Credo Action

Tell President Obama’s administration: Stop selling our neighborhoods to Wall Street

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Petition to Julian Castro, Secretary of U.S. Department of Housing and Urban Development:

"The Department of Housing and Urban Development (HUD) must stop selling our neighborhoods to Wall Street and immediately suspend all sales of mortgages in the Distressed Asset Stabilization Program (DASP) until HUD can ensure that the program prioritizes what’s good for homeowners and their communities."

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    Tell President Obama’s administration: Stop selling our neighborhoods to Wall Street

    Wall Street is snatching up as many foreclosed homes as it can, turning a huge profit off of the housing mess it created. And our government is helping them do it.

    The Department of Housing and Urban Development (HUD) is supposed to take its mission -- strengthening communities -- into account whenever it sells off the millions of mortgages it insures, especially loans to families still struggling to recover from Wall Street’s housing fraud. But according to recent reports, HUD has simply been auctioning them off to the highest bidder -- usually hedge funds and banks who promptly foreclose, flip the properties, or convert them to rental properties and jack up the rent.1

    Tell HUD: Stop selling our neighborhoods to Wall Street.

    The next auction is scheduled for September 30th, so now is the right time to put a stop to this scam. We’re joining our friends from the Home Defenders League, Occupy Our Homes, the Center for Popular Democracy and the Right to the City Alliance to put the pressure on HUD. A series of recent reports released by these allies has already put the government on the defensive. A huge public outcry now could force HUD to cancel the upcoming auction to save face.

    When Wall Street’s mortgage fraud was exposed and the housing market collapsed, it blew a hole in the books of the Federal Housing Administration (FHA), the division of HUD dedicated to helping promote home ownership. With Republicans blaming government for the crash and unwilling to help, the FHA started trying to repair the damage by selling off delinquent loans to the highest bidder through the Distressed Asset Stabilization Program (DASP). When DASP was expanded in 2010, the FHA added a second goal, in addition to raising money: Stabilizing communities by keeping people in their homes or keeping rents low.

    It’s not happening. More than 90,000 loans have been sold. Huge hedge funds and private equity firms have scooped up 97 percent of the loans. Only one of every ten loans sold has met criteria measuring whether it helps the community. Meanwhile, a single private equity firm -- Blackstone -- has become the country’s biggest landlord by buying up foreclosed homes.2

    Tell HUD: Stop selling our neighborhoods to Wall Street.

    The callousness is shocking. Step one: Drive up housing prices by fraudulently selling off mortgages to investors. Step two: Get a bailout when it comes crashing down. Step three: Buy up the loans all over again, this time at record low prices -- and make a killing off of rent or reselling the homes. And do it all with the enormous helping hand of the Department of Housing and Urban Development.

    There is a better way. Right now, there are non-profit organizations called “Community Development Financial Institutions” with a proven trackrecord of buying up loans in a responsible way that helps strengthen neighborhoods. They have billions of capital, but it’s still not enough to outbid hedge funds and other heavy hitters.

    HUD Secretary Julian Castro needs to put a stop to these sales to Wall Street until the FHA fixes this broken system. HUD should make sure non-profits have an opportunity to purchase distressed loans -- and start holding the for-profits’ feet to the fire.

    Not only do we need stronger requirements on what private firms can do with the loans they purchase, HUD must take steps to strengthen requirements to keep people in their homes and rental rates low by collecting and releasing detailed performance data, and improving the pre-sale process to protect homeowners.

    Tell HUD: Stop selling our neighborhoods to Wall Street.

    It is bad enough that none of the fraudsters responsible for the crash are in jail. We certainly don’t need to help them bank even bigger bonuses.

    Thank you for helping putting a stop to these sales.

    1. Mark Kurlyandchik, "Feds accused of selling out neighborhoods to Wall St. firms," Al Jazeera America, September 9, 2014.

    2. Ibid.