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[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]

 
                  THE IMPACT OF THE FORECLOSURE CRISIS
                    ON PUBLIC AND AFFORDABLE HOUSING
                           IN THE TWIN CITIES

=======================================================================

                             FIELD HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                   HOUSING AND COMMUNITY OPPORTUNITY

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                            JANUARY 23, 2010

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 111-99

                  U.S. GOVERNMENT PRINTING OFFICE
55-242                    WASHINGTON : 2010
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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 BARNEY FRANK, Massachusetts, Chairman

PAUL E. KANJORSKI, Pennsylvania      SPENCER BACHUS, Alabama
MAXINE WATERS, California            MICHAEL N. CASTLE, Delaware
CAROLYN B. MALONEY, New York         PETER T. KING, New York
LUIS V. GUTIERREZ, Illinois          EDWARD R. ROYCE, California
NYDIA M. VELAZQUEZ, New York         FRANK D. LUCAS, Oklahoma
MELVIN L. WATT, North Carolina       RON PAUL, Texas
GARY L. ACKERMAN, New York           DONALD A. MANZULLO, Illinois
BRAD SHERMAN, California             WALTER B. JONES, Jr., North 
GREGORY W. MEEKS, New York               Carolina
DENNIS MOORE, Kansas                 JUDY BIGGERT, Illinois
MICHAEL E. CAPUANO, Massachusetts    GARY G. MILLER, California
RUBEN HINOJOSA, Texas                SHELLEY MOORE CAPITO, West 
WM. LACY CLAY, Missouri                  Virginia
CAROLYN McCARTHY, New York           JEB HENSARLING, Texas
JOE BACA, California                 SCOTT GARRETT, New Jersey
STEPHEN F. LYNCH, Massachusetts      J. GRESHAM BARRETT, South Carolina
BRAD MILLER, North Carolina          JIM GERLACH, Pennsylvania
DAVID SCOTT, Georgia                 RANDY NEUGEBAUER, Texas
AL GREEN, Texas                      TOM PRICE, Georgia
EMANUEL CLEAVER, Missouri            PATRICK T. McHENRY, North Carolina
MELISSA L. BEAN, Illinois            JOHN CAMPBELL, California
GWEN MOORE, Wisconsin                ADAM PUTNAM, Florida
PAUL W. HODES, New Hampshire         MICHELE BACHMANN, Minnesota
KEITH ELLISON, Minnesota             KENNY MARCHANT, Texas
RON KLEIN, Florida                   THADDEUS G. McCOTTER, Michigan
CHARLES A. WILSON, Ohio              KEVIN McCARTHY, California
ED PERLMUTTER, Colorado              BILL POSEY, Florida
JOE DONNELLY, Indiana                LYNN JENKINS, Kansas
BILL FOSTER, Illinois                CHRISTOPHER LEE, New York
ANDRE CARSON, Indiana                ERIK PAULSEN, Minnesota
JACKIE SPEIER, California            LEONARD LANCE, New Jersey
TRAVIS CHILDERS, Mississippi
WALT MINNICK, Idaho
JOHN ADLER, New Jersey
MARY JO KILROY, Ohio
STEVE DRIEHAUS, Ohio
SUZANNE KOSMAS, Florida
ALAN GRAYSON, Florida
JIM HIMES, Connecticut
GARY PETERS, Michigan
DAN MAFFEI, New York

        Jeanne M. Roslanowick, Staff Director and Chief Counsel
           Subcommittee on Housing and Community Opportunity

                 MAXINE WATERS, California, Chairwoman

NYDIA M. VELAZQUEZ, New York         SHELLEY MOORE CAPITO, West 
STEPHEN F. LYNCH, Massachusetts          Virginia
EMANUEL CLEAVER, Missouri            THADDEUS G. McCOTTER, Michigan
AL GREEN, Texas                      JUDY BIGGERT, Illinois
WM. LACY CLAY, Missouri              GARY G. MILLER, California
KEITH ELLISON, Minnesota             RANDY NEUGEBAUER, Texas
JOE DONNELLY, Indiana                WALTER B. JONES, Jr., North 
MICHAEL E. CAPUANO, Massachusetts        Carolina
PAUL E. KANJORSKI, Pennsylvania      ADAM PUTNAM, Florida
LUIS V. GUTIERREZ, Illinois          KENNY MARCHANT, Texas
STEVE DRIEHAUS, Ohio                 LYNN JENKINS, Kansas
MARY JO KILROY, Ohio                 CHRISTOPHER LEE, New York
JIM HIMES, Connecticut
DAN MAFFEI, New York

                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    January 23, 2010.............................................     1
Appendix:
    January 23, 2010.............................................    51

                               WITNESSES
                       Saturday, January 23, 2010

Amos, Richard, Director of Housing Services, St. Stephen's Human 
  Services, Inc..................................................    35
Anderson, Marion, constituent, and renter displaced by 
  foreclosure crisis.............................................    37
Bartholomay, Hon. Daniel M., Commissioner, Minnesota Housing 
  Finance Agency.................................................    14
Dahl, Michael, Public Policy Director, HOME Line.................    31
Davnie, Hon. Jim, Member of the Minnesota House of 
  Representatives................................................    10
Dorfman, Hon. Gail A., Commissioner, Hennepin County, Minnesota..    11
Halbach, Chip, Executive Director, Minnesota Housing Partnership.    30
Higgins, Hon. Linda, Member of the Minnesota State Senate, 
  District 58....................................................     8
Ireland, Mark, Staff Attorney, Housing Preservation Project......    33
Louden, Christina, constituent, and Section 8 Voucher resident...    39
McCorvey, Cora A., Executive Director/Chief Executive Officer, 
  Minneapolis Public Housing Authority...........................    28
Poethig, Erika, Deputy Assistant Secretary, Office of Policy 
  Development and Research, U.S. Department of Housing and Urban 
  Development....................................................     6
Streitz, Thomas, Director, Housing Policy and Development, 
  Minneapolis Department of Community Planning and Economic 
  Development....................................................    16

                                APPENDIX

Prepared statements:
    Amos, Richard................................................    52
    Anderson, Marion.............................................    75
    Bartholomay, Hon. Daniel M...................................    77
    Dahl, Michael................................................    83
    Davnie, Hon. Jim.............................................    87
    Dorfman, Hon. Gail A.........................................    92
    Halbach, Chip................................................    95
    Higgins, Hon. Linda..........................................   101
    Ireland, Mark................................................   106
    Louden, Christina............................................   111
    McCorvey, Cora A.............................................   115
    Poethig, Erika...............................................   127
    Streitz, Thomas..............................................   137

              Additional Material Submitted for the Record

Waters, Hon. Maxine:
    Written statement of Leslie Parks............................   149
    Written statement of Rebuilding Together Twin Cities.........   151

                  THE IMPACT OF THE FORECLOSURE CRISIS
                    ON PUBLIC AND AFFORDABLE HOUSING
                           IN THE TWIN CITIES

                              ----------                              

                       Saturday, January 23, 2010

             U.S. House of Representatives,
                        Subcommittee on Housing and
                             Community Opportunity,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 12 p.m., in 
the Minneapolis Central Library, Pohlad Hall, 300 Nicollet 
Mall, Minneapolis, Minnesota, Hon. Maxine Waters [chairwoman of 
the subcommittee] presiding.
    Members present: Representatives Waters and Ellison.
    Also present: Representative McCollum.
    Chairwoman Waters. This hearing of the Subcommittee on 
Housing and Community Opportunity will come to order. Good 
morning, ladies and gentlemen.
    Audience. Good morning.
    Chairwoman Waters. Welcome to the Subcommittee on Housing 
and Community Opportunity's Minneapolis field hearing on, ``The 
Impact of the Foreclosure Crisis on Public and Affordable 
Housing in the Twin Cities.'' I would like to begin by thanking 
the Minneapolis Central Library for graciously allowing us to 
use this space for today's hearing. I would also like to thank 
Congressman Ellison's staff for their effort and assistance to 
ensure a successful and productive hearing.
    Of course, I must also mention the leadership of 
Congressman Keith Ellison, a very engaged member of the Housing 
Subcommittee and the Congressional Progressive Caucus. Mr. 
Ellison has been a champion for individuals and families 
bearing the brunt of this foreclosure crisis, particularly for 
renters displaced as a result of foreclosure. As many of you 
know, he was the author of the Protecting Tenants at 
Foreclosure Act of 2009, which was signed into law by the 
President in May. Go ahead, you may applaud. And Mr. Ellison 
has been my ally on the subcommittee as we work to preserve 
public and assisted housing during this severe economic 
downturn, and to rid our housing of the hazards caused by lead 
paint. Give him a round of applause for that too.
    I would also like to thank Congresswoman Betty McCollum of 
the 4th District of Minnesota, a strong supporter of labor and 
working families through her role on the very important 
Appropriations Committee. Ladies and gentlemen, without her 
work on the Appropriations Committee, no matter what we 
authorize, we would not be able to get it unless it was funded. 
So give her applause for being able to do that. And she is a 
Member who has taken the lead in confronting the global AIDS 
pandemic. Thank you for making it here to support and engage in 
this important discussion. And I would, because we have to do 
it according to our procedures, request unanimous consent that 
Congresswoman McCollum be considered a member of the 
subcommittee for this hearing. Without objection, it is so 
ordered.
    The foreclosure crisis has devastated neighborhoods all 
across the country, from the district I represent in Los 
Angeles to here in the Twin Cities. In Hennepin County, 
mortgage foreclosure sales have increased by nearly 800 percent 
in 2008 compared to 2002. In the next 5 years, the Center for 
Responsible Lending predicts that there could be as many as 13 
million additional foreclosures nationwide.
    Because the foreclosure crisis has created so many vacant 
homes, one would think that the silver lining of this horrible 
situation would be lower prices for renters. Unfortunately, 
this is not the case, primarily for two reasons. First, the 
growing number of low-income households far outpaces the amount 
of available affordable housing. With long-term unemployment at 
its highest levels since 1948, affordable housing production 
can't keep up with need.
    Second, we know that foreclosed housing doesn't necessarily 
become ownership or rental opportunities. Often, banks unload 
foreclosed properties for pennies on the dollar to speculators 
and flippers, who frequently fail to do basic maintenance or 
rehabilitation. As a result, the neighborhoods in which these 
homes are located remain blighted, and communities are deprived 
of a potential renting housing resource. We have all heard the 
stories of boarded-up houses stripped of their piping and 
sinks, ignored by their owners and attracting crime to 
neighborhoods.
    These trends are putting strains on our public and assisted 
housing system. I know that in L.A. County, there are about 17 
times as many families on the waiting list for public housing 
as there are units. This is the case in Minneapolis as well. 
One of our witnesses today, Chip Halbach, noted in an article 
that 12,000 households applied when the public housing waiting 
list was opened in 2008. If our housing resources remained as 
they are today, the 12,000th person will not be able to get 
assistance until July 2034.
    Nearly 2 years ago, I drafted the Neighborhood 
Stabilization Act, recognizing that we need to connect the 
foreclosure crisis with the lack of affordable public and 
assisted housing. After a hard fight with the previous 
Administration, I was able to secure $4 billion in Neighborhood 
Stabilization Program funds in the summer of 2008. The 
following February, we were able to get an additional $2 
billion in funds through the economic stimulus bill.
    Last week, we were very pleased to announce and to learn 
that HUD made their grant announcements for the second round of 
NSP, and both the City of Los Angeles and the Twin Cities had 
winning grant applications. With over 300 grant applications 
scored by HUD, and only 50 or so grants granted or awarded, 
it's a testament to both the work of people on the ground, and 
to the magnitude of the problem in our communities.
    I know that over $100 million in NSP funds were awarded 
directly to public housing authorities under the second round 
of funding. Other housing authorities are working with their 
cities and States to pair NSP funding with other funding 
sources such as project-based voucher assistance to expand the 
number of units for the most vulnerable citizens.
    Besides NSP, we have been fighting to preserve public 
housing. In the stimulus bill, we worked to secure $5 billion 
in public housing capital funds, which are now being used to 
make critical repairs and keep units in the public housing 
stock, along with additional homelessness prevention grants and 
project-based rental assistance.
    We realize this problem isn't over and the need for 
resources hasn't been satisfied. That's why Congressman Ellison 
and I, along with seven members of the Congressional Black 
Caucus who serve on the Financial Services Committee, worked 
hard to get an additional $1 billion in Neighborhood 
Stabilization Funds in the Wall Street reform bill that passed 
the House in December. We also worked to secure $3 billion in 
assistance for unemployed homeowners threatened by foreclosure. 
We still need to get this bill through the Senate. The fight 
isn't over and it won't be easy. But Congressman Ellison and I 
will be advocating for this funding over the coming months.
    I'm eager to hear more from our witnesses about both the 
foreclosure crisis, and the shortage of public and assisted 
housing. Again, thank you for welcoming me to Minneapolis 
today. I would now like to recognize Congressman Ellison to 
make his opening statement. Thank you very much. Congressman?
    Mr. Ellison. Chairwoman Waters, let me thank you for coming 
to Minneapolis, and let me offer a very hardy and warm welcome 
to you and your staff who worked so hard to make this hearing a 
reality. Let me also thank you, on behalf of our State and our 
Nation, for all the work that you have done, not just in the 
area of housing, but on the critical issue of Haiti relief, 
which is something you have been working on for many, many 
years, and on the issue of Hurricane Katrina relief, which is 
something that you have been absolutely relentless on, and also 
your work over the years for equal opportunity for women, 
communities of color, and all Americans. Thank you very much.
    Let me also thank my twin sister from St. Paul, 
Congresswoman Betty McCollum, for joining us today as we 
address regional efforts to increase affordable housing. 
Congresswoman McCollum is an appropriator and on the 
Appropriations Committee, and therefore is an essential partner 
for us as we move forward to try to make sure that our policy 
and our resources match up together to serve community.
    Also let me thank State and local leaders, many of whom are 
here today, for their excellent work. It's an honor to serve 
with you, in partnership with you, and I would like you to know 
that over the time that I have been able to serve as a Member 
of Congress, your assistance and your information has been 
indispensable to our overall program, and so thank you very 
much.
    I would like everyone to consider also that the advocates 
and the citizens who keep us informed are essential players, 
and that we think that you are essentially the most important 
component of our efforts, and we thank you for coming and all 
of the work that you do. Please continue to keep us informed 
and please keep your ideas coming; they are essential to our 
success.
    Please consider this hearing today to be an important 
information-gathering hearing, just like any other 
congressional hearing you might have on Capitol Hill, but 
unique in the sense that it is in our community and gives us an 
opportunity to talk about some of the unique challenges that 
we're facing as residents of the Twin Cities, but also things 
that may apply generally throughout the country. Many ideas 
gathered at field hearings make their way into national 
legislation, and I hope that we'll be able to honor some of the 
important details that can lead us in that direction in this 
hearing.
    According to data from RealtyTrac, 3 million households 
received foreclosure notices in 2009. While the national 
foreclosure rate has slightly decreased, Minnesota posted a 56 
percent increase in foreclosures from 2008. Last year, 6,000 
households in Minneapolis alone received delinquency notices. 
These displaced households are looking for help to find safe 
and adequate housing that they can afford. That's why 
Representative Waters and I fought for increased funding for 
the Neighborhood Stabilization Program, to get help for our 
communities. And as I indicated earlier, I look forward to 
working with all of you to make sure that the legislative 
intent of the NSP program gets carried on through right to the 
end user, and so I look forward to working with members of the 
community and local and State officials to make sure that this 
happens.
    NSP was created to allow local communities to purchase and 
rehabilitate foreclosed property and create affordable 
homeownership and rental opportunities. Before the foreclosure 
crisis, our communities experienced intolerable rates of 
housing insecurity. Now the need has grown even greater. 
Federal rental assistance programs are facing unprecedented 
requests for help. Shelters are seeing as many as 10 percent of 
their clients directly linked to foreclosure displacement as 
affordable rentals disappear. Today, we seek input from a broad 
range of witnesses on how to promote affordable housing in the 
midst of this mortgage foreclosure crisis.
    To our witnesses, I would like to extend a hearty welcome 
and my appreciation for taking time on a Saturday morning to 
come to this committee to testify. I want to thank you each for 
your time, and I know we are looking forward to hearing from 
each of you.
    Chairwoman Waters. Thank you very much, Congressman 
Ellison. Now, we will hear from Congresswoman Betty McCollum. I 
thank you so very much for joining us today. I know today is a 
busy day and you won't be able to stay for the entire hearing, 
but we welcome you, and I would like to offer you time for your 
opening statement.
    Ms. McCollum. Thank you very much, Madam Chairwoman. I am 
pleased to have the opportunity to be here with you today, but 
I'm really pleased to welcome Congresswoman Maxine Waters to 
Minnesota. She can really walk on water when it's hard, as she 
found out today, because she wore her boots. So she's smart. 
She's a national leader on housing issues and a long-time 
advocate for the needs of the most vulnerable in our Nation and 
throughout the world. She has been one of the great advocates 
in Congress, as Keith pointed out, for American response to the 
earthquake in Haiti. She is a woman I admired greatly before 
coming to Congress, and I was thrilled that I had the 
opportunity to serve with her my first term, and she was a 
mentor. But there's a song that says it all, I wish all of our 
daughters would be like Maxine Waters.
    And it's always great to be with Congressman Ellison. We 
work together on a lot of issues, and people see our heads 
together on the House Floor with great frequency. We are twins; 
I'm the eldest, however.
    I'm also a history teacher, social studies, and I think 
it's important, in order to move forward positively into a 
future, we have to reflect on the past to see where we are in 
the present. So our community is doing that, and we're doing 
that today in this hearing, like so many other communities 
across the country struggling to meet the basic needs of 
housing for our neighbors, for our friends, and for our 
families. You all know that there's a housing crisis today, and 
it's because affordable housing and the needs of low- and 
middle-income Americans were neglected for most of the past 
decade. The Bush Administration also failed to properly 
regulate the housing market, which led to reckless loans and 
high-stake gambling on Wall Street. When those bad debts all 
started to unravel, American families were left with a housing 
crisis, a financial crisis, and the most painful recession 
since the 1930's.
    The victims of this current crisis are working families and 
those families who want to work but have no job opportunities 
in this tough economy. We're committed, our party is committed 
as Democrats, to work towards solving these problems. We are 
fighting in Washington for the attention and the resources this 
housing issue deserves.
    The Recovery Act, which passed in 2008, was an essential 
step toward stabilizing the housing market, but there's much 
work to be done, there's much retooling to be done to the 
legislation. Many of our panelists this afternoon were 
responsible for putting those Federal dollars to work in 
Minnesota, and we look forward to hearing about what worked 
well and what can work better.
    I want to, again, thank Congresswoman Waters and 
Congressman Ellison for the opportunity to be with you here 
today, even though briefly, because I have to go back to the 
other side of the river, but I want you to know that we stand 
united in working for you, and Keith and I are putting the 
needs of our districts, Minnesota and our country first. Thank 
you.
    Chairwoman Waters. Thank you very much. And I'm pleased to 
welcome our distinguished first panel.
    Our first witness will be Ms. Erika Poethig, Deputy 
Assistant Secretary, Office of Policy Development and Research, 
U.S. Department of Housing and Urban Development.
    Our second witness will be the Honorable Linda Higgins, 
member of the Minnesota Senate.
    Our third witness will be the Honorable Jim Davnie, member 
of the Minnesota House of Representatives.
    Our fourth witness will be the Honorable Gail Dorfman, 
commissioner, Hennepin County, Minnesota.
    Our fifth witness will be the Honorable Dan Bartholomay, 
commissioner, Minnesota State Housing Finance Agency.
    Our sixth witness will be Mr. Tom Streitz, director of 
housing policy and development, Minneapolis Department of 
Community Planning and Economic Development.
    And I would like to say to our panel here, I thank you for 
appearing before the subcommittee today, and without objection, 
your written statements will be made a part of the record. You 
will now be recognized for a 5-minute summary of your 
testimony, starting with our very first witness, Ms. Erika 
Poethig.

STATEMENT OF ERIKA POETHIG, DEPUTY ASSISTANT SECRETARY, OFFICE 
OF POLICY DEVELOPMENT AND RESEARCH, U.S. DEPARTMENT OF HOUSING 
                     AND URBAN DEVELOPMENT

    Ms. Poethig. Thank you, Madam Chairwoman, Congressman 
Ellison, and Congresswoman McCollum for inviting me to testify 
before you today. It's great to be in Minnesota. While I will 
focus my testimony on the national housing market and the new 
challenges we face as a result of the foreclosure crisis, I 
also want to talk about the housing conditions here in the Twin 
Cities and Minnesota.
    Preserving the affordability of rental housing, especially 
for low-income households, is a crucial challenge for the 
Nation and its many housing markets. Under Secretary Donovan's 
leadership, HUD has reasserted its role as a catalyst for 
expanding the availability of decent and affordable rental 
housing. If this crisis has taught us anything, it's that the 
Nation needs a balanced comprehensive national housing policy, 
one that supports homeownership, but also provides affordable 
rental opportunities, and ensures nobody falls through the 
cracks.
    Rental affordability is a key priority of Secretary 
Donovan, but HUD also remains focused on restoring stability to 
the Nation's homeownership market. In my testimony today, I 
will cover three issues based on the questions submitted by the 
committee on this important topic. First, I want to cover the 
trends in rental affordability across the Nation and here in 
the Twin Cities. Second, I will discuss the relationship 
between the foreclosure crisis and dynamics in the rental 
market and steps that have been taken to address the 
displacement of renters. Third, I will highlight HUD's efforts 
to stabilize communities affected by the recent foreclosure 
crisis.
    First, you probably have seen in the press national 
indicators citing high vacancy rates in the U.S. rental market. 
But I think it's really important to understand that while some 
new renters have benefited from this softness, drawing 
concessions from distressed property owners that have resulted 
in lower rents, many, many more low-income renters, as 
Chairwoman Waters pointed out, whose incomes have fallen as a 
result of unemployment and lost hours worked, have difficulty 
affording their housing. I want to stress that this softness in 
the broader rental market has not substantially eased 
affordability concerns for low-income renters. So in 2008, 
there were 8.7 million renter households paying more than 50 
percent of their income for rent. This is up from 8.3 million 
households in 2007.
    But let me dig under these national statistics and describe 
how this plays out at the local level. In tight markets such as 
New York, Los Angeles, and San Francisco, constrained supply 
and strong demand creates real affordability challenges for 
renters up the socioeconomic ladder. In other markets, low- and 
moderate-income renters have an easier time finding affordable 
options, but they are often located in neighborhoods with high 
concentrations of poverty and the least opportunity.
    A shortage of rental housing affordable to extremely low-
income renters is a problem across virtually all housing 
markets. The American Housing Survey indicates that for every 
100 extremely low-income renters in the United States, there 
are only 44 units affordable and available to them.
    In the Minneapolis/St. Paul metro area, extremely low-
income households--households earning approximately $25,000 for 
a family of 4--face a similar challenge. However, for low- and 
moderate-income renters, the Minneapolis region does remain 
considerably more affordable than similarly sized coastal 
metros, which brings me to my second point, and the central 
focus of this hearing, what is the impact of the foreclosure 
crisis on the access to affordable rental housing in the Twin 
Cities region?
    Although it is really difficult to untangle, there is 
anecdotal and some quantitative evidence suggesting that 
families are doubling-up with friends or relatives, which has 
depressed demand for the rental market and contributes to some 
rising vacancies. The impact of the foreclosure crisis on the 
rental stock is still unclear. In the same way that the 
foreclosure crisis has taken single-family properties off the 
market, foreclosures on multifamily properties have also 
removed rental housing from the available supply. At the same 
time, though, there have been some additions to the rental 
inventory because newly built multifamily units that were 
intended to be condominiums are now converting back to rental 
housing.
    This problem of displaced renters from foreclosed 
properties is particularly acute in the Twin Cities area, where 
20 percent of the rental stock is in single-family homes and 
another 12 percent is in 2- to 4-unit buildings. Research from 
the Humphrey Center at the University of Minnesota suggests 
that in Minneapolis, nearly 60 percent of foreclosed buildings 
in 2006 and 2007 were renter-occupied, nearly 60 percent.
    Recognizing the tumultuous experience these renters faced 
during foreclosure, Congressman Ellison introduced, and 
President Obama signed, as Congresswoman Waters said, the 
Protecting Tenants at Foreclosure Act in 2009. This Act 
protects renters in foreclosed properties by allowing them to 
fulfill their lease unless the property is sold to someone who 
will be the primary resident, and importantly, requires that 
tenants receive 90 days' notice before eviction.
    What is HUD doing to mitigate the impact of the foreclosure 
crisis on neighborhoods and renters across the Nation and this 
region? Under the first round of the Neighborhood Stabilization 
Program funding, jurisdictions in Minnesota received just over 
$57 million to buy, rehabilitate or demolish properties and 
help homeowners finance the purchase of foreclosed homes. A 
quarter of this money must be spent to assist households 
earning less than 50 percent. In Minneapolis, about 52 percent 
of the units that are expected to be preserved or produced with 
this funding will serve very low-income households. Last week, 
Secretary Donovan awarded just under $2 billion in the 
Neighborhood Stabilization Program funding through this, a 
competitive process. The City of Minneapolis was awarded $19.5 
million in a consortium agreement with the City of Brooklyn 
Park Community Development Department, Hennepin County Housing 
Community Works, and the Transit Department. In addition, the 
City of St. Paul was awarded $18 million.
    This region's approach to neighborhood stabilization is a 
model of coordinated, cohesive community development that makes 
sufficient use of existing housing development capacity and 
sets a high bar for providing jobs and other benefits for 
members of the affected communities. Working in partnership 
with the Twin Cities Community Land Trust LLC, these 
jurisdictions have launched an innovative approach to using NSP 
funds. The Land Bank acts as an intermediary to identify, 
purchase and coordinate the disposition of foreclosed 
properties to a pre-identified group of nonprofit developers.
    [The prepared statement of Deputy Assistant Secretary 
Poethig can be found on page 127 of the appendix. ]
    Chairwoman Waters. Thank you very much. I did want you to 
get the part in about how much money they got, that's why I 
didn't stop you at 5 minutes, but I'm going to have to move on 
to Ms. Higgins now. Thank you very much.

    STATEMENT OF THE HONORABLE LINDA HIGGINS, MEMBER OF THE 
              MINNESOTA STATE SENATE, DISTRICT 58

    Ms. Higgins. Chairwoman Waters and honorable members of the 
committee, my name is Linda Higgins. I am the Minnesota State 
Senator from District 58, and I proudly represent north and 
downtown Minneapolis.
    For several years, I have carried and passed legislation 
related to foreclosures and the devastation that results. 
Visitors to my office are used to seeing maps showing the 
foreclosures by year in Minneapolis. Jaws drop when they see, 
graphically displayed, the density of foreclosures in my 
district and the change from year to year. Many comment that 
there are so many dots overlaid on the other dots, that you 
can't see the base map. Clearly, we are ground zero for 
foreclosures in our City, our County and our State. Our mayor 
says it this way: ``When Minneapolis gets the sniffles, North 
Minneapolis gets pneumonia.''
    I would like to describe the state of my district after 
years of foreclosure. Thousands of families have lost their 
homes. They have moved away or they have moved in with their 
friends or families. They're still hurting from the loss of 
that family home, and the opportunity to purchase another home 
seems a distant dream. The foreclosed-upon properties are being 
repurchased for considerably less than the previous price that 
was paid. Some families have been able to purchase great houses 
that are in pretty good shape. Others are buying homes that 
have been rehabbed with NSP funds. Others are taking a chance 
and buying a house that could kindly be called a fixer-upper. 
Many homes have been vandalized, had copper stripped, sometimes 
had fires, and many of those are now demolished.
    Other homes are being snapped up by investors. Some of 
those investors are clueless about how to rehabilitate a house 
and get good tenants. Others think that the laws really aren't 
meant for them. They buy a house for pennies, paint some of the 
walls, maybe they'll scrub the appliances, and then they rent 
it out. They forget the small details, like maybe the house was 
condemned, and that there are requirements for lifting the 
condemnation and getting a new certificate of occupancy and a 
rental license.
    A case in point is a condemned fourplex near my home. It 
was bought by a consortium of investors from North Dakota. The 
consortium has bought about 50 properties in North Minneapolis, 
and they hired someone local to get them in shape to rent out. 
It has now been 8 months since this gentleman started having 
work done on this building. A couple of weeks ago, he failed 
what was to have been the final inspection, so it's still 
condemned. He lied about being an asbestos abatement 
contractor, and illegally and dangerously removed the asbestos 
himself, and he got caught. I understand, unfortunately, that 
his work at his other properties is equally shoddy.
    There are still many blocks in North Minneapolis with more 
than one vacant house. This proves challenging in the winter 
especially. The sidewalks might go unshoveled, the pipes will 
freeze if they haven't been winterized. Sometimes people move 
in. If the house becomes open to trespass, it will get boarded-
up.
    And according to a 2001 study in Philadelphia, houses 
within 150 feet of a vacant or abandoned property experience a 
net loss of $7,627 in value, making it more of a burden on the 
neighboring residents. In addition, a study in Austin, Texas, 
found that blocks with unsecured vacant buildings had 3.2 times 
as many drug calls to police, 1.8 times as many theft calls, 
and twice the number of violent calls, as blocks without vacant 
buildings.
    In 2007, I carried and passed a Predatory Lending 
Prevention package in the Minnesota Senate which: requires 
mortgage lenders to verify the borrower's ability to pay the 
loan; prohibits refinancing that does not benefit the borrower; 
requires the mortgage lenders to act in the best interest of 
the borrower; requires that people receive mortgage financial 
counseling before refinancing a special mortgage, like those 
no-interest loans from Habitat For Humanity; bans financial 
penalties for early repayment; requires a mortgage originator 
to orally inform a borrower of the additional taxes and fees 
that are associated with the loans; allows the borrowers to sue 
if they are harmed by predatory lending or an overinflated 
appraisal; and finally, it makes mortgage fraud a specific 
crime all on its own. Minnesota has also passed several 
progressive measures to address protections for renters 
affected by foreclosures.
    In 2008, I carried a bill that requires landlords to tell 
prospective tenants that the property is in foreclosure, and to 
waive any penalty if the tenant in the foreclosed property 
withholds the last month's rent. Another bill in 2008 provided 
for mandatory expungement of an eviction if a tenant vacated a 
foreclosed property before the expiration of the redemption 
period or if the tenant never received the required notice to 
vacate. We will continue working on renter protections in 2010.
    Minnesota appreciates the Federal resources that have been 
sent out to the States to address the foreclosure crisis. 
However, some Federal policies actually impede our progress 
here in the States. For example, Federal legislation preempts 
the State control of federally-chartered lending institutions, 
making State efforts less effective than they would ordinarily 
be. Our 2007 bills were called the strongest in the Nation, but 
in actuality only State banks were actually affected. Since 
most State legislatures are considerably more nimble than 
Congress, removing the preemption would allow us to do what 
needs to be done in a more timely fashion than waiting for a 
Federal solution. Thank you again for being here today. We 
really appreciate your interest in this issue, because it 
affects all of our constituents. Thank you.
    [The prepared statement of State Senator Higgins can be 
found on page 101 of the appendix.]
     Chairwoman Waters. Thank you very much. Our next witness 
will be the Honorable Jim Davnie.

STATEMENT OF THE HONORABLE JIM DAVNIE, MEMBER OF THE MINNESOTA 
                    HOUSE OF REPRESENTATIVES

    Mr. Davnie. Thank you, Madam Chairwoman, and members of the 
committee. I'm grateful for the opportunity to testify before 
you today. I don't need to review for members of the committee 
the details of the foreclosure crisis that has swept our Nation 
for the last number of years. While Minnesota did not lead in 
experiencing that foreclosure crisis, I do like to think that 
we have led in responding to that foreclosure crisis. And I 
would like to stress that I believe we did that by working 
collaboratively across jurisdictions, as this panel reflects, 
as well as in ways that are broadly inclusive of the multiple 
stakeholders in our community and across our State.
    In 2007, as the foreclosure crisis was first being 
recognized, we established a working group led by our Attorney 
General Lori Swanson and a group of stakeholders that she had 
assembled, and proposed and passed an aggressive platform of 
foreclosure prevention and mortgage lending reform proposals. I 
was privileged to author the lead piece of that legislation in 
the Minnesota House. Senator Higgins, my colleague and friend 
on this, has explained the critical elements of that proposal 
in her testimony.
    Additionally, to the work that she has described, we worked 
that year to close loopholes in State law that were being 
exploited by equity strippers to the detriment of challenged 
homeowners.
    The following year, as our recognition and understanding of 
the foreclosure crisis evolved and received wider 
acknowledgment, a broad array of stakeholders was brought 
together, and drafted a robust package of reforms aimed at 
easing the fallout, not just for homeowners, but, as has been 
discussed, the large number of renters who are being caught up 
in the foreclosure crisis, as well as owners of manufactured 
homes.
    Those initiatives prioritized increased emphasis on 
foreclosure prevention outreach, to provide assistance to 
struggling homeowners earlier in the foreclosure process, 
strengthening and protecting the position of renters swept into 
the foreclosure crisis, and providing owners of manufactured 
housing greater rights and protection.
    Additionally, that year both Houses of Legislature 
bipartisanly passed the Minnesota Subprime Borrower Relief Act, 
a narrowly targeted proposal that would have allowed lenders 
and borrowers more opportunity to work together to create 
mutually agreeable loan modifications based on the ability to 
pay of the borrower. Unfortunately, that legislation was vetoed 
by Governor Pawlenty.
    Over the same time period, Minnesota Legislatures have 
increased funding for housing programs and capital investment 
in affordable housing. We have created the ability for renters 
to take over the payment of utility bills that are in arrears 
and deduct those payments from their monthly rent, and 
fashioned a mechanism for the automatic expungement of eviction 
records where a renter is a victim of foreclosure.
    Looking forward to the 2010 Minnesota Legislative Session 
that will begin in just a few weeks, we're looking at a 
significant proposal for bonding, for affordable housing, and 
proposals to streamline the foreclosure notification process, 
to, again, get to those challenged homeowners as early in the 
process as possible.
    Looking forward to Federal assistance, we are, as has been 
stated, extremely grateful for the $19.5 million that 
Minneapolis has received and other communities from the 
American Recovery and Reinvestment Act. In speaking with 
advocates in preparation for this hearing, what they called 
for, and I hear their voices, is a 1-2 punch from the Federal 
Government. Punch 1 is additional resources for affordable 
housing, and punch 2 is aggressive reforms of our financial 
system in ways that create more responsible lending and 
protection for consumers, so that they can go into the 
homeowner process secure that their investment in their 
families and communities will remain.
    Again, I want to thank you for the opportunity to testify 
before the committee today.
    [The prepared statement of State Representative Davnie can 
be found on page 87 of the appendix.]
    Chairwoman Waters. Thank you very much. Our next witness 
will be the Honorable Gail Dorfman.

   STATEMENT OF THE HONORABLE GAIL A. DORFMAN, COMMISSIONER, 
                   HENNEPIN COUNTY, MINNESOTA

    Ms. Dorfman. Chairwoman Waters, on behalf of the residents 
of Hennepin County and my colleagues on the County Board, I am 
pleased to welcome you here today to Minneapolis and Hennepin 
County for this important field hearing. Our own Congressman 
Keith Ellison has been at the forefront of efforts to 
effectively respond to the foreclosure and housing crisis both 
nationally and here at home. We are thankful for his leadership 
and representation, and we know that we're lucky to have this 
strong congressional team of Congresswoman McCollum and 
Congressman Ellison.
    I want to say up front that the most important and 
effective action we have taken is to come together as a 
community to collaborate and innovate as partners through the 
Minnesota Foreclosure Partners Council. We have a coordinated 
plan focused on data collection, counseling and outreach, 
community recovery, and legislative and legal strategies, some 
of which you have heard about. And while the pace of new 
foreclosures slowed a bit in 2009, and our prevention and 
revitalization efforts grew, in large part due to the influx of 
Federal support, we cannot say yet that we have turned the 
corner on this crisis. Instead, we have seen the foreclosure 
problem shift from the city to the suburbs, and from being 
caused by mortgage products to now being impacted by job loss 
and unemployment.
    Hennepin County is the largest unit of local government in 
Minnesota. There are 46 municipalities, with a population of 
just over 1 million people. The number of annual mortgage 
foreclosure sales in Hennepin increased from over 3,000 in 
2006, to 5,600 in 2007, to more than 7,300 in 2008, and went 
back to the 2007 level this past year. That's just shy of 
22,000 foreclosures in 4 years, representing 4 percent of our 
overall housing stock and particularly devastating urban and 
suburban communities with the highest concentrations. As a 
result, home values have fallen dramatically in the 
neighborhoods with the most foreclosures, with a 14 percent 
decline in home values in North Minneapolis, and 10 and 12 
percent declines in the Cities of Brooklyn Park and Brooklyn 
Center.
    Let me just touch briefly on what we have been doing at the 
County. We have provided prevention counseling resources for 
at-risk homeowners and renters through the Minnesota Home 
Ownership Center, HOME Line, and Legal Aid that have been 
accessed by more than 3,200 households. We have held 25 
foreclosure workshops at our libraries, like this one, and 
distributed a workshop video seen by thousands more.
    We have stepped up efforts through the Sheriff's Office and 
community partners to make sure that both owners and renters 
facing foreclosure understand the process and their rights 
under the law.
    We have been aggressively prosecuting mortgage fraud cases 
through County Attorney Mike Freeman's office. To date, 24 
persons and companies have been convicted, and charged cases 
involve 210 properties with over $60 million in fraudulent 
loans.
    Hennepin County was awarded $8.6 million in NSP funding to 
work with 7 targeted suburban cities, along with Habitat and 
the Land Trust, to acquire and rehab abandoned and foreclosed 
homes and to primarily assist first-time home buyers, with our 
NSP goal of providing affordable homeownership for 200 
households this year. We have invested an additional $2 million 
through the County Affordable Housing Capital Fund and Federal 
HOME Program to rehab another 79 foreclosed and vacant 
properties in 2009. And since 2000, the County has provided 
over $35 million in local county funding to assist in the 
preservation and new construction of over 3,400 affordable 
units.
    We are targeting some of our Homeless Prevention and Rapid 
Re-Housing (HPRP) funds to help renters at risk of homelessness 
due to foreclosure--65 percent of the foreclosures in the City 
of Minneapolis involve rental properties, and approximately 10 
percent of the families who showed up in our homeless shelters 
over the past 2 years are renters coming from these properties.
    HPRP, frankly, is the best tool we have right now to 
address the problem of renters impacted by foreclosure, through 
our City/County HPRP partnership and our contracts with 
community agencies. Legal Aid is providing the legal assistance 
that buys the family a little more time, and St. Stephen's 
provides the relocation assistance so that families never have 
to even enter a shelter to get help. Just since October, these 
two agencies have served over 130 people and 40 families.
    Let me share just one story to illustrate how well this is 
working. Legal Aid has been working with a single mom with two 
children who has rental housing with a Section 8 voucher. She 
moved in last year, and was notified just before Thanksgiving 
that she had to move out within 48 hours because the house was 
in foreclosure. Despite the requirements of State and municipal 
law, the landlord had not disclosed the foreclosure. Legal Aid 
attorneys were able to get the 48-hour notice retracted. The 
bank then issued the 90-day notice, but Legal Aid informed the 
bank of her Section 8 status and was able to extend the 
family's stay to when their lease ends this summer. Legal Aid 
is now working with the family and St. Stephen's to make sure 
the utilities stay on and that the family is resettled into a 
new home next summer. Without this help, this family would 
surely have ended up in a shelter this winter.
    So in Hennepin, we're tackling the foreclosure and housing 
crisis from every angle we can, but we're still falling short. 
For every family who gets out of a shelter, there's another 
family in line to take their place. For every family we work 
with to prevent foreclosure or find alternative housing, there 
are new families walking away from their homes because they owe 
more than their home is worth.
    NSP is working to leverage other public and private 
resources, to stabilize our communities and provide affordable 
housing, but it's not a model that works well for renters and 
for households of 30 percent or below the average median 
income. We're also struggling with NSP dollars in competition 
with private investors and speculators who put cash down and 
can move much more quickly to acquire the properties, because 
they don't have to comply with environmental assessments, 
appraisals, discounted prices, and inspections. We worry that 
we'll not be able to meet the September 30th deadline of having 
all our NSP funds committed.
    We are thankful for the new Federal assistance, but 
Hennepin County and our local governments cannot solve this 
problem alone. We have stepped up to fill the gaps, to help our 
neighborhoods impacted by foreclosures and families who have 
lost their housing. And for Hennepin, responding to the 
foreclosure crisis, frankly, didn't fit neatly into our 
organizational structure or mandated services, but we did it 
anyway. But we don't see the financial sector doing that. It's 
time for the financial sector to do what the rest of us are 
doing, step up and help us turn the corner on this crisis. 
Thank you.
    [The prepared statement of Commissioner Dorfman can be 
found on page 92 of the appendix.]
    Chairwoman Waters. Thank you. The Honorable Dan 
Bartholomay.

STATEMENT OF THE HONORABLE DANIEL M. BARTHOLOMAY, COMMISSIONER, 
                MINNESOTA HOUSING FINANCE AGENCY

    Mr. Bartholomay. Madam Chairwoman, members of the 
committee, Representative Ellison, and Representative McCollum, 
thank you so much for the opportunity to testify today and for 
holding this hearing in Minnesota. As Commissioner of the 
Minnesota Housing Finance Agency, the State's affordable 
housing financial institution, my testimony relates primarily 
to finance issues. It is Minnesota Housing's mission to advance 
affordable housing opportunities to low- and moderate-income 
Minnesotans. And since 1971, Minnesota Housing has invested 
more than $8.7 billion and assisted more than 750,000 
households.
    Every other year, we go through a process to develop an 
affordable housing plan that describes the Agency's sources and 
uses of funds. For the 2010-2011 biennium, the Agency will 
invest about $1.4 billion of Federal, State, and agency-
generated funds to finance new affordable housing 
opportunities, preserve existing affordable housing, end long-
term homelessness, and address foreclosures.
    A large portion of Minnesota Housing's resources are 
dedicated by law to specific purposes. Of the Agency's 
discretionary budget of about $180 million, the Agency has 
specifically allocated 18 percent for addressing foreclosures. 
Our Agency has used both the State and Federal resources 
through the Neighborhood Stabilization NSP 1 mortgage revenue 
bonds and home funds to address foreclosures in the areas with 
the highest need. Mortgage revenue bonds represent a large 
portion of the resources available to Minnesota Housing and 
other State housing finance agencies and local governments. 
It's important to note that earnings on the loans financed with 
bond proceeds are used flexibly to create more affordable 
housing. They constitute 15 percent of our 2010-2011 affordable 
housing plan and have enabled the Agency to dedicate $50 
million to end long-term homelessness. As a result, a well-
functioning bond market has implications well beyond affordable 
mortgages that the HFAs provide.
    The impact of the foreclosure crisis on bond markets is not 
well-known. Access to bond market capital is critical to 
financing affordable housing. So turmoil in the market has a 
significant negative impact on HFAs' ability to meet their 
missions. Because Minnesota Housing and other HFAs did not 
participate in the exotic mortgage-making practices, their 
portfolios have fared significantly better than other lending 
institutions. Despite this performance, the market did not 
differentiate between predatory and subprime mortgages and HFA 
mortgages.
    The foreclosure crisis drove bond investors away for two 
primary reasons. First, the disintegration of the subprime 
mortgage portfolio was generalized to all mortgages because 
investors either were not able to differentiate between 
subprime mortgages and healthy mortgages, or they didn't trust 
the information that would have enabled them to do so. Thus, 
housing bonds in general were tainted overall, and some 
corporate investors went so far as to prohibit the purchase of 
any housing related bonds, regardless of the credit ratings. 
Also, declining profits due to mortgage-related losses meant 
investors had less money to invest, and yields on housing bonds 
were higher.
    During some portions of late 2008 and early 2009, yields 
were so high that the debt issuance was infeasible, effectively 
shutting down lending by public entities. Matters worsened for 
HFAs once the Federal Government intervened to subsidize the 
broader housing market by purchasing mortgages at artificially 
low interest rates without extending the same benefit to public 
bond issuers, thus the most powerful tool available at housing 
finance agencies, the tax exemption of the mortgage revenue 
bond, lost most of its value. As a result, many of the housing 
finance agencies and virtually all local housing authorities 
ended their mortgage lending programs. Potential borrowers, our 
clients and customers whose access to credit was already 
strained by the broader economic forces, had lost yet another 
source to support housing.
    The recently implemented Treasury/HFA initiative will help 
restore some lost funding capacity, which will improve earnings 
potential prospectively as we look ahead. This new one-year 
program will provide about $275 million to Minnesota Housing to 
finance both homeownership and rental housing. Despite this, 
however, the Agency has and will continue for some time to have 
fewer funding resources due to two factors related to 
foreclosures: First, the significantly reduced 2009 lending 
volume has had a long-term impact on our ability to internally 
generate flexible revenue to plow back into housing; and 
second, losses in our existing loan portfolio, due to the 
declining real estate values of foreclosed loans, impaired our 
earnings in both 2008 and 2009. Both of these factors reduce 
our ability to provide housing assistance from internally 
generated resources, which, as mentioned earlier, are our most 
flexible resources, and constitute about 15 percent of all of 
our resources.
    So I urge Congress to continue funding foreclosure 
remediation, but in addition, to look at ways of improving the 
current NSP resources, which could move houses from the 
foreclosure inventory to homeownership much more effectively 
with temporary waivers of statutory requirements regarding 
processes of the Uniform Relocation Assistance and Real 
Property Acquisition Policies Act, URA Act, and also the 
National Environment Policy Act. These changes would permit 
final purchase offers to be made when acquiring foreclosed 
properties before completion of an appraisal and environmental 
review, putting the NSP purchaser on a more equal footing with 
investors who are not obligated to improve substandard housing 
or to make homes available to lower-income households.
    I also urge Congress to continue providing funding for 
foreclosure prevention, and Congress should explore new 
approaches to avoiding foreclosures. Providing relatively 
short-term financial assistance to homeowners in certain 
circumstances so they can continue to make loan payments during 
their economic troubles, may be less costly both to the 
homeowner, lender, and neighborhood in the long run, rather 
than foreclosure.
    The Tax Credit Exchange Program that permits States to 
exchange low-income housing tax credits for grants from the 
Treasury should be extended to permit continued development of 
low-income housing for families, including those who have lost 
their homes through foreclosure.
    Before closing, I would just like to thank you again, and 
Congress for the financial support provided to both State 
agencies but also local governments over the last few years. 
The Tax Credit Exchange Program and the Tax Credit Assistance 
Program have both been essential to continuing to support and 
develop affordable rental housing. The NSP 1 and now 2 are 
invaluable to turning around foreclosure-impacted 
neighborhoods. We take pride in our partnerships with the 
Federal Government, the State government, and with local 
government, but also the private sector, in providing and 
preserving affordable housing in Minnesota. Thank you very 
much.
    [The prepared statement of Commissioner Bartholomay can be 
found on page 77 of the appendix.]
    Chairwoman Waters. Thank you very much. I believe the 
correct pronunciation of the last name of this gentleman, I 
have missed. It is spelled ``S-t-r-e-i-t-z.'' Would you please 
tell us the correct pronunciation of your name?
    Mr. Streitz. Madam Chairwoman, it is ``Streitz.''
    Chairwoman Waters. All right. I knew I was saying it wrong. 
Mr. Tom Streitz, you are the next witness.

   STATEMENT OF THOMAS STREITZ, DIRECTOR, HOUSING POLICY AND 
 DEVELOPMENT, MINNEAPOLIS DEPARTMENT OF COMMUNITY PLANNING AND 
                      ECONOMIC DEVELOPMENT

    Mr. Streitz. Madam Chairwoman, Representative Ellison, 
Representative McCollum, thank you, first of all, so much, and 
welcome to the great City of Minneapolis. I just want to take a 
moment to say thank you for your efforts. I am the former 
deputy executive director of the Minneapolis Public Housing 
Authority. I spent 7 years working in public housing with this 
great agency here and Executive Director Cora McCorvey, and I'm 
well aware of your long record to support the public housing 
residents, and the work that you all do, I really, really 
appreciate, so I wanted to say that right out of the gate, so 
thank you.
    I would like to express my appreciation on behalf of the 
mayor and the council members of the City of Minneapolis and 
our partners for this opportunity to share our viewpoint and 
recommendations on the successful implementation of the 
Neighborhood Stabilization Program. I would also like to thank 
the Subcommittee on Housing and Community Opportunity for 
bringing NSP implementation issues forward.
    Finally, I would also like to thank the United States 
Department of Housing and Urban Development, not only for 
awarding funds to Minneapolis, but for the changes they have 
made in developing a Neighborhood Stabilization Program in 
response to our program suggestions to improve the feasibility 
of carrying out the program in our local housing markets.
    The NSP resources that you have provided have proven 
critical to addressing the foreclosure crisis in our 
neighborhoods. However, the current allocation is only a first 
step when looking at the challenges faced by our communities 
most highly impacted by foreclosures. The stability of these 
Minneapolis neighborhoods is significantly and uniquely 
impacted by the high percentage of decline in property values, 
the level of fraudulent mortgage activity, and the 
disproportionate effect of foreclosures on people of color.
    One notable manifestation of the high level of fraudulent 
activity in Minneapolis was the investment company known as TJ 
Waconia which purchased and flipped more than 150 homes in 
North Minneapolis. The City, with the assistance of the County, 
was successful in prosecuting the principals who are now in 
Federal prison. The homes that were--thank you. It's a huge 
victory. The homes that were a part of this scam have now been 
recovered and are being rehabilitated and sold to homeowners. 
It should be noted that low-income neighborhoods in our 
community have also lost hundreds of millions of dollars of 
equity, stripped from the neighborhoods.
    Residential mortgage foreclosures continued to rise in 
Minneapolis until 2009, when we have detected a slight downturn 
in foreclosures. The decreases are partially due to lenders' 
voluntary moratorium on foreclosures and the increase in 
foreclosure prevention loan modifications or short sales.
    In 2006, 1,610 homes in Minneapolis went to foreclosure 
sale, over half of them in North Minneapolis. In 2007, 2,895 
homes went through foreclosure sale, 54.7 percent of these were 
in northside wards of the City. In 2008, there were 3,000 
foreclosures. Foreclosures, as I mentioned, decreased slightly 
in 2009, with 1,896 through the end of October. Many of these 
foreclosures are investor-owned properties that we have heard 
about from various panel members. Minneapolis neighborhoods 
hardest hit by foreclosure are in South Central, Northeast, and 
North Minneapolis, as discussed.
    My testimony now will address the following specific issues 
or questions raised by the committee. The first question asked 
how the NSP program in Minneapolis is tailored to address the 
foreclosure crisis in the City. Well, Minneapolis, as mentioned 
earlier, has some unique strategies that we have put in place, 
and they are focused on: number one, prevention; number two, 
reinvestment, purchasing and rehabilitating homes; and number 
three, repositioning these neighborhoods for market recovery.
    Minneapolis received $14 million in NSP 1 resources and has 
dedicated an additional $3 million in non-Federal funding to 
the Minneapolis Advantage Program to assist low-income 
households with downpayment and closing cost assistance in the 
purchase of foreclosed properties. Minneapolis, through a 
consortium agreement with Hennepin County and the City of 
Brooklyn Park, was awarded $19.5 million in NSP 2 resources to 
be allocated to eligible activities.
    With the additional funding, the City of Minneapolis and 
our community partners, many of whom are here, will be poised 
and able to purchase and rehab and get back in the hands of 
homeowners over 700 homes in our hardest-hit neighborhoods.
    The City is putting NSP 1 dollars to work. Over 43 percent 
of the funds that we received in the first round have been 
obligated. We have nine nonprofit developers that are in the 
neighborhoods buying homes for closing them, and people are 
moving into the homes, so I want you to know that we're acting 
responsibly, we're investing quickly, and the money's being 
obligated.
    In response to question two, Minneapolis has located and 
been able to purchase REO properties, real estate-owned 
properties--I didn't know that word 2 years ago, REO, but I 
have learned it now--and ensured the participation of banks and 
other owners of REOs.
    As was mentioned earlier, Minneapolis uses two novel 
concepts in its efforts to purchase REO properties. As has been 
discussed here today, the major issue confronting many of our 
neighborhoods are investors coming in from outside of the 
community with no connections to the community, and we're in a 
race against cash investors in our City.
    And one of the unique things that we have been able to do, 
working through the First Look Program, part of the National 
Community Stabilization Trust, we formed something called the 
Twin Cities Community Land Bank. The First Look Program, in 
combination with the Land Bank, has been central in our efforts 
to get our properties out of the hands of banks and back into 
the hands of homeowners. The Twin Cities Community Land Bank is 
a public-private venture with a focus on community re-building 
efforts. The First Look Program is coordinating the transfer of 
REO properties from financial institutions nationwide to local 
housing organizations in collaboration with State and local 
governments. A key component of recovery efforts is to gain 
control of properties and then manage the disposition and 
redevelopment of those properties at a scale large enough to 
build confidence and stimulate investment.
    Finally, the third question asked of me was, what 
challenges are we facing when dealing with NSP 1 and NSP 2? As 
mentioned earlier, I think there are three areas that we really 
need to focus on in our future efforts. Number one is, again, a 
recognition of the fact that we're in competition with 
investors. As the commissioner pointed out, there are 
regulations in the NSP program that are very burdensome, and 
when we're competing against cash investors, we have willing 
buyers who are told to wait 30 days, we have other 
requirements, such as the environmental, etc., that are simply 
making our efforts to purchase these homes extremely 
challenging. I encourage HUD to look at these regulations and 
work with communities to make changes.
    Finally, I would like to advocate that the definition of 
eligible properties under NSP 2 be redefined to include short 
sales. That is the new--the new foreclosure is a short sale. So 
we have a one-month inventory of foreclosure properties in the 
City of Minneapolis, Twin Cities area today, and we have a 12-
month inventory of short sales. Cities, communities, our 
partners who are trying to purchase these homes are stymied 
every step of the way by incoherent recordkeeping at multiple 
banks, and servicers fighting, and the homes remaining vacant 
and a nuisance to the adjoining neighbors.
    In addition, we recommend some changes to address limited 
funding. I hope NSP 3 will come forward, and I would encourage 
whatever future efforts we have, that they be more focused on 
being upstream. As has been mentioned here today, we have 
larger issues, and if we can keep families in homes, mortgage 
foreclosure prevention counseling is key, emergency crisis 
repair funds to help low-income seniors and other low-income 
people who are choosing between paying mortgages and their roof 
or a boiler, employment services to increase household income, 
and foreclosure-related assistance to stabilize renters in 
particular who have been very hard hit.
    Finally, I commend the subcommittee today for focusing on 
the impact of foreclosures on low-income renters. In 
Minneapolis last year, over 50 percent of all foreclosures were 
rental properties, many of the tenants affected paying their 
rent and given no notice of the default of the landlord, and 
many ended up homeless, as described earlier. Finally, I want 
to thank you again for this opportunity, and I look forward to 
working with you and stand ready to answer any questions you 
may have.
    [The prepared statement of Mr. Streitz can be found on page 
137 of the appendix.]
     Chairwoman Waters. Thank you very, very much. I would like 
to thank you all for appearing before the subcommittee today, 
and without objection, your written statements will be made a 
part of the record.
    I would now like to begin our question period. Let me--
there's so many things that I would like to discuss, but let me 
just kind of gear in on these foreclosed properties, these 
REOs. And since we have HUD here today, I want to talk about 
FHA a bit. Before I say that--are you getting ready to leave?
    Ms. McCollum. I'm going to have to leave in a few minutes.
    Chairwoman Waters. Well, I have to yield my time to you to 
raise your questions first before you leave. But let me just 
say that we are so pleased about HUD. Secretary Donovan is like 
a breath of fresh air. We have gone through a period of time 
where we had a Secretary who did not care very much or know 
very much--that's a bad combination. And so Secretary Donovan 
is working very closely with us, and I'm very pleased, and I 
just want to say that. I'm going to yield the first 5 minutes 
to Ms. McCollum to raise her questions. I know she must depart 
very soon.
    Ms. McCollum. Madam Chairwoman, that's very generous of 
you, and I thank you and Congressman Ellison. I'm going to go 
back and ask a question on something that I mentioned when we 
were talking together earlier, and that was short sales. And 
thank you so much for bringing that up. I have been working 
with Realtors who have been trying to do short sales and 
paperwork, they think they have it done, time on hold, and 
they're up against a crunch.
    One of our financial institutions here is actually sitting 
down and working--I had people get together in the room to try 
to address it, because the financial institution, quite 
frankly, it wasn't getting up the food chain, for them to know 
that there was a problem. And so they're also working to 
address it. Because this is kind of new for them, too, to be 
involved in this. So if I could just maybe--the only question I 
would have is, to educate us a little more about your 
experience with short sales and what we can do. Some of it's 
not governmentally, some of it's going to be leadership, in 
getting people at the table to talk. Would you just give us 
your background on short sales and what you think we can do or 
should do?
    Mr. Streitz. Madam Chairwoman, Representative McCollum, 
thank you for that question. Absolutely, short sales are what I 
call the new foreclosure. And as I mentioned earlier, we have a 
one-month inventory of foreclosures, 12 months of short sales.
    I can give you one example. A home became vacant in North 
Minneapolis and was caught in the short sale process, and it 
took 22 months, working with 7 different servicers, banks, to 
determine even who owned the property, because of confusion 
with paperwork, etc. Now that may be an extreme example, but I 
also talk to Realtors, and we meet on a monthly basis with 
local Realtors, who encounter significant issues of getting the 
banks to respond. Now there are multiple reasons for that, I 
believe, and the one is, of course, we have many, many banks, 
particularly locally, that act as servicers. Wells Fargo, U.S. 
Bank, Bank of America, are some of the biggest servicers of 
mortgages. However, as you know, because of the investor-
related sale of these mortgages, often determining who the 
investor buyers are and getting their consent to the short sale 
is extremely problematic.
    I would like to suggest that we engage in what I like to 
call--we introduced the First Look Program to foreclosures. I 
think we need something that I'm terming the ``Last Look 
Program'' for short sales, and that is to incentify, as the 
banks and servicers, like we did with HAMP and our First Look 
efforts, to sit down with communities and Members of Congress 
and others, to have an expedited short sale process. I 
understand that the Obama Administration has proposed something 
like that, and maybe one of our other panelists from the 
Department of Housing and Urban Development can talk about it, 
but I think we do need to sit down with lender partners, we 
need to pilot a new program that would allow us an expedited 
access to these properties.
    As you know, Congresswoman, the properties sitting vacant 
attracts crime, it declines further the property values 
surrounding the properties. So getting banks and servicers to 
sit down together and, frankly, figure this out, is something 
that I think we're going to have to encourage very strongly, 
from Congress, from our regulatory agencies. Otherwise, our 
communities are going to continue to have negatives impacts of 
foreclosed and, well, frankly, vacant homes.
    Ms. McCollum. Maybe that's something Congressman--while we 
work congressionally, Congressman Ellison and I can do. Because 
I do know two of the financial leaders that you mentioned here, 
both Wells Fargo and U.S. Bank, want to turn this tide around. 
They have been very receptive. We have been very fortunate with 
the leadership here with both of those banks. When we sit down 
and talk to them about something, they're very open to address 
it. And I see you're nodding your head as well. Maybe sit down 
with Realtors and some of their folks to look at it. And, 
Keith, we could do that together while we work on a 
congressional solution, because many people--I don't think the 
right people necessarily were aware of what the problem was, 
with even faxes just sitting because there was so much stuff 
going on. A dedicated fax machine for short sales might even be 
a solution in some areas. So thank you, Madam Chairwoman.
    Chairwoman Waters. Thank you very much. I would like to 
address my question to Ms. Erika Poethig. Pronounce your name 
for me also.
    Ms. Poethig. ``Poethig.'' You said it wonderfully.
    Chairwoman Waters. Oh, thank you, I got that one right. I'm 
concerned about the FHA foreclosed properties, the REOs, and 
not just as relates to FHA, but for the other banks and 
mortgage companies also. I'm hearing a lot about what is 
happening and what is not happening with these properties. 
First of all, before I came here, I heard in Los Angeles about 
the speculators and the investors who have an edge up, who have 
the possibility of getting access to these properties in ways 
that compete with legitimate would-be home buyers, often who 
are bidding on these properties. And they are not just underbid 
by the investors, sometimes these properties are going for less 
than they could be sold for because there's some kind of 
special relationship between something called the Association 
of REO Brokers, who have an organization where they get access 
to these properties, and not everybody can even join the 
association. They have cut out people from being able to join 
the association by saying they're limited to only a certain 
number, which I think may be questionable. It may be something 
that needs to be looked into.
    But with the FHA properties, how are they being disposed 
of? Do we have the same kind of problems of speculators being 
able to have access to these properties over others and would-
be buyers, etc., etc.?
    How are the listings done? That's another problem that I'm 
told by some of the Realtors in the communities that have been 
targeted by these institutions that have caused the 
foreclosures to begin with. But many of the local Realtors who 
work in these communities don't have access to the listings, 
because the Association of Real Estate Brokers seem to have the 
first possibility for this. What is going on with this? Are we 
entering into another problem with these foreclosed properties 
by the same people who created the problem to begin with? What 
is happening here?
    Ms. Poethig. You raised so many important questions, Madam 
Chairwoman, so let me take the--I think the first one, which is 
this more global issue of the relationship between HUD homes or 
FHA foreclosed properties and the NSP program, and tell you 
what we're doing in relationship to NSP 2. Our office of FHA is 
mapping our foreclosed properties on to the target areas for 
the NSP 2 program, to facilitate and help communities target 
those homes as part of the Neighborhood Stabilization Program. 
So that's one step we're trying to take to improve the 
coordination, to ensure that those homes get into the hands of 
low- and moderate-income buyers.
    The other thing that I want to say, addressing your 
question, is that the HUD homes program and the foreclosed 
program features a priority period for most sales, where the 
sales have to go--be available only to purchasers who will 
occupy the home as their primary residence, or to nonprofits, 
or the local jurisdiction, who will probably turnkey to an 
eligible borrower. So we are trying to--
    Chairwoman Waters. Does this include the housing 
authorities also? Because they're selling to the Section 8s; 
right?
    Mr. Streitz. That's right.
    Ms. Poethig. To local government? I am not the expert on 
this. We can get back to you in public record to clarify that 
point. Establishing this preference, though, is one way we're 
trying to mitigate this issue related to speculation.
    The other question you raised--and I actually looked into 
how many foreclosed homes there are in Minneapolis. So there 
are 40 HUD homes in Minneapolis, 20 are actually under contract 
to sell right now, and our Office of Single Family Asset 
Management is really working with a contractor to improve, to 
your issue the way listings are done. But I can provide in the 
public record a more detailed description for you about the 
more national sort of issues and particularly those in your 
district.
    Chairwoman Waters. Let's just talk about here in 
Minneapolis. Of those 40 homes, who controls the listings on 
those?
    Ms. Poethig. We have a contractor who is responsible for 
the sale of those homes.
    Chairwoman Waters. Who is the contractor?
    Ms. Poethig. I'm sorry, Madam Chairwoman, I don't know the 
name of the contractor.
    Chairwoman Waters. Probably some of the real estate people 
know who it is.
    Ms. Poethig. I'm sure, yes.
    Audience. Best Assets.
    Ms. Poethig. Best Assets.
    Chairwoman Waters. Okay, all right. And what is the 
contractor's responsibility?
    Ms. Poethig. To manage the REO process, to, on behalf of 
HUD, put forth those properties for sale.
    Chairwoman Waters. So they actually do the upkeep on those 
properties also?
    Ms. Poethig. (nods affirmatively)
    Chairwoman Waters. And they're also involved in the sale of 
those properties to individuals who want to buy them or to 
speculators or investors also?
    Ms. Poethig. Well, we have a priority period, and that 
priority period is intended to, of course, guard against 
speculation. However, after that priority period, those 
properties are available for sale. Because we have to--of 
course, FHA, as an insurance program, has to try to recover any 
losses. But we are trying to protect against speculation.
    Chairwoman Waters. Do you feel that your contractor here in 
the Minneapolis area is carrying out the program in ways that 
would be consistent with your rules, your laws, about how to do 
this?
    Ms. Poethig. Madam Chairwoman, I am not the expert on this 
issue, but our Office of Single Family Asset Management can 
certainly provide something for the record that speaks to the 
contractor's capabilities.
    Chairwoman Waters. Is the contractor doing a good job here, 
audience?
    Audience. No.
    Chairwoman Waters. Okay, thank you so very much.
    Ms. Poethig. You're welcome.
    Chairwoman Waters. Congressman Ellison, please, for as much 
time as you would like.
    Mr. Ellison. Madam Chairwoman, I love the way you run a 
meeting, because we get real participation. I'm a little bit 
embarrassed to ask this question, but I have no pride, so let 
me just put it out there. How do you think we might improve NSP 
legislation? What are the barriers to participation for city-
owned or State-owned entities that might help us acquire 
properties that we can then turn around and try to sell? I have 
been picking up earlier, before today, and also today, that 
there are certain institutional advantages certain cash 
investors have over public entities. What are those? And are 
these advantages in the Federal legislation, are they in local 
implementation, are they--is it statutory, is it regulatory? 
Who feels that they could sort of hit that pretty hard?
    Ms. Dorfman. Congressman Ellison, I can start. I think 
they're in the NSP rules. In order to acquire property in the 
suburbs, we have to do an environmental assessment, you have to 
give a 1 percent discount on the price, you have to do an 
inspection, and there are probably other regulations. And while 
we're going through that process, the house disappears right 
under us, to somebody who can just put down the cash, doesn't 
have to do any of that sort of regulatory work and can walk 
right in and take it. And that's happening to us in the suburbs 
and hard-hit cities like Brooklyn Center, Brooklyn Park, 
Richfield, over and over again, which is slowing down our 
ability to really use NSP dollars.
    Mr. Ellison. Commissioner, to your knowledge, is this 
something that the Feds sent down to you? Is it in the statute? 
Is it in how HUD has promulgated rules?
    Mr. Bartholomay. It's embedded in the statutes, I believe, 
that govern the process overall that are applied to NSP. So 
some of these regulations existed pre-NSP, but then NSP has to 
comply with them. And that's why in my testimony I talked about 
waivers, short-term waivers for NSP programs. There is more 
detail in my testimony on that, but that's--the nub of the 
issue is that potential buyers cannot sign a purchase agreement 
or make an offer without first having an appraisal and also 
going through these hoops, if you want to call them, the 
environmental assessment. And so what happens is that a private 
investor is able to sign a purchase agreement, go get an 
appraisal and then do their work, and our partners have to do 
all the work before they can make an offer. And that 
essentially makes it really difficult for them to compete with 
the private sector.
    Mr. Ellison. In your testimony, which I did read last night 
but apparently not thoroughly enough, do you lay out how we can 
put the NSP buyer on equal footing with the private cash 
investor?
    Mr. Bartholomay. Not in detail, but we could certainly put 
something together that would allow us to lay that out in a 
much more thorough and detailed way.
    Mr. Ellison. If we were to be able to put folks on equal 
footing--NSP buyers on equal footing with the private--and it's 
the cash investor, it's the person who doesn't need to worry 
about a bank loan; am I right about that?
    Mr. Bartholomay. I think it's the cash investor, but it may 
actually relate to other investors as well who would get a 
loan; right? Maybe you know more about that detail, but--
    Mr. Ellison. Let me ask this one question. This is a 
congressional hearing. If we could get the NSP buyer on equal 
footing, what kind of a difference would that make?
    Mr. Bartholomay. I would say it would make a huge 
difference on a couple of fronts. One is, they would be able to 
buy properties that were in better condition, so they wouldn't 
have to buy the worst of the worst. They are going to get the 
better properties. And the money and the properties are going 
to move faster.
    Mr. Ellison. Okay. Mr. Streitz, do you want to elaborate on 
that?
    Mr. Streitz. Yes. Congressman Ellison, I think this is 
exactly getting to the issue that's very much a phenomenon in 
the City of Minneapolis and Los Angeles as well, and that is 
the cash investor. I can give you numerous examples, and I'll 
submit additional testimony with the examples, if you would 
like, where we have had a buyer who wants to invest in the 
neighborhood, live in the home, and we were told by the selling 
agent, no, we're not going to accept your offer because we have 
a cash investor, you don't have to go through the 
environmental, we don't want to wait for the FHA approval of 
the loan, which was a big, big issue, so you wait 30 days, and 
the people say, I'm going to take the cash. And that happens 
repeatedly.
    I think the default under the statute, Congressman, is that 
it adheres to CDBG regulations. And so--and I see our HUD 
representative here shaking her head. CDBG are the default 
regulations under the NSP program, and therein lies the 
problem, of the environmental and--I see Alfred shaking your 
head. Thank you, Alfred, because if I'm getting this wrong, 
tell me. He's our guy on the ground. But those are the main 
issues we're facing. And when you're in a climate where every 
house is being bid on, and you have a buyer--once again, I'll 
submit additional testimony--who is looking to invest in the 
neighborhood, live there with their children, be a neighbor, 
and they have multiple hoops to jump through, the 
environmental, the historic preservation, the waiting period 
for FHA, and then you have a guy standing there from outside 
the community, typically a lot of them are working with REO 
agents who have hundreds of listings, and they come and they 
offer cash, and the seller takes the cash.
    Mr. Ellison. Can you all help get us a little bit more up 
to speed on the problem here? It seems to me that we could--if 
it's a Federal statutory issue, we might be able to really 
weigh in on that front. Would you all mind putting some things 
together?
    Mr. Streitz. We would be happy to.
    Mr. Ellison. That's a good one. The other thing is--
    Mr. Streitz. And, Congressman, could I just make one more 
point on that?
    Mr. Ellison. Sure.
    Mr. Streitz. And then the result is, when there's a cash 
investor--not all investors are bad, but most of them are from 
outside the community, they don't live here, and the difference 
is this: The home becomes, in many cases, very minorly 
repaired. I call it the caulk-and-paint job, unlike NSP. In 
NSP, our developers, our nonprofits and for-profits, we require 
them to meet green community standards.
    So here's the difference. A family walks into a home with a 
new roof, new windows, essentially a new boiler. They're going 
to save thousands of dollars in utilities. They have gone 
through foreclosure prevention counseling. They're working with 
a counselor actively. So we're creating sustainable 
homeownership. Compare that with the outside investor who buys 
a home in cash, does the paint-and-caulk job, moves a family 
in, often without adequate ventilation or heating, and mold in 
the basement, we see that repeatedly, and then when things go 
wrong, you call them, and that person lives in Florida or North 
Dakota or South Dakota. We have people in North Minneapolis 
sending rent to Puerto Rico, for example. So when problems 
occur with the property, and the neighbors try to contact 
someone, there's no one to be contacted, because they have no 
connection to the community.
    Thank you for indulging me. I just wanted to share the 
difference and what happens to the community in one 
circumstance versus the other.
    Mr. Ellison. And my thought is, all these things that NSP 
regulations seem to require are good. Of course, we want some 
kind of environmental assessment; of course, we want to make 
sure these things are done. But if these requirements are 
essentially disadvantaging that NSP buyer, then what we're 
doing is we're defeating our own purpose. We're like the dog 
chasing his own tail. And I think we have to find a way to 
preserve those considerations without--but still be able to 
operate with the kind of speed that we need and get through 
that red tape. So that would be a great thing, if we can work 
on that, and I appreciate any input you have, and so, good. I 
knew something good was going to come out of this hearing.
    Ms. Dorfman. And, Congressman, those dollars have to be 
committed by September of this year, and that causes a crunch.
    Mr. Ellison. Right. Well, I was going to go to you next, 
Commissioner. Commissioner, you're actually the next on my list 
of questions. Because if we're having trouble meeting our 
September deadline, September 30th, can you tell me, are you 
getting the kind of technical assistance from HUD that you 
think that you need? And what more can be done in Hennepin 
County?
    Ms. Dorfman. Congressman, thank you, that's not the 
problem. The problem is, we're having trouble acquiring homes. 
We're doing a really good job of identifying families who are 
ready to move into homes, and giving them the downpayment 
assistance through NSP. We have done over 100 already that 
we're processing. But the actual acquisition and rehab, that's 
where we're slowing down. It's just tougher to get those 
properties. And so we'll have to turn back any money that we 
don't spend, if it's not committed.
    Mr. Ellison. Can you guys talk about what we're going to do 
to make sure we don't have to turn back money?
    Ms. Dorfman. Well, we are scrambling.
    Mr. Ellison. Right. But what can we do, perhaps, to help 
you? Extend it? Extend the deadline?
    Ms. Dorfman. Extending the deadline would help. It's 
tougher in the suburbs. The average acquisition price is 
considerably higher than in North Minneapolis or in the City. 
It makes it tougher.
    Mr. Ellison. Okay. All right, good. If there's anything 
else you think of--extending's a good one. Anything else, Tom, 
you want to--
    Mr. Streitz. Congressman, can I mention one other thing, 
since I see you making a list over there? I appreciate that. 
The discount requirement is a very large impediment. When you 
have cash investors who are willing to pay more than the 
discounted price, the seller's not going to sell to you. And so 
that is a major issue for us as well. So if we--since we're 
taking notes here, I would be hopeful that we could address 
that issue as well, the discount requirement. Because we're 
simply not seeing discounts in an environment where you have 
multiple investors and purchasers willing to buy the home.
    Mr. Ellison. All right, good. Another question for the 
Commissioner of our State Housing Finance Agency. The housing 
finance system is something that the Financial Services 
Committee has identified as a priority in this upcoming year. 
Can you expand on what types of policy changes would be most 
beneficial to Minnesota with regard to housing finance?
    Mr. Bartholomay. Well, there has been a lot of work done 
this last year, year-and-a-half, to put some pieces in place 
that made a big difference for us and agencies like ours to be 
able to finance affordable housing in this market. Ultimately, 
the market is going to have to change, for things to progress. 
But we do think some of the recommendations or things that I 
was urging you to consider, extending the Tax Credit Exchange 
program, will--provided the economy continues to be like it is, 
and it doesn't seem like it's moving as fast, the recovery, as 
anybody would hope, that's going to be very important.
    I could certainly follow up with additional information for 
you on that too. My policy director is an expert in that area, 
and I could have her put together a list. We did submit a list 
to HUD of some ideas. I'm not sure that we shared that with 
you, but we could certainly do that.
    Mr. Ellison. We would appreciate that, thank you. 
Representative Davnie, I was interested to hear about your 
bill. As you know, you and I have talked about it before, and I 
thought it was a great bill, and I mean now the Minnesota 
Subprime Borrower Relief Act, which would have required lenders 
to make a good-faith effort to restructure mortgages before 
foreclosure.
    I'm working on a similar bill, H.R. 3451, which I 
introduced last year, which would require the lender, upon 
default of a federally-related mortgage loan, to engage in loss 
mitigation activities that provide for: one, long-term 
affordability of the loan; and two, maximum retention of home 
equity. The bill I have in mind, I hope to move forward in the 
coming year. Could you tell me, from your perspective, what's 
needed to move forward on mortgage servicer reform?
    Mr. Davnie. Madam Chairwoman, Representative Ellison, thank 
you for the opportunity. I think you know, through your 
conversations in the community, Congressman, the frustration 
experienced by many homeowners who are in trouble and 
foreclosure prevention counselors in engaging the financial 
institutions who hold the loans on modifying those loans. In my 
real life, I work for one of the major social service agencies 
in the State, and have frequent contact with some of the 
housing counselors there, and repeatedly get stories of the 
difficulty, first, of identifying, as has been identified here, 
who is the lender? They may be able to identify who the 
servicer is, but who is the lender? And then the issue we come 
to of the secondary market and the securitization of mortgage 
loans making identifying who gets to make the decision on 
modifying the loan more and more difficult.
    Any efforts that could be done to simply bring the 
transparency that's needed to the process, from the Federal 
level, would be a great help, I think, to those both as 
borrowers and to the folks who are trying to assist them in 
that.
    The work that you have done on looking to create a Federal 
system of consumer protection, I think, where we can get on the 
front end of assisting homeowners, as I spoke to in my earlier 
testimony, so that when they make the commitment to 
homeownership, they are assured that the product that they're 
using to get there for them and their family and their 
community is a stable product that will allow them to continue 
in homeownership, is critical as well.
    Mr. Ellison. And this question is both for you and Senator 
Higgins. I know that you all were working on mandatory 
mediation programs in the last session, which I was really 
excited about. But we're not the only State looking at a 
mandatory mediation program. I think in Pennsylvania, 
Connecticut, and Florida, they were looking at these programs. 
Can either one of you talk about the mediation bill that you 
all worked on? And please explain why, if you can, the governor 
vetoed the bill--Governor Pawlenty vetoed the bill.
    Ms. Higgins. Madam Chairwoman, Representative Ellison, I 
can't say it kindly, so I won't say it at all. I'm probably--
were you the author of that bill?
    Mr. Davnie. No, Representative Hillstrom.
    Ms. Higgins. Oh, okay. So you have two people here who were 
not authors of the mediation bill, so we probably don't have 
the detail that we should have. But it would have set out a 
process where there would have been a 6-month, 7-month period 
where mediation would have been required. It was a serious and 
honest attempt to get the lender to the table, which is 
something that we heard and continue to hear from one and all, 
that is the piece that we just can't get compliance on, is 
getting the lender to the table to have an honest discussion on 
how a mortgage can be restructured, how both parties can win in 
going forward.
    Mr. Ellison. I'm all done with my questions, Madam 
Chairwoman, so I yield back.
    Chairwoman Waters. Thank you very much. I'm very 
appreciative for the presentations that have been made by this 
panel, and the Chair notes that some members may have 
additional questions for this panel, which they may wish to 
submit in writing. Without objection, the hearing record will 
remain open for 30 days for members to submit written questions 
to these witnesses and to place their responses in the record. 
Thank you very much, panel, for your very informative 
presentation. The panel is now dismissed.
    Ladies and gentlemen, I'm pleased to welcome our 
distinguished second panel. We're going to move forward with 
our second panel. Please take your seats. We have a lot of good 
information for you.
    Our first witness will be Ms. Cora McCorvey, executive 
director, Minneapolis Public Housing Authority.
    Our second witness will be Mr. Chip Halbach, executive 
director, Minneapolis Housing Partnership.
    Our third witness will be Mr. Michael Dahl, public policy 
director, HOME Line.
    Our fourth witness will be Mr. Mark Ireland, staff 
attorney, Housing Preservation Project.
    Our fifth witness will be Mr. Richard Amos, director of 
housing services, St. Stephen's Human Services.
    Our sixth witness will be Mr. Marion Anderson, constituent, 
and renter displaced by the foreclosure crisis.
    And our seventh witness will be Ms. Christina Louden, 
constituent, and Section 8 voucher resident.
    Without objection, your written statements will be made a 
part of the record, and each of you will now be recognized for 
a 5-minute summary of your testimony. We will begin with our 
first witness.

    STATEMENT OF CORA A. McCORVEY, EXECUTIVE DIRECTOR/CHIEF 
    EXECUTIVE OFFICER, MINNEAPOLIS PUBLIC HOUSING AUTHORITY

    Ms. McCorvey. Chairwoman Waters, Representative Ellison, I 
am Cora McCorvey, the executive director of the largest Public 
Housing Authority in the State of Minnesota, with over 6,000 
units of public housing and 5,000 housing choice vouchers. I am 
honored to be here on behalf of the Minneapolis Board of 
Commissioners, our staff, and over 21,000 residents and housing 
choice voucher participants.
    I welcome you, Madam Chairwoman, to Minneapolis. I am 
personally delighted you have decided to visit our great City 
today, as you are one of my role models. I proudly watched you 
on television over the years, regimenting comments in the 
newspapers, and know you have spent over 30 years of your life 
being a fierce and tenacious advocate for women, children, 
people of color, and for the most vulnerable among us. I 
applaud you, Chairwoman Waters, along with thanking you for 
your leadership, courage, and service to humanity.
    Chairwoman Waters. Thank you, thank you, thank you.
    Ms. McCorvey. Representative Ellison, I have worked with 
you on many important issues during your career, and I am 
grateful for your steadfast support of affordable housing 
programs. I want to talk a little bit this afternoon about some 
of the need. The Public Housing Authority is a bastion of safe, 
decent and affordable housing for our community. This resource, 
while critical, is woefully inadequate, when measured against 
the need that we see. A family waiting list has been closed 
since 2007, and we have almost 3,000 people on that waiting 
list now, as I speak. And Chairwoman Waters mentioned that 
there are 12,000 people on the Section 8 waiting list. There 
were 15,000 who actually asked for applications, and, yes, 
there are 12,000 who are on the waiting list today.
    At our central office headquarters, we have a resource room 
where people can come in off the street or just call and 
request information. We have 900 contacts each and every month. 
That's nearly 12,000 people, desperate people, in need of 
housing who contact us that we can't serve.
    The Public Housing Authority turns away literally thousands 
of people each year because there are no vacancies in our 
operations, either our public housing programs or our Section 8 
programs. Those programs were often a step up and out of 
homelessness and out of transitional housing. We literally have 
no room. Families are forced to choose between food and 
shelter, shelter and medicine, medicine and school needs for 
their children. Wilder Research estimates that on any given 
night in the metropolitan area, there are 4,700 people who are 
homeless. And of those 4,700, 45 percent of those are children.
    The Public Housing Authority is working hard and is 
committed to respond to these needs as best that we can. We 
have established seven assisted living and housing with 
services and programs for our elderly. These supports help our 
seniors to live more independently and remain in their homes 
longer. We have worked with our partners in the community to 
develop two women's shelters, a youth shelter, a transitional 
housing program for chemically dependent women that is funded 
through a program called Publically Owned and Transitional 
Housing (POTH). This is funded by the State of Minnesota.
    We have two self-sufficiency programs, one through our 
public housing programs and one through our Section 8 program. 
We have pursued very aggressively and won nearly $32 million of 
ARRA funds, that's American Recovery and Reinvestment Act 
funds. With these funds, we are developing a senior center on 
the north side of Minneapolis in our Heritage Park development 
and a 48-unit memory care development. We believe this is the 
first in the country where public--it's a public housing 
development we're envisioning we will develop, providing 
comprehensive support for vulnerable elderly who have 
Alzheimer's or suffer from forms of dementia.
    We're investing $12 million in significant injury 
improvements in our over 700 scattered site family units. We 
have obligated 96 percent of the $18.2 million of capital ARRA 
funds that we received last year. With those funds, we believe 
that we will be creating nearly 300 jobs in our community.
    We have entered into a second energy performance contract, 
this is with a new provider, Honeywell International, which is 
going to upgrade our energy infrastructure. And we have 
structured this deal so that Honeywell guarantees a savings 
that will be enough to pay for the cost of the improvements 
that are going to be made in our facilities.
    We are responding in small but we think very important ways 
to the foreclosure crisis. We have created a Section 8 
foreclosure prevention demonstration program, and it's called 
Saving Homes, for families in North Minneapolis who are under 
threat of foreclosure. The same prevention strategy is 
available to the 185 families who have previously purchased 
homes through the Public Housing Authority's homeownership 
programs.
    We have partnered with the City of Minneapolis and a 
nonprofit agency to project base some of our Section 8 vouchers 
in foreclosed properties. These properties are being purchased 
and they're going to be rehabbed and made affordable for low-
income families.
    We have used ARRA dollars to purchase 20 foreclosed 
townhomes in North Minneapolis, and those townhomes will be 
created for a rent-to-own program for low-income families.
    The Public Housing Authority has many strategies to respond 
to these needs, but we don't have the resources to do so. Madam 
Chairwoman, thank you so much for the opportunity.
    [The prepared statement of Ms. McCorvey can be found on 
page 115 of the appendix.]
    Chairwoman Waters. Thank you so much. Our second witness 
will be Mr. Chip Halbach.

   STATEMENT OF CHIP HALBACH, EXECUTIVE DIRECTOR, MINNESOTA 
                      HOUSING PARTNERSHIP

    Mr. Halbach. Thank you, Chairwoman Waters, and 
Representative Ellison. Thank you both for the emphasis of 
today's hearing on rental housing. As was said by the HUD 
speaker, there is a need for more balanced housing policy in 
this country. I'm going to speak about the urgency for 
providing affordable rental housing for the lowest-income 
residents, and I'm going to put it in the context of the 
economic problems this country is facing. Certainly, there has 
been a recent substantial downturn in the economy, but for many 
low-income households, this economic challenge has been around 
for at least 30 years.
    So with Minnesota, we have now 7.4 percent unemployment. 
And an equal number of households, percentagewise, are also 
underemployed and have faced job losses or partial job losses. 
That's over 200,000 people in this State. And that economic 
challenge facing the State has manifested across the housing 
continuum.
    For instance, for the homeownership we have seen over the 
last 2 years--or since 2005, that is, a default rate, people 
60-plus days in default, that has gone from under 2 percent to 
just about 8 percent; 8 percent of people with mortgages in 
this State now are 60 days behind in their mortgage payment. 
And while there have been reforms that have been discussed 
earlier, that trend is continuing upward.
    With rental housing, we have, of course, the cost burden 
placed on many low-income families. But one of the things that 
we have been able to observe, in partnership with nonprofit 
developers across the State, is that many of the households 
that are in affordable housing now are falling behind. In fact, 
it's about 23 percent of the residents of the 3 largest 
nonprofit affordable housing developers in the State are now at 
least 1 month behind in their rent payment. We have an economic 
situation where our policies and programs have helped a lot, 
but they're still not reaching people, particularly as the job 
losses continue.
    And, of course, there's homelessness, which is the trend, 
which is the ultimate of people not being able to afford 
housing. Looking at family homelessness in Hennepin County, 
where we have the best records, over the last 3 years, there 
has been a 70 percent increase in family homelessness here in 
Hennepin County.
    Focusing more on renters, what we have here is that about 1 
in 5 renter households across the State are paying more than 50 
percent of their income for housing. And that is particularly 
burdensome on those who are called extremely low-income, those 
with incomes at 30 percent of median and below. That is about 
$21,000 or less in annual income for a family of four. In the 
State, we have 85,000 households who are in that situation, who 
earn $21,000 or less and are paying over half of their income 
for housing. That's a number that continues to increase. And as 
I said before, this is a long-term trend.
    Since 1980, rents across the State have increased by 19 
percent, while at the same time, renter incomes have declined 
10 percent. We need help for people now in being able to afford 
rental housing, but also we need to be able to prepare for our 
expanding population, and more low-income people, we expect, 
will be residing in Minnesota. For instance, the Metropolitan 
Council projected, for this decade we're just beginning, we 
need about 5,100 affordable housing units per year added to the 
stock, whereas our current ability to provide affordable 
housing is about 1,000 units per year.
    Where do we go from here? Well, of course, our primary need 
is to be able to transcend that gap between what it costs to 
create and maintain housing, and what people can afford.
    NSP, which has been talked about here, is a great program 
and extremely important. However, it is not a good program for 
helping people at the bottom end of the income spectrum.
    There are four areas where we need help. I'll just list 
them quickly. The Low Income Housing Tax Credit, which has been 
mentioned, our State uses that tax credit program, not only for 
the $700 to $1,000 apartments, but also for chronic homeless, 
extremely low-income. The tax credit needs to be preserved.
    The National Housing Trust Fund, which if we get--that has 
been authorized in the Housing and Economic Recovery Act, and 
we're hoping to get it capitalized. We're looking at a billion 
dollars. The two of you have been leaders in doing that, 
seeking that fund. The two of you have been leaders in seeking 
that fund. But a billion dollars will only bring 140 units to 
Minnesota.
    And then vouchers, SEVRA, and then preserving existing 
affordable housing, including public housing, where the 
economic stimulus has been able to provide important resources 
but less than 20 percent of the resources needed for 
Minnesota's public housing backlog and needed repairs. Thank 
you.
    [The prepared statement of Mr. Halbach can be found on page 
95 of the appendix.]
    Chairwoman Waters. Thank you very much. Our next witness is 
Mr. Michael Dahl.

  STATEMENT OF MICHAEL DAHL, PUBLIC POLICY DIRECTOR, HOME LINE

    Mr. Dahl. Madam Chairwoman, it is an amazing honor to meet 
with you, and, Congressman Ellison, you have been an 
unparalleled leader on affordable housing, and I'm thankful 
that you are having this hearing. Thank you for the opportunity 
to testify. My name is Michael Dahl, and I'm the public policy 
director with HOME Line. HOME Line is a statewide organization 
that provides free legal, organizing, education, and advocacy 
advice to tenants, so they can solve their own problems, and we 
work on public and private policies that advance that goal.
    As a part of our work, we operate a statewide tenant 
hotline. The hotline provides renters with legal advice. And it 
has grown from suburban Hennepin County in 1992 to serving the 
whole State except for Minneapolis, which has its own tenant 
and city-funded service. Last year, we took 11,000 calls, 
setting an unfortunate record for the number of tenants who are 
seeking our advice in troubles with their landlord or help in 
affording their rent.
    As you would expect in today's market, the number of 
tenants calling us because of foreclosure has increased. It has 
gone way up. In 2000, we received 18 calls from all of 
Minnesota from renters who had a question about foreclosure. 
This year, the number was at 1,265. We're seeing a dramatic 
increase, and that increase is seen in Congressional District 5 
as well. Last year, we received 273 calls from tenants in 
Congressman Ellison's district. That's a fourfold increase in 
just the past 3 years.
    So obviously we are very happy, Congressman Ellison, that 
you took a leadership role on this and got the Protecting 
Tenants at Foreclosure Act passed. Since that legislation went 
into effect, HOME Line's work has changed in two ways. One, 
tenants have more time to move, which this is something 
that's--prior to the change, a bank only needed to give someone 
60 days, now they have 90 days. And that extra time gives them 
time to save up for a move, and not choose just the first place 
that comes available, but, instead, the place that works for 
them.
    Next, holding owners to the tenant's lease is a good change 
as well. When a property is transferred normally, the new owner 
steps into the shoes of the old owner, and the new owner must 
respect the tenant's lease. That had not been the case in 
foreclosures. And making one rule that applies throughout the 
market is a good one.
    The increased call volume for foreclosures is one that 
shows no sign of abating. And so we ask that one of the first 
things you can do is make the Protecting Tenants at Foreclosure 
Act permanent. Its sunset in 2012 is something we would think--
we need to extend this forever. It's a good idea--it was a good 
idea before, it's a good idea now, and I think that in 2012, 
we'll be seeing that it continues to be an issue that we need 
to address.
    More, however, needs to be done in this for extremely low-
income households. And I'll leave NSP to Mark Ireland's 
testimony, to talk about that. I just want to focus on some of 
the issues that Chip had tried to bring up towards the end of 
his testimony that we agree with.
    America's affordable housing crisis predates the 
foreclosure crisis. And we have people who were on the Section 
8 waiting list in 2005. They still haven't gotten to the top of 
the list. And that's before all of this foreclosure thing sort 
of hit the media screens and became the thing that we're all 
talking about.
    There are two things that we need to do, basically, to 
address the crisis that we're in: We need to increase the 
supply of affordable housing; and we need to make more rental 
assistance available.
    In the 5th Congressional District, if someone needs help 
right now, all of the waiting lists that they could be on are 
closed. Minneapolis, Richfield, St. Louis Park, Metro HRA, all 
the lists are closed. And if you manage to be lucky enough to 
need help the day that a list opens, maybe you'll get on the 
list, and 17,000 people will be ahead of you on all of the 
lists that are out there. So we need to do something to 
increase the stock and the availability of rental assistance.
    Chip had talked about the need for our Nation to recommit 
to a production program, and that's why Congress needs to pass 
significant funding for the National Housing Trust Fund. There 
are two steps that can be taken for this. One, the United 
States Senate needs to put, like the House did, $1 billion into 
the National Housing Trust Fund through the jobs bill, and 
that's something that can happen in short order. The next step, 
and this is an area where we're happy for leadership from 
Senator Franken, is asking for the President to include another 
$1 billion for the Trust Fund in his annual budget.
    But these two steps are just partial steps, because we need 
$5 billion annually for each of the next 10 years. And so we--
that's one request that we have, is to find a way to provide 
permanent funding, at least for the next 10 years, to the 
National Housing Trust Fund.
    And then lastly, we need more money for vouchers. Nothing 
will reduce the waiting list better than providing more money 
for vouchers. And housing vouchers--it was already stated that 
we have thousands of people who are waiting for help. There are 
230,000 renter households who cannot afford where they live. 
Chip talked about the 85,000 who are extremely low-income and 
are paying more than 50 percent of their income. Congress needs 
to make the HUD budget reflect the number of eligible people 
who need a voucher.
    Madam Chairwoman, Congressman Ellison, we will stand with 
you and provide whatever you need to reach these goals. We know 
that you have the vision to make them happen, and we're there 
with you.
    [The prepared statement of Mr. Dahl can be found on page 83 
of the appendix.]
    Chairwoman Waters. Thank you. Thank you very much. Now, we 
will hear from Mr. Ireland.

STATEMENT OF MARK IRELAND, STAFF ATTORNEY, HOUSING PRESERVATION 
                            PROJECT

    Mr. Ireland. Thank you, Chairwoman Waters, and Congressman 
Ellison. Thank you for inviting the Housing Preservation 
Project to come here and testify today.
    You can really break down the proposals and the ideas into 
two broad categories. One is opportunity, and one is need, and 
they certainly overlap. But I think the first is that we have 
an opportunity here. It is a financially smart move to invest 
in rental property, to expand our voucher programs, to expand 
the availability of affordable housing tax credits.
    All of these programs, now is the time that we can do that. 
And we have a lot of community development agencies, 
nonprofits, that want to do that, but they need access to 
capital, they need access to funding, to do it. We have the 
potential today to access houses and bring multifamily units, 
single-family units, into these affordable housing programs in 
areas that are close to jobs, close to transit corridors and 
other areas where people want to live, and where you come and 
you raise that standard of living for people who are renting 
property in Minnesota and the country. So this is an 
opportunity. It's financially a good move.
    The second, and this was touched upon a little bit by the 
first panel, is that by expanding these programs, we're going 
to create standards and oversight. And sometimes standards and 
oversights are a little bit too much and they impair the 
ability to expand these programs and make them work. But we 
have right now that competition between speculators and the 
nonprofit affordable housing organizations. And we found that 
81 percent of the foreclosed properties in the City of 
Minneapolis had 911 calls. The median--and these were 
properties that were foreclosed upon 3 years ago. The median 
number of 911 calls related to that property was five, and the 
average was eight. So by bringing these properties into the 
Federal programs and putting them in the hands of responsible 
owners, responsible lenders, we're going to increase the 
standards--the standard of living for our renters, we're going 
to--and we're also going to help strengthen those 
neighborhoods.
    The fourth is--or the other opportunity and need is to 
subsidize scattered site rental. Our community development 
corporations, our Public Housing Authority, they have 
experience. And that experience has taught them that it is time 
consuming, it's expensive, but the opportunity, what it 
provides for the renter, far outweighs that, but we need that 
need. We need the management of scattered site housing to be 
subsidized in a greater degree by Congress, and Congress could 
provide that. So we meet up that opportunity and that need, and 
we access that.
    And then the final is to loosen some of the restrictions on 
NSP, and we talked about that in the first panel.
    And lastly, it's an issue that hasn't been raised by any of 
the panelists, but I think it relates both to where we are and 
where we're going, and that's the issue of race. Nobody seems 
to really talk about it all that much, but in every study that 
I have seen and every article that I have seen, the 
disproportionate impact of the economic crisis, the foreclosure 
crisis, on renters, on homeowners, has been on communities of 
color and people of color. And so, therefore, as we develop 
these programs for scattered site rental housing, expanding 
vouchers, expanding tax credits, we have to talk about race, 
and we have to talk about those issues and see it as an 
opportunity to have a conversation that's long overdue about 
race, both in Minnesota and the Midwest and then in our 
country. Thank you.
    [The prepared statement of Mr. Ireland can be found on page 
106 of the appendix.]
    Chairwoman Waters. Thank you very much. Next, we will have 
Mr. Richard Amos.

 STATEMENT OF RICHARD AMOS, DIRECTOR OF HOUSING SERVICES, ST. 
                 STEPHEN'S HUMAN SERVICES, INC.

    Mr. Amos. Thank you, Chairwoman Maxine Waters, and 
Congressman Keith Ellison. Thank you very much for giving me 
the opportunity to share what we're seeing at St. Stephen's.
    The mission of St. Stephen's is to end homelessness through 
effective collaborations and programs, and we do that by 
serving over 6,000 people, and we serve them with street 
outreach, shelter opportunity, transitional housing, employment 
services, support services, shelter, a free store, and multiple 
programs that we believe people need. Because you can give 
people a job or you can help people fill out resumes, but the 
populations we work with never really had a job or an 
opportunity of employment, so they wouldn't have anything to 
put on a resume.
    Looking at the foreclosure crisis, we're seeing people who 
have never called before for services. They are working class 
people, and they kind of get embarrassed and intimidated when 
we ask them questions about their personal lives. We're seeing 
people who were in shelters because they had their houses 
foreclosed upon, and then when we locate them housing, they go 
into that housing, only to find out that house was in 
foreclosure, and we have to rehouse them again.
    We're working with a variety of people, families and single 
adults, some have mental health issues, some have addiction 
issues, some have multiple barriers that prevent them from 
obtaining housing on their own. So we have a program that's 
called Rapid Exit. The Rapid Exit Program is funded by Hennepin 
County through money that passes through the State.
    One bout of homelessness costs about $5,000. We can save 
someone from being homeless for $1,000. Now that makes economic 
sense. An adult without children, it costs about $850 to 
prevent them from being homeless. But if we pay for them to be 
in a shelter or to go in and out of emergency rooms, because 
all they can use is emergency services because they're 
homeless, then it costs about $2,000. So when we look at the 
economic issues, we can actually save money by keeping people 
out of shelters and not being homeless.
    The Hennepin County Homeless Prevention Program helped 
nearly 2,000 people, families, and 477 adults between 2007 and 
2008--95 percent of those families and 90 percent of the single 
adults were stable in their house for about 6 months. And it 
costs--when we look at the costs, again, $875 for family, $610 
for an adult without children, that's a cost savings we look 
at. And those are our tax dollars.
    Between 2007 and 2008, the Hennepin County Rapid Exit 
Program prevented people from being homeless. When we look at 
prevention, we look at saving people from being homeless. Don't 
wait until they get homeless, because it costs a whole lot 
more, once they're homeless, to get them back into housing in 
order to get them back on track. Some people assimilate in the 
homeless culture, and it's a climate and it's hard for them to 
get out of. So we don't want to wait until they have 
assimilated in and they're used to being homeless. Then it's 
harder to get them back on track and out of that.
    We have prevention programs, where people can call in who 
are in a rental crisis. Maybe they have lost their job, they 
have broken an arm. We say, when you're poor, you can't get 
sick. Because if you get sick and you miss 2 days at work, 
there goes your rent money, and you may be homeless again.
    So we have prevention assistance funds, where we can pay a 
portion of the rent and help them stay on track and in that 
housing until they get past that crisis, whether it was a 
broken arm, whether it was a child sick and they missed a 
couple days at work and they can't pay their rent.
    There are a whole lot of issues that contribute towards 
people becoming homeless. I haven't met anybody who volunteered 
to be homeless or who would volunteer to be homeless. So we 
need to think about this when we're thinking about addressing 
homelessness. It's not just those people over there. I was 
homeless in my life for 20 years, and people wouldn't look at 
me, they would look around me, they would look down, because 
they were afraid I would ask them for something. And sometimes 
I wanted to ask them for something, but I knew they wouldn't 
give it, because they already had their minds made up.
    So homelessness, we look at it at St. Stephen's as a way to 
reach out and grab a person's dignity, to talk to people and 
embrace them. Because if you're not going to reach out and 
embrace someone's dignity, then you might as well not talk to 
them in the first place. We have all kinds of programs, and 
they try to address homelessness. But if you don't have that 
compassion and you don't reach for their dignity and you don't 
believe that they can make it in the first place, they won't.
    I sit down at work sometimes and I help people go through 
the newspaper and look for housing, and I want them to call 
landlords and talk to them, after I have talked to them and 
they know how to do it, because I want to teach them to fish, 
rather than give them fish every day.
    And I hate to say it like this, but I'm going to say it 
anyway. Sometimes we can create plantations for the homeless. 
And I say that because we have mastered trying to show people 
which way to go, when you can teach them how to go and they can 
go for themselves, rather than create an industry called 
homeless providers and keep on serving the populations, and 
that population just keeps on growing.
    So we look to the Federal Government to create some 
subsidized housing, to create some short-term subsidies, not 
just long-term subsidies like Section 8. And I know that may 
not be politically correct, but what about short-term 
subsidies, people who need help for 2 or 3 years, until they 
can get an education or a skill or something that will help 
them sustain their housing, rather than just all Section 8s, 
which are for a lifetime and people just kind of never go off. 
I think we need both short term and long term. And with that, I 
will stop.
    [The prepared statement of Mr. Amos can be found on page 52 
of the appendix.]
    Chairwoman Waters. Thank you very much. Next, we have Mr. 
Marion Anderson.

STATEMENT OF MARION ANDERSON, CONSTITUENT, AND RENTER DISPLACED 
                     BY FORECLOSURE CRISIS

    Mr. Anderson. Thank you. I hope you'll bear with me, I'm 
not used to public speaking at all. Thank you, Madam 
Chairwoman, and members of the subcommittee, for inviting me to 
testify about my experience as a renter affected by 
foreclosure. My name is Marion Anderson, and for over a year my 
life has been affected by the foreclosure of my rental unit.
    Just to give you a little history, it was exactly a year 
ago, I had just gotten--6 months prior to that, I had gotten a 
job with a multinational company locally, 3M. I was a machine 
operator, and I had just bought a car with no notes, paid off 
in full. Life was looking good. I signed a lease for $900 a 
month. I said, I can do this now.
    Well, in November 2008, I signed a one-year lease on a two-
bedroom apartment in a fourplex in North Minneapolis. What I 
didn't know at the time was that my landlord was already in the 
early stages of foreclosure. In fact, my landlord had two 
mortgages on the property, and both had gone into foreclosure. 
Okay, then, one of the sheriff's sales was in August 2009, and 
the other was in September 2009. In addition, my landlord had 
filed for bankruptcy.
    Our first suspicion that something was wrong, as far as the 
tenants went, was about 4 months into our lease. In February 
2009, our landlord started taking appliances out of the 
property without any explanation. The first things to go were 
the washer and dryer in the basement. About that time, we got 
really concerned.
    The next month, we started getting utility shut-off notices 
at our building. In our original lease, the utilities were paid 
for by the landlord, which was--$900 a month, no utilities, I 
can make it.
    The next month, April, the building was posted by the City 
for a lack of utilities, but the landlord was still asking for 
rent and not addressing the utility issues. So myself and my 
roommate, we organized, contacted the utility companies, and 
agreed to pay the utilities at the unit, all--it was a 
fourplex, so each tenant was supposed to pay their portion of 
the water bill, the heating bill, whatever.
    As it worked out, on April 15th, our landlord came by the 
property and manually turned off the furnace. From April to 
July, we had no contact from our landlord. In July, our 
landlord showed up at the property and threatened us with 
evictions for nonpayment of rent. Well, at this point we knew, 
okay, as long as we paid our utilities, she really couldn't 
hold us accountable for the rent, as long as we kept a record, 
etc., etc .
    At this point, we were no longer paying rent, but we were 
paying the utilities ourselves. We had already received 
numerous water and gas shut-off notices. She continued to strip 
the basement of appliances and never showed up again. One of 
the words I became familiar with was ``abandonment,'' I got 
that notice in the mail. I wasn't quite sure what that was, but 
it was addressed to my landlord, that she had abandoned the 
property completely, and wanted nothing else to do with it.
    So right about this time--well, actually we weren't doing 
too badly. We didn't have to pay rent; we just had to pay 
utilities. I was unemployed. And so, you know, I'm a ``cup-is-
half-full'' kind of guy. I'm looking--I can see the future a 
little bit.
    And, well, right about--in the fall, mostly--right around 
October, really. It says here in August, but right around 
October is when they had the shut-off notices and turn-off 
notices for utilities, especially because of the weather. If 
you're not from Minnesota, October 15th is about the time it 
starts getting cold, and the furnaces go on.
    And so the fire inspector showed up at our property and put 
up two notices on the door. A really nice lady, her name is 
Melanie--I can't say her last name, it's Polish, but she's 
really, really good help; right? I tell you, she was really--
she had a lot of empathy. She worked the north side, nice 
uniform and everything. She posted these psychodelic posters on 
our doors saying you had 72 hours to either get that furnace 
turned on or the building would be condemned. And we had from 
that time until January 1st to have a new rental license for 
that property. Evidently our landlord hadn't renewed our old 
license in August.
    So by this time, it's, like, fall, October. So we say, 
well--I had been a little depressed before, but I got a little 
hint of--with 72 hours, I had a little hint of what clinical 
depression really was. But like I said, she was really 
empathetic, told me they were changing some of the laws and 
some of the rules as far as what they did for condemnations. 
And we were able to get the furnace turned back on with help 
from their contacts with CenterPoint, with, I'm saying, the 
fire department, Legal Aid.
    A woman in particular, Genevieve Gaboriault from 
Minneapolis Legal Aid, she was on it from the minute I called 
her. These are resources I really wasn't aware I was eligible 
for. So she contacted them. They made an agreement with 
CenterPoint. We got the furnace turned on by that Saturday. We 
could still stay in the building. That means all the tenants 
who were still in there could still stay there. I'll hurry up.
    And Legal Aid also--Genevieve, she also tried to get the 
City of Minneapolis to allow the tenants in our building to pay 
for our rental license ourselves, so that we could stay 
throughout the winter--well, at least throughout the redemption 
period. There is a 6-month redemption period if the old 
landlord doesn't buy the property back, you can stay there, 
just pay the utilities. I'm, like, yes, I can make that too. 
March 29th would be the end of the redemption period.
    Well, that didn't look like that was going to work out, 
because the City wasn't really willing to do that for a 
fourplex. Maybe more with a single ownership, a single-family 
home, but for a fourplex, I guess they weren't really able to 
do that.
    Legal Aid then connected me with St. Stephen's Housing 
Human Services, and their housing advocate, her name is Susan 
Dunn--I mean Sara Dunn, I'm sorry, she helped me greatly. She--
as soon as she got wind of what was going on, and her contact 
with Legal Aid and Genevieve, they had their own assistance 
program for renters who were affected by foreclosure. I didn't 
know this program was available. And since we found out the 
property had been in foreclosure and had been in--had numerous 
utility shut-off notices--this is about the time when I found 
out from Sara that, yes, I was eligible for some financial 
assistance, if the property was foreclosed on, that maybe she 
could help me with relocation fees, relocation money, that kind 
of thing, which was a great burden off my mind.
    Since it was in foreclosure, the old building manager left 
the unit, and some of his family moved in upstairs. No lease, 
they were basically squatting. Another unit up above me, who 
were receiving Section 8, they moved out to another Section 8 
property, once they found out about the foreclosure. And they 
left and allowed their friends and family to move into their 
unit. There have been three or four squatters in the vacant 
units and in the basement, which does not have a secured door, 
and it has been hard or impossible to get the squatters there 
to contribute to the utility payments.
    In fact, what just happened last week was, the new owners--
the new owner--and I just found this out from Senator Higgins. 
What happened was, the new owners bought this property from one 
of the banks, one of the mortgages--okay, I'm finishing.
    Chairwoman Waters. Your time has expired; however, we want 
to hear the end of this story. So, please, keep going. There's 
unanimous consent to grant this gentleman additional time to 
finish this story.
    Mr. Anderson. Well, to make a long story short, the 
squatters made it impossible to--they brought other problems to 
the building. We actually had police come out last week to take 
one of the squatters out. The new landlord, I think he's a 
landlord, he came in and asked to see the apartment, and the 
guy opened the door with a wrench and said, ``You're not coming 
in my house, white dude; you're out of here,'' and he closed 
the door on him. And this is one of the squatters, I don't even 
know his name. And the guy left, the supposed new owner, and 
the squatter came out of the house with a wrench and followed 
him to his truck, and they got to scuffling out there.
    To make a long story short, it's not safe for us or any 
other tenants who are qualified to be there or supposed to be 
there. And they told--the fire inspector came back out and told 
us that the building was at risk of being condemned again for 
suspected meth use by this person upstairs.
    At any rate, from March to December, our building had 
virtually no management or ownership. This has created an 
unsafe environment for the remaining tenants. There's no 
accountability, and we have no one to address our safety, 
utility, and maintenance concerns.
    Right now, as of December 28th, we have a new owner who is 
selling it to another owner, an Irishman from Australia named 
Bernie O'Brien. And he says--he promises he's going to close by 
September 20th and we'll get a new stove. That's a wrap, and 
thank you for your time.
    [The prepared statement of Mr. Anderson can be found on 
page 75 of the appendix.]
    Chairwoman Waters. Wow. Ms. Louden?

   STATEMENT OF CHRISTINA LOUDEN, CONSTITUENT, AND SECTION 8 
                        VOUCHER RESIDENT

    Ms. Louden. I want to say thank you for giving me the 
opportunity to testify. My experience is with Section 8 and the 
waiting list. My name is Christina Louden. I'm a 31-year-old 
single parent of two daughters: Ruby Rose, age 9; and Danista, 
age 5. I am currently unemployed but pursuing my bachelor's 
degree online in business administration while actively looking 
for employment.
    When I first applied for Section 8 assistance in May 2003, 
I was a single parent of one child and paying more than 50 
percent of my income towards rent. During my 6\1/2\ years on 
the Section 8 waiting list, I had another child and managed to 
make my rental payments, however rarely on time. On February 
12, 2009, I lost my job due to health concerns. I recently had 
a pacemaker put in and have suffered significant injuries in an 
automobile accident.
    I was on the verge of losing my apartment and was unable to 
pay my rent. I did not receive child support or any childcare 
assistance, and my income was significantly reduced to some 
welfare for my children and unemployment insurance. I called 
the Section 8 department in March 2009 and was informed that I 
was near the top of the waiting list, and was finally approved 
for the Section 8 voucher in July of 2009. I found an apartment 
and was leased up in November 2009.
    My two-bedroom apartment rents for $960 per month, and my 
share of the rent is $432 per month. And this is more than half 
the rent I would be required to pay if not for my Section 8 
assistance.
    This housing assistance allows me to make sure my children 
have adequate food, clothing, and shelter, as well as being 
able to provide them with what is needed for school and other 
day-to-day requirements.
    My lower rent also enables me to be able to prepare for a 
better future. I'm attending the University of Phoenix online, 
and I expect to receive a bachelor's degree in business 
administration in 2011. I hope to be able to use this degree to 
find a better job and put myself in a position where I will no 
longer need Section 8 assistance, and someone else who needs 
the help can have the same opportunity that Section 8 has 
brought to me.
    I am not an expert in what Minneapolis needs, nor in 
affordable housing. I can tell you that waiting 6\1/2\ years to 
receive assistance is not a realistic way to help people who so 
desperately need assistance. If I would have lost my job 2 
years ago, or experienced any other kind of setback that would 
have impacted my income, my girls and I would have been 
homeless.
    I think of all the families that I hear about who are 
homeless, and wonder, knowing that the miracle I experienced 
may not be there for them. The waiting list is closed, and I'm 
told that thousands of other families have to wait as long as I 
had to wait to get help. Thousands of others can't even apply 
for help at this time, and Minneapolis needs more Section 8 
vouchers to help families. They need more landlords willing to 
accept Section 8, and they need more just plain old affordable 
housing.
    There is an economic crisis, and so many families are 
impacted by it. I know, from my 6\1/2\ years on the waiting 
list, that for low-income people working or on welfare, there 
has always been an economic crisis. Rents of over $1,000 per 
month, car payments, insurance, food costs, clothing costs, 
medical, and other day-to-day costs associated with just 
living, are almost impossible to meet with a low-paying job or 
welfare benefits.
    It is hard to even have to ask for assistance. And I want 
you to know that assistance should be viewed as an investment 
instead of a handout. With the investment you are making in me 
and my family, you will see a big return. I will graduate 
college, find a good paying job, and help my children, so 
hopefully they will not have to experience the difficulties 
that I have had to face.
    [The prepared statement of Ms. Louden can be found on page 
111 of the appendix.]
    Chairwoman Waters. Let me thank all of our witnesses for 
being here today. Each of you, in some way, has touched on what 
we work for and about every day. And the issues that you raised 
are at the centerpiece of our legislative agenda, serving on 
the Financial Services Committee and the Subcommittee on 
Housing and Community Opportunity.
    Let me just briefly say, this Nation is a little 
schizophrenic about public housing. On the one hand, we have a 
lot of people who are supportive of public housing, yet we have 
people who want to see public housing not as an opportunity for 
the least of these or people who really find themselves in a 
position where they cannot afford to live anyplace else but 
public housing. But they want to change the requirements and 
the makeup and a lot of things about public housing to 
basically eliminate trouble, rather than providing the 
resources and the money to assist people to change their lives 
and to be able to manage their lives and be given 
opportunities. And we have some people who want to just 
eliminate public housing altogether and maybe deal with the 
Section 8 and scattered housing, and who just believe that 
there should not be a public housing kind of footprint.
    I support public housing. I support the upgrade of public 
housing, money for renovation, repairs. But I also support 
money for services. And I appreciate what you described to us 
today and what you're doing. You certainly are innovative in 
creating that center that you referred to. So some of us, 
despite a growing call for almost getting rid of public 
housing, some of us are supportive. And even when we are not so 
sure, we know that some public housing in some cities would 
like to renovate and to downsize, but we're going to insist, 
for the time being, one-for-one replacement on all public 
housing. We're going to do that because we are not going to go 
down this road of getting rid of units.
    You have heard described here today so passionately the 
need for low-income housing. The Housing Trust Fund, yes, we 
had $1 billion. We supported--Barney Frank has put his life on 
the line for it, and we have passed it, I believe, in the 
House. And we don't know what's wrong with the Senate, but the 
Senate never can seem to get its act together. But, yes, we 
intend to get that billion dollars. And, you're right, we 
should have the goal of having a permanent funding Housing 
Trust Fund for years to come, whether it's $5 billion or 
whatever. That's an ideal, that's a goal that we would like to 
reach, we would like to support. We worry about it when we have 
more and more people crying about the deficit and talking about 
cutbacks, but we're going to fight for not only the billion 
that we have already passed out of the House, but we will 
continue. Because, you're right, there is a need for low-income 
housing that has never been met in my career, my time in public 
service, and we have to continue to work for that.
    Know your rights. I can remember, I guess in civics classes 
when I was young, that there was a program called Know Your 
Rights. And they always talked about how it's important for 
people to pursue justice and how it was important to have 
agencies that would assist people in knowing their rights. And 
you're absolutely correct, we're not against the landlords. We 
need landlords to provide housing. But we need landlords who 
are fair and who will treat the tenants right and who will 
invest in the properties. And sometimes the landlords forget 
that they have lease contracts and arrangements, and they just 
overlook that and they try and do whatever they want to do. We 
have to make sure that we deal with this business of cutting 
off utilities and pulling out the washing machines and all of 
that stuff. But I'm so pleased about the work that you do in 
helping to assist people with legal services.
    For homelessness, we reauthorized the homeless program. And 
one of the things we are focused on is permanent supportive 
housing for the homeless. We want--and we will continue--I 
think we put some money in to--we authorized money for 
permanent supportive housing, and we're going to have to expand 
on that. The idea that somehow homeless people cannot manage an 
apartment or do not want permanent housing, they kind of lack 
the way that--we have to get rid of those notions. And we have 
to show that with supportive services, most of the homeless can 
be put off the street, and you don't even need a transition 
period. You can go right into permanent supportive housing, if 
you have the services to go along with assisting people who 
need some assistance. So we're going to work toward that end. 
We have $1.8 billion--$1.5 billion we put into the stimulus 
package, above and beyond what's in the budget, we have 
additional money.
    And so--the City that I come from is perhaps the homeless 
capital of this country, and it is heartbreaking to walk 
through downtown Los Angeles and see what is going on there. 
And I'm committed to it, Congressman Ellison is certainly 
committed to it, and we're going to do everything that we can 
with this Administration to do what has not been done for far 
too long. Thank you for dedicating your life to this work; we 
really do appreciate it.
    I want you to know, it was just today that someone, and I 
forgot who it was, asked what were we going to do about tenant 
ownership of some of these foreclosed properties. Who was it 
that asked me that?
    Mr. Dahl. (raises hand)
    Chairwoman Waters. That was you who asked me that. What was 
just described by Mr. Anderson, where the tenants were 
abandoned and you were left in this property and all that you 
described, I was just sitting here thinking, what can we do, 
with the kind of proposal that you alluded to, that would 
provide the opportunity for tenants to have taken over that 
building and to own that property and manage that property? 
There needs to be capital, there needs to be well-thought-
through programs about how you do it, but it's certainly, 
certainly needed. So you have put that on our radar screen, and 
we will do everything that we can to pursue examining those 
possibilities. And thank you for just hanging in there. You 
could have just said, well, let me just go on and try and find 
some shelter to live in until--but you--you're pretty tough. 
And so for those squatters, you can handle them. Yes, that's 
going to be great.
    And I'm appreciative for the testimony that you were able 
to give about Section 8. I appreciate--well, first of all, you 
frightened me, when you first started to talk, about being 31 
years old with 2 children and without a job, and then further, 
about the medical problems that you had. But you evidently are 
in control, no matter what. And you have said, in so many ways, 
to people, that they, too, can be in control, no matter how 
difficult it gets. You have to pursue opportunities and stick 
with it.
    And I'm appreciative for the testimony that you gave for 
Section 8. We need so much more. And the reauthorization, I 
have asked for 150,000 more vouchers. That's just a drop in the 
bucket, but we have to fight for that. And I think--did we get 
that off the Floor? It's out of committee, but it's not off the 
Floor yet. But we're going to fight, and I'll do anything I can 
to try to increase that and keep increasing it. But we know how 
important it is and how it certainly saves families.
    Let me just say to all of our advocates and all of our 
panel who have made their lives and their careers a part of 
this housing struggle for all of our people all over the 
country everywhere, I certainly appreciate you. I'm certainly 
dedicated to the proposition that we can do a lot better than 
we're doing, creating housing opportunities, maintaining 
sustainable neighborhoods, utilizing and expanding resources 
that make good sense, and we're going to keep working toward 
that end. And I believe that we're going to be able to do more 
under this Administration than has been done in many years, and 
so just keep working with us. Keep working with us.
    I like advocacy on the ground. I like people to act up a 
bit and to make noise and to keep saying to their elected 
officials, these are the things that you have to do. Because 
politicians tend to get nervous around election time, 
particularly when they talk about deficits and we can't spend 
any more money and the government's getting too big and all of 
that. You have to help back them down, and talk about our need 
as a free and prosperous country to be able to supply a safety 
net for the least of these. And so the more you act up, the 
better we'll be. Thank you very much.
    Congressman, please, please, go right ahead.
    Mr. Ellison. Can we have another round of applause for our 
chairwoman? My first question is for you, Mr. Anderson. When 
did you first get notice that the building that you had just 
rented a unit in was going to be under foreclosure?
    Mr. Anderson. Actually, we signed the lease in November, 
got laid off in January, and got a foreclosure notice in March. 
And they sent the mail--I don't know if it was supposed to come 
to us, but we got it addressed to the landlord. But we got two 
foreclosure notices, first and second mortgage, at our address.
    Mr. Ellison. So it was never sent to you? You were never 
told directly, this building is in foreclosure?
    Mr. Anderson. No--well, not until later on. But in the 
mail, it came addressed to the landlord, the foreclosure. Even 
the bankruptcy mail came to us. That's the only way we knew 
what was going on, really, because she never contacted us again 
after that.
    Mr. Ellison. Well, I think there should be an affirmative 
duty for somebody, perhaps the landlord, but somebody to tell 
you as soon as they know.
    Mr. Anderson. Right.
    Mr. Ellison. I think that that's something that we might 
want to start working on. Because it certainly would put you in 
a better position pursuing this idea of, perhaps, tenant 
ownership. You could, perhaps, get busy working on that the 
earlier you know.
    Mr. Anderson. Right.
    Mr. Ellison. Let me also say that, Ms. Louden, I think your 
point about investing, together with the point that Mr. Amos 
made--Mr. Amos made the point that it's actually fiscally 
responsible to prevent people from getting into the homeless 
situation, because it costs more to get a person out of 
homelessness than to prevent somebody from ever becoming 
homeless. And then your point about investing in people. Here 
you're going to--about to be a college graduate, significantly 
increasing your earning potential. This program, which you 
almost--it seems like it's just a blessing that you were able 
to take advantage of.
    Ms. Louden. Absolutely.
    Mr. Ellison. How do you all respond to this? Do you think 
that it is fiscally responsible and actually saves money and 
actually increases wealth in our community by investing in 
people, by keeping them in homes and avoiding homelessness? 
Could you all--anybody on the panel address this issue? Ms. 
McCorvey? And everybody is welcome to answer.
    Ms. McCorvey. Absolutely. Absolutely. Because it's 
providing a stable environment, not only for the parent or the 
parents, it's also the environment for the children. The 
children cannot prosper in chaos and confusion. Children need 
to be stable, they need structure, they need to have a base, 
like we all do. And so having the Public Housing Authority, 
Section 8 or those kinds of programs be there for people, it's 
critical. And I have built my life--spent my life with these 
programs for over 30 years in various levels, and I have seen 
how Section 8 and our public housing programs have not only 
stabilized families, but also seniors and people who are 
disabled. I know people who have had serious health problems 
and felt that public housing allowed them to live for as long 
as they had to live in dignity here. And they ended up dying, 
but they were very grateful to have that dignified place to 
live, where they didn't have to worry about their rent and 
whatnot. So, yes, absolutely.
    Mr. Ellison. Well, what about this issue--I know that Ms. 
Louden has--go ahead?
    Mr. Halbach. Just to add a quick note to that, I know it 
was 4 to 5 years ago, there was a study of Minnesota's TANF 
program, a welfare program. And one of the conclusions of the 
study was that people who had stable housing did much better 
economically than those that didn't. So in addition to what 
Cora was saying, in terms of her experience, there is 
documentation of that, at least in terms of recipients of TANF.
    Mr. Ellison. Well, when you think about housing 
instability, how does it--do any of you have any either 
personal experience or secondary experience on how it impacts 
children? I do know that--I'm not sure which one of you said 
this, but I heard somebody say, about 4,700 people are homeless 
and some major percentage of that are children.
    Ms. McCorvey. 45 percent of those are children, yes, based 
on the Wilder Research, yes.
    Mr. Ellison. Now, Ms. Louden, you are a mom?
    Ms. Louden. Yes.
    Mr. Ellison. What are some of the challenges that a parent 
might have when--for raising their kids, and how does it affect 
the grades, how does it affect all these things, when a parent 
is facing housing instability?
    Ms. Louden. Yes, and moving. There should be--they do 
thrive and grow on stability. It's--they have a place to call 
home, they have their bedroom, whatever, their area. It's very 
important. Getting them back and forth to school, 
extracurricular activities, they have a routine, but they 
always have that home to go to. And when we have moved and had 
to move--I see, like, my oldest, she's nine. Now my five-year-
old's starting to come into it and notice what's going on. And, 
like, my nine-year-old will start--she asks a lot of questions, 
starts acting up and just kind of goofing off because there's 
no stability. She doesn't know what we're doing from one day to 
the next, so--
    Mr. Ellison. And how do the kids--how does it affect the 
kids? I am curious to know, maybe Mr. Amos can share, if a 
child is living in a shelter, and they go to school, and the 
other kids say, where do you live, how does that impact the 
kids?
    Mr. Amos. When I first started as a case manager, it bugged 
me to death that--I heard one of the children say that, when we 
were looking for housing, that they hated to be dropped off at 
a shelter, coming from school, because the other kids would 
tease them about where they lived, so they couldn't wait to get 
out of there. And that just made me want to get them out of 
there a lot faster. But now they have different buses that go 
to the shelter and drop them off.
    But there are studies that have shown that if a family is 
homeless, if the parent is homeless for a long period of time, 
that child will grow up to experience homelessness also. So we 
don't want to start a pattern of homelessness within families. 
We want it to be as short as possible, back in housing, and 
stable as possible. As she said, having your own room, your own 
toys, your own place to go to, is stability in life. We all 
want that. And shelter should be a basic right.
    Mr. Ellison. I guess my last question is for Mr. Ireland. 
You ventured out into that unsafe water of race. And I was 
going to say that I thought that was a courageous thing for you 
to do. I think I can speak for people of color generally. When 
we hear people who are White speak about systemic racism, it 
makes us all feel a little bit better, because we know what's 
going on. And when it's like--and it makes me feel like, look, 
we're all Americans. Some have--we have different ethnic 
backgrounds, but we're all Americans. And you really can't 
totally maximize your resources as a society if one part of it 
is sort of relegated to the side, because we're not getting 
maximum production from that part because it's not fully 
included. What do you think we should do, and how do you think 
we might communicate the message of racial justice and 
inclusion as we pursue this work?
    Mr. Ireland. I think that any discussion of race, 
particularly from some 6-foot White guy like me, has to be done 
with humbleness and done very carefully. Because race is a 
conversation, a discussion, about racial justice. And just the 
historic draining of resources and assets and money from 
communities of color, it's just something that has to be done 
very carefully. But I think that it was--we just celebrated Dr. 
King's day. And in his last book, ``Where Do We Go From Here, 
Community or Chaos?'', he set out a structure for that 
conversation to occur. I think that it would be in the best 
interests of everybody to follow that structure. First, you 
identify, where are we at right now? The second thing is that 
you assert the dignity and worth of all people, and assert that 
vigorously. And then you identify the structural impediments to 
moving forward, and then you fight like hell, in a nonviolent 
way.
    And so, for that to occur, and with race underpinning and 
being the unspoken issue in the financial crisis, in the 
foreclosure crisis, you have people like Ann Coulter who blames 
the Community Reinvestment Act for the financial crisis. So 
you're stepping into a dangerous environment where a discussion 
about race could, if done incorrectly, backfire. But I think it 
has to be done, because that's going to inform how you target 
the resources.
    Because every initiative, it seems like, over the past 50, 
75 years, you start out with the intention that you're going to 
improve communities, improve neighborhoods, and then all of a 
sudden those resources start getting split off, and the people 
who are most in need of those resources, it doesn't quite get 
to them. Somehow all of a sudden you're building a stadium or a 
prison, instead of infill housing in North St. Louis or North 
Minneapolis. And so those resources start being peeled off. So 
as we talk about expanding Section 8 vouchers, as we talk about 
expanding affordable housing tax credits, now we have the point 
where we can do that--if we have that conversation about race, 
we can target those, to make sure that affordable housing, low-
income housing, is put in communities where it's going to 
provide that ladder. Leveraging mass transit, good schools, 
located near jobs, all those goals that have been there all 
along, but making sure that it happens.
    Mr. Ellison. Well, I think it's important to be able to 
discuss issues of race in a non-polarizing way that brings 
people together, as opposed to just sending people into their 
corners. And so I want to thank you for introducing that 
important topic into this congressional hearing. Let me tell 
you, it's not often that congressional hearings have that 
element of the conversation brought up.
    And so I just want to, again, give praise and honor and 
thanks to you, Madam Chairwoman, and also all of our witnesses 
who have testified so eloquently. I just want to remind people, 
if they want to get something into the hearing record, I think 
we can accommodate that. And this is a real congressional 
hearing, just like one we have in Washington all the time. 
Before I yield back, I'll hand the floor to Mr. Anderson.
    Mr. Anderson. Well, since this is on the record, down here 
on the ground, I really would like to see how we're going to 
get jobs back into the community. From where I stand, if I 
can't work, I can't eat, and I can't afford affordable housing. 
And so laying off--I have never been laid off twice in one year 
before, and it happens. And so I'm just saying, most of the 
jobs that pay anything in the Twin Cities--I'm originally from 
New York, but in the Twin Cities now, most of the jobs that pay 
any kind of money, whether skilled or semi-skilled, are out. 
Transportation is an issue, the weather's an issue, all of 
that. But there was a time, when I first came here, where you 
could practically walk to your job. The good paying jobs were 
right in the community or close enough to it. Is there any 
way--is that going to happen, infrastructure coming back, 
monies, anything?
    Mr. Ellison. Well, let me just tell you, it's funny, 
because actually both Congresswoman Waters and I are very 
focused on issues of jobs. And I can tell you that based on 
my--what I hear in our democratic caucus meetings, that most 
members of our caucus are very focused on jobs. We have the 
Senate issue to overcome, but a lot of members really, really 
want to see a jobs--we passed a jobs bill right before the 
Christmas break. It included some extensions of unemployment 
insurance, COBRA--COBRA, when you lose your healthcare, and 
then--and some food stamps and then some infrastructure 
investment.
    Many of us are still focused on a jobs bill. We're trying 
to figure out how to get the Senate to come along with it. But 
I think we need--but jobs are our front strategy. I have told 
more than one Member of Congress, if we don't figure out how to 
get some jobs, we're going to be looking for them ourselves.
    And let me just tell you this. I have a jobs bill that 
calls for--we put $40 billion that would create 1 million full-
time jobs, with nondisplacement procedures, like prevailing 
wage, stuff like that, together with an infrastructure 
investment, because all the--not only do we need the jobs, but 
we need the work done. Our roads and bridges are crumbling. You 
all know, we could walk to 35W from here, where the bridge fell 
down, Madam Chairwoman.
    And so jobs are a key focus element. We want to put money 
into State and local government, so that we can retain 
essential city and county and State services, which you know 
are being cut. And with the LGA cuts, they're really hurting 
locally around here--39 States are facing a deficit right now, 
and are cutting. So with that, I'm going to yield back to our 
chairwoman. Thank you very much.
    Chairwoman Waters. Thank you very much. As we wrap up, I 
would like very much to thank all of our panelists for 
participating in this hearing. We were not able to talk about 
all of the public policy work that we're involved in.
    In this conversation that was held just a moment ago about 
race, we just had a hearing on a piece of legislation that was 
initiated by Congressman Al Green, where he's asking now for 
$20 million, and I'm suggesting that he increases it to $50 
million, for what is known as the PIP program. This is a 
program, fair housing program, where the testers go out. And I 
was kind of surprised to discover, in that discussion, that 
there are many cities that don't even have this at all. So 
we're going to increase that. We'll get that legislation passed 
out of our committee.
    In addition to that, we're going to talk about appreciation 
for Secretary Donovan. St. Bernard Parish down in New Orleans 
had developed local laws to prevent multifamily housing, 
because they didn't want those people in their neighborhood. 
And it had gone into court and to the court system, and the 
courts had ruled against them, but they defied the court. 
Secretary Donovan came in and said, you're not going to get any 
Federal money unless you change these local laws. And so they 
began to understand that they have to eliminate those laws, 
reverse themselves, in order to get any Federal money to have 
in their parish at all. So sometimes it doesn't take 
legislation or litigation, it just takes a person with the 
power to exercise it. And I'm very appreciative about the way 
that Secretary Donovan is moving in that way.
    And another little story is this. As you know, there was a 
lawsuit that was filed against Wells Fargo, because they were 
accused of targeting minority neighborhoods in the subprime 
meltdown. I think the NAACP Legal Defense Fund and some others 
were involved in that. They didn't win. But I called the CEO of 
Wells Fargo, Mr. Stumpf, to talk to him about the lawsuit. And 
he seemed very humble, and he said, yes, but they were going to 
do more. He said, I remember you told me that we weren't doing 
well in these loan modifications, and I need to get our 
servicers on the ground, I need to get more storefront 
operations, I need to be available to the people. He says, I'm 
going to do that. He said, I think that we can do more. And so 
I was appreciative to hear the CEO, even though they won that 
lawsuit, really in many ways acknowledge that they needed to do 
better.
    So we are all working on some of these issues. And as you 
said, the discussion must take place. And those of us who have 
the power to do something constructive about these issues, must 
use their power to do so. So I want to thank you all for the 
issues that you have brought up today.
    And I'm reminded by my staff that the memorandum that you 
just gave me about what Chairman Barney Frank wanted to do on 
preservation in relationship to the first refusal memorandum, 
there's more going on than I knew about. Right of first 
purchase, it seems that Barney Frank is now in the process of 
trying to work out how to put it in his preservation bill. And 
it's not easy, because we have a lot of the owners of 
multifamily properties who threaten to drop their support of 
preservation if the right of first purchase is in.
    Now I want you to know that sometimes the wheels of 
progress move very slowly. And when you're moving something 
like preservation, which is extremely important, and you have 
the support of the multifamily owners, that's good support. But 
when you start to lose that support, it threatens the 
legislation, and sometimes it takes time to keep working on it, 
and it may have to go beyond, certainly, this legislative 
session. But it is on the radar of Barney Frank, and we will 
talk with him about it when we get back. Thank you all so very 
much for your participation.
    Also, the Chair notes that there may be additional 
questions for this panel, which we will submit in writing. And 
without objection, the hearing record will remain open for 30 
days, so that we will be able to submit written questions to 
these witnesses, and place their responses in the record, and 
this panel is now dismissed.
    Before we adjourn, however, I'm told the written statements 
will be made a part of the record of this hearing. We have some 
written statements we're going to insert, from the City of 
Lakes Community Land Trust and Mr. Robert Roedell. We will make 
sure that their statements are included in the record.
    Thank you all so very much, and this panel is dismissed and 
the hearing is adjourned. Thank you.
    [Whereupon, at 3:10 p.m., the hearing was adjourned.]

                            A P P E N D I X

                            January 23, 2010

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