I decry the foolish strategies of the race hustlers and the apathy of our communities to engage each other and the challenges we face with real solutions. I believe we should be talking to each other to get off our collective cans and we should also be informing each other about opportunities for action. One of the challenges is getting and keeping capital in the black neighborhoods of America. We need sources of capital for revitalization efforts and we need to retain the capital we have, much of which is held in our home values and is being wiped out by the subprime crisis. Make no mistake, the subprime crisis is going to wipe out 20 years of black wealth creation. So what could you do this week that could help? I pass on the following action item regarding pending legislation in the Senate that would benefit black communities:
This is worth a moment of your time:
Sen. Jack Reed (D-RI) has introduced S. 2391, a bill to strengthen the affordable housing mission of Fannie Mae and Freddie Mac. It includes several provisions important to community development. In particular, it would provide substantial capitalization for community development financial institutions (CDFIs) and other nonprofits to leverage substantial private capital for housing and community development.
I. Contributions from Fannie and Freddie. Like the bill recently passed in the House, the Reed bill would require Fannie and Freddie to contribute an estimated $500-900 million annually. The Reed bill would split these funds as follows.
A. Affordable Housing Fund 65% would go into an Affordable Housing Fund. ($325-$585 million annually)
1. In the first year, states would use the funds to help address the current subprime mortgage crisis. These grants could be used to facilitate loan modification and refinance options for low- and moderate-income borrowers facing foreclosure. Some of the funding could also be used to help low- and moderate income homebuyers purchase properties that have been foreclosed upon to help stabilize neighborhoods.
2. After 2008, the funding would be distributed by formula grants to the states for the development, construction, and preservation of housing for very low- and extremely low-income families. This funding would complement other federal and state programs, such as the HOME Investment Partnerships and Low-Income Housing Tax Credit programs, to bring down costs enough to primarily target the income group most needing housing that is truly affordable to them, extremely low-income renters.
B. Capital Magnet Fund for CDFIs and nonprofits. ($87-$315 million)
The other 35% of this set-aside would be allocated for a Capital Magnet Fund managed by the CDFI Fund. This funding would go out through competitive grants to CDFIs and other nonprofits to leverage private capital for affordable housing development, construction and preservation for low-, very low-, and extremely low-income families. It could also be used for economic development activities or community service facilities, such as day care centers and health care clinics, that in conjunction with affordable housing activities implement a concerted strategy to stabilize or revitalize a low-income community or underserved rural area. This would be a major opportunity for CDFIs and other nonprofits to get capitalization to attract substantial private financing into distressed neighborhoods across America. This bill would do the following:
II. Fannie and Freddie’s Affordable Housing Goals. The bill would align their goals with current Community Reinvestment Act income targeting definitions, which should help the lower end of the conventional market become more liquid.
III. Duty to Serve. The bill would create a new statutory duty for Fannie Mae and Freddie Mac to serve “underserved markets” that lack adequate credit through conventional lending sources such as Affordable Housing Preservation; Subprime Borrowers; Community Development Financial Institutions; Rural Housing; and Manufactured Housing. Enforcement authorities are provided.
The bill is part of a broader package to strengthen the regulation of Fannie and Freddie. Timing in the Senate is unclear.
What YOU Could Do This Week:
Contact your Senator via a phone call, fax or email and tell them
- you support more capital for neighborhood redevelopment
- that you support Sen. Jack Reeds bill, S. 2391,
- you request that [your senator] support the bill
- and you would like a response to your letter,phone, fax regarding their support of the bill.
Let me be clear. The federal government is not the answer to our problems. However, government has a legitimate role to play and we should always be prepared to engage the institution of government in our communities where it is prudent to do so. Contact your Senator and keep an eye open for activity on this bill.