became apparent. Click read more to find out the rest of the story.

"More-closure solutions" DN Editorial in favor of a reasonable approach to dealing with foreclosure volume

PUP Members and Clients for Reasonable Workout Program before City Council

The Daily News today editorialized in favor of the demands PUP and the coalition of groups working here to prevent foreclosure made before City Council last week.The editorial board wrote:

Those people on the front lines of the issue - such as ACORN and Philadelphia Unemployment Project- seem to agree that pressure must be put on loan servicers to work more closely with local housing agencies to devise workout agreements with homeowners facing foreclosure.

Lenders and servicers can't work fast enough - or don't want to - to handle large numbers of mortgage workouts. But they need to be pressured to come to the table and work with those on the front lines to help homeowners.

Click read more for a breakdown of our demands!

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