For Release Sunday, October 26, 2008
Citiwire.net
In a column last July, my Citistates colleague Neal Peirce succinctly described federal housing policy as “a real mess.” Given the financial turmoil of the last two months, it’s accurate to say that the entire housing situation in the U.S. has slipped from bad to worse, with even the most optimistic industry analysts predicting little relief until 2010.
Yet even as mortgage delinquencies and defaults and home foreclosures soar, some stars of exception dot the sky. One especially bright one is Enterprise, the nationally acclaimed affordable housing investment and development organization formed in 1982 by legendary developer and community builder James Rouse.
Enterprise has persevered throughout bad times and good ones, raising more than $9 billion in private capital for the production of nearly 250,000 homes. The majority have been for people making no more than 60 percent of the median income for their communities.
The sterling track record is due, in no small part, to the leadership of F. Barton Harvey III, who retired as chairman of Enterprise last spring after a 24-year stint as a self-described “investment banker for the poor.” Under Harvey’s guidance, Enterprise’s impact grew from $200 million annually (enabling 5,000 units per year) to more than $1 billion raised and invested annually (creating 20,000-plus units a year).
Enterprise’s big strides in filling the nation’s affordable housing gap–economic crisis notwithstanding–has just earned it a prestigious award. Harvey and Enterprise are recipients of the 2008 Urban Land Institute J.C. Nichols Prize for Visionaries in Urban Development. The $100,000 prize–ULI’s highest honor–recognizes longstanding dedication to responsible development.
While most Enterprise units are rentals, the owner-occupied homes it has developed or financed tend to have low turnover rates and low mortgage foreclosure rates. Prospective buyers must complete comprehensive homeownership preparation and counseling training–a far cry, the ULI notes in its October edition of Urban Land, from the lax lending practices that fueled the subprime loan frenzy and subsequent mortgage meltdown.
As an example, a 2007 analysis of an Enterprise-administered mortgage assistance program in Dallas found the foreclosure rate for homes purchased through the program to be far below the rate for all subprime conventional loans in Texas. The study, by the Federal Reserve Bank of Dallas, found that households using the Enterprise program “are not as likely to purchase homes that are too expensive in relation to income.”
Says Deborah Hammond, a 13-year resident of Baltimore’s Sandtown neighborhood, the first major community rehabilitation tackled by Enterprise: “This is my home, and I don’t have to worry about losing it. I did not buy more than I could afford.”
In all, Enterprise has brought the power of community pride to 17 metro regions across the U.S. Harvey points to the multiple benefits generated by providing safe, fit, affordable housing that is integrated into the greater community: “When people have a stake in the community, they want to see better things happen. They fight for better schools, they look out for their neighbors. The people in our communities are rooted.”
Enterprise is, to be sure, not the only non-profit with a sterling record in helping new homeowners qualify–and keep–their new residences based on underwriting loans properly and offering homebuyers financial counseling so they fully understand the terms to which they are committing.
Another champion of housing ownership that really works for people has been the Local Initiatives Support Corporation (LISC). Formed in 1980 by Michael Sviridoff of the Ford Foundation, it became and remains a major champion of community-wide redevelopment across America’s cities.
LISC played a major role in the New York City Marketplace Plan, designed to help low and moderate income New Yorkers buy their own homes in the city. More than 17,000 families take advantage of the program, with as astoundingly low five mortgages ever ending up in foreclosure.
The housing non-profits were among the advocacy groups that rallied for key measures in the federal housing legislation enacted last summer to assist homeowners facing foreclosure, help financial institutions stuck with bad loans and foreclosed properties, and help communities in acquiring foreclosed homes and placing them back on the market.
“I look at this housing legislation very positively, but it may be only the first step in stabilizing the housing market,” Harvey said. “It’s time for the government to intervene in a prudent way to keep people in housing.”
One affordable housing myth effectively dispelled by Enterprise, LISC and their companion non-profits is that their style of development is uneconomical, risky and should be considered a charitable write-off. Time and time again, they’ve proven that’s patently untrue.
In Harvey’s words: “If we can provide a platform that is more nourishing,” he said, “and which helps more people to succeed, then that translates into a more productive society.”
William Hudnut’s e-mail address is bhudnut@uli.org.
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