University of Wisconsin Parkside Civic Honors Portfolio Defense

“Living the American Dream” Overcoming the Barriers to Home

OwnershipHousing Policy and Education

Napoleon D. HardySociology Major

Presented: August 30th 2011

Introduction•Name: Napoleon D. Hardy•Hometown: Dayton Ohio•Currently: Racine WI•Experiences: U.S.A.F. (Desert Storm Vet) COO Rhino Logistics LLC UWP Non-Trad. Student

What is Civic Honors

• Civic Honors allows students to tailor their educational experiences around civic issues of their choice, focus on a specific topic, and design research and other creative projects related to the civic issue they have chosen

• The Civic Honors track provides a mechanism to support and sustain student involvement in a particular public issue that extends beyond the 16-week semester and encourages students to examine and respond to public issues

Civic Honors is Empowering!

• “WHATEVER MAY BE THE LIMITATIONS WHICH TRAMMEL INQUIRY ELSEWHERE, WE BELIEVE THAT THE GREAT STATE UNIVERSITY OF WISCONSIN SHOULD EVER ENCOURAGE THAT CONTINUAL AND FEARLESS SIFTING AND WINNOWING BY WHICH ALONE THE TRUTH CAN BE FOUND.” (UW Board of Regents 1894)

Housing from a global perspective

• Importance of housing and shelter• Access to shelter and land versus ownership

Agricultural and Pastoral societies

The American Dream

The reality!

Why does this happen?

• Systemic problems in our society• Role of government in helping and hurting• Class and economics

…the strong do what they can and the weak suffer what they must.

Thucydides 460 B.C – 400 B.C.

Homeownership…was not always the American Dream

• History of home ownership in the U.S.Society of renters prior to 1934Mortgage terms 5 yearsNational Housing Act of 1934

Federal Housing Administration established in 1934Job creation

FDR’s response to The Great Depression

The major players

• The Federal Housing Administration (FHA)Department of Housing and Urban Development (HUD) 1965

• Department of Veteran Affairs• Department of Agriculture

FHA Becomes a Household Word

• 11 million homeowners between 1934 and 1974

• Guaranteed loans• 30 year mortgages

Department of Veteran Affairs

• Programs for returning War Veterans• The Servicemen’s Readjustment Act of 1944• Guaranteed loans• 30 Year mortgages• Currently covers all veterans with honorable service

U.S. Department of Agriculture

• Farm Loans• Rural housing development• Rural homes non-farm loans• 30 year mortgages

Housing Boom for some… challenges for others

• FHA rules and red lining “…hereafter no part of said property or any portion

thereof shall be…occupied by ay person not of the Caucasian race, it being intended hereby to restrict the use of said property…against occupancy as owners or tenants of any portion of said property for resident or other purposes by people of the Negro or Mongolian race.” FHA Underwriting Manual 1934

• Redlining and Residential Security Maps

Housing Boom for some… challenges for others cont

FHA also explicitly practiced a policy of “redlining” when determining which neighborhoods to approve mortgages in

Housing Boom cont.

From Explicit to Implicit

• 1939 FHA Underwriting Manual sections 932 and 935 explicitly prohibited underwriting loans that would comingle the races

• 1948 Supreme Court Case Shelley vs. Kramer outlawed racial covenants in real estate transactions

• 1950 FHA removes any explicit references to redlining and racial covenants

Civil Right Act of 1964 Title VIIProhibits discrimination based on: race, color, religion, sex and national origin

The Commerce Clause of the U.S. Constitution was instrumental in passage and future objections to the Civil Rights Act

Urban Renewals Mixed Message• Planes, Trains, and Automobiles

Urban Renewal in low income neighborhoods

Federal Highway Act of 1956 et al.Gentrification

Today’s Barriers to Home Ownership

• History shows the systemic problems• No mechanism to pass on wealth by those less

fortunate financially• Slow homeownership progress for minorities,

veterans, and the working class• Government red tape and bureaucracy make

utilizing programs nearly impossible

Today’s Barriers to Home Ownership cont.

• Secondary education systems fail to address the buying process

• Creative financing options and markets not designed with the best interest of the consumer at heart

Home purchasing today

• Best time to purchase a home.• Home loans and tax credits for all • Market flooded with foreclosures• Neighborhood Stabilization Program

Housing and Economic Recovery Act of 2008 American Recovery and Reinvestment Act of

2009

• $300 billion nation wide in FHA guaranteed home loans from Housing & Economic Recovery

• $14.7 billion nation wide in housing assistance from American Recovery & Reinvestment

It’s not as easy as you think

• Neighborhood Stabilization Program (NSP) a product of The Recovery Act’s of 08-09

• Wisconsin Housing and Economic Development Authority

NSP funds in Racine

• No local lenders willing to participate in program

• Process is cumbersome and difficult to navigate

• As of July 2011 one home was purchased by prospective homeowner with NSP funds in the city of Racine

“On behalf of a grateful nation”

• U.S. Department of Veteran Affairs Programs• Understanding the regulations: May, Shall, Must, and

Will• “Section 7.04”• VA may guarantee a loan for alteration and repair of a

residence already owned by the veteran and occupied as a home, or made in conjunction with a purchase loan on the property The alterations and repairs must be those ordinarily found on similar property of comparable value in the community.

“On behalf of a grateful nation” cont

“Catch 22” • Since there has been an increased interest in the

purchase of foreclosed properties, VA believes it is important to reaffirm its policies regarding MPRs. As outlined in the VA Lender’s Handbook (VA Pamphlet 26-7) Chapter 12, VA requires that all properties, including foreclosed properties, be in a condition that meets our MPRs or that there is a reasonable likelihood the property can be repaired to meet the MPRs prior to loan closing.

VA Circular 26-09-5

Rural options

• USDA programs offer direct loans• Require one year of “Good” credit history• Work history accepts farming income• Different standards from other federal

programs designed for city dwellers

Current Experts on the process

• Home buyer education counselors • Real Estate Agents• Loan Officers

Education beyond the experts is necessary!

My Beliefs & Philosophy

• Agent of Change• Education is power• Educate others and share the wealth of your experience

Learning Informing and Making Changes

• WHEDA lenders meeting.• Home buying education courses.• Albert House Apts.

Worked on issues with Senior Citizens and transitioning from homeowner to resident

• Correspondence with legislators State / Federal.

What was the result

• WHEDA Lenders Manual changesKim Plache- Community Development OfficerAdd Cover page to track changes and as of datesEstablish a Best Practices page to help other lendersProvide consistent timelines across all countiesExplain Scope of repairs allowed with NSP fundsClarify Inspection requirements

• WHEDA updates Have sequential update numbers and as of dates

Purchased home with NSP funds

Future PlansWhere do we go from here?

• Share knowledge• Provide education• Volunteer• Gainful employment

Questions?

Thank You!