U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

56–242 PDF 2010

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 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

BARNEY FRANK, Massachusetts, Chairman 

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

GWEN MOORE, Wisconsin 

PAUL W. HODES, New Hampshire 

KEITH ELLISON, Minnesota 

RON KLEIN, Florida 

CHARLES A. WILSON, Ohio 

ED PERLMUTTER, Colorado 

JOE DONNELLY, Indiana 

BILL FOSTER, Illinois 

ANDRE ́ CARSON, Indiana 

JACKIE SPEIER, California 

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 

SPENCER BACHUS, Alabama 

MICHAEL N. CASTLE, Delaware 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

J. GRESHAM BARRETT, South Carolina 

JIM GERLACH, Pennsylvania 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

ADAM PUTNAM, Florida 

MICHELE BACHMANN, Minnesota 

KENNY MARCHANT, Texas 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

BILL POSEY, Florida 

LYNN JENKINS, Kansas 

CHRISTOPHER LEE, New York 

ERIK PAULSEN, Minnesota 

LEONARD LANCE, New Jersey 

JEANNE M. ROSLANOWICK, Staff Director and Chief Counsel 

(III) 

SUBCOMMITTEE ON HOUSING AND COMMUNITY OPPORTUNITY

MAXINE WATERS, California, Chairwoman 

NYDIA M. VELA ́ ZQUEZ, New York 

STEPHEN F. LYNCH, Massachusetts 

EMANUEL CLEAVER, Missouri 

AL GREEN, Texas 

WM. LACY CLAY, Missouri 

KEITH ELLISON, Minnesota 

JOE DONNELLY, Indiana 

MICHAEL E. CAPUANO, Massachusetts 

PAUL E. KANJORSKI, Pennsylvania 

LUIS V. GUTIERREZ, Illinois 

STEVE DRIEHAUS, Ohio 

MARY JO KILROY, Ohio 

JIM HIMES, Connecticut 

DAN MAFFEI, New York 

SHELLEY MOORE CAPITO, West Virginia 

THADDEUS G. McCOTTER, Michigan 

JUDY BIGGERT, Illinois 

GARY G. MILLER, California 

RANDY NEUGEBAUER, Texas 

WALTER B. JONES, JR., North Carolina 

ADAM PUTNAM, Florida 

KENNY MARCHANT, Texas 

LYNN JENKINS, Kansas 

CHRISTOPHER LEE, New York 

(V) 

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 

(1) 

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 

2 

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 lowincome 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. 

3 

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 

4 

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 

5 

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 lowand 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. 

6 

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 lowincome 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. 

7 

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 moderateincome 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 doublingup 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 perVerDate Nov 24 2008 17:47 May 27, 2010 Jkt 056242 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 K:\DOCS\56242.TXT TERRIE
8 

cent. 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 

9 

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 

10 

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 

11 

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 stat- ed, 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 colVerDate Nov 24 2008 17:47 May 27, 2010 Jkt 056242 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 K:\DOCS\56242.TXT TERRIE
12 

lection, 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 atrisk 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/CounVerDate Nov 24 2008 17:47 May 27, 2010 Jkt 056242 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 K:\DOCS\56242.TXT TERRIE
13 

ty 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. 

14 

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 wellknown. 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 

15 

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. 

16 

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. 

17 

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 

18 

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 publicprivate 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 onemonth 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 asVerDate Nov 24 2008 17:47 May 27, 2010 Jkt 056242 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 K:\DOCS\56242.TXT TERRIE
19 

sistance 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 onemonth inventory of foreclosures, 12 months of short sales. 

20 

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. 

21 

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. EstabVerDate Nov 24 2008 17:47 May 27, 2010 Jkt 056242 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 K:\DOCS\56242.TXT TERRIE
22 

lishing 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. 

23 

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 Stateowned 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— 

24 

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. 

25 

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 paintand-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. 

26 

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 federallyrelated 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 

27 

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. 

28 

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. 

29 

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. 

30 

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. 

31 

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 

32 

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. MinVerDate Nov 24 2008 17:47 May 27, 2010 Jkt 056242 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 K:\DOCS\56242.TXT TERRIE
33 

neapolis, 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 

34 

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. 

35 

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. 

36 

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. 

37 

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. 

38 

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, 

39 

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 

40 

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 61⁄2 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 61⁄2 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 61⁄2 years on the waiting list, that for lowincome 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. 

41 

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 

42 

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 

43 

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 bankVerDate Nov 24 2008 17:47 May 27, 2010 Jkt 056242 PO 00000 Frm 00049 Fmt 6633 Sfmt 6633 K:\DOCS\56242.TXT TERRIE
44 

ruptcy 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 

45 

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 

46 

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 

47 

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 

48 

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. 

49 

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.] 

(51) 

A P P E N D I X 

January 23, 2010 

52 


56242.001
53 


56242.002
54 


56242.003
55 


56242.004
56 


56242.005
57 


56242.006
58 


56242.007
59 


56242.008
60 


56242.009
61 


56242.010
62 


56242.011
63 


56242.012
64 


56242.013
65 


56242.014
66 


56242.015
67 


56242.016
68 


56242.017
69 


56242.018
70 


56242.019
71 


56242.020
72 


56242.021
73 


56242.022
74 


56242.023
75 


56242.024
76 


56242.025
77 


56242.026
78 


56242.027
79 


56242.028
80 


56242.029
81 


56242.030
82 


56242.031
83 


56242.032
84 


56242.033
85 


56242.034
86 


56242.035
87 


56242.036
88 


56242.037
89 


56242.038
90 


56242.039
91 


56242.040
92 


56242.041
93 


56242.042
94 


56242.043
95 


56242.044
96 


56242.045
97 


56242.046
98 


56242.047
99 


56242.048
100 


56242.049
101 


56242.050
102 


56242.051
103 


56242.052
104 


56242.053
105 


56242.054
106 


56242.055
107 


56242.056
108 


56242.057
109 


56242.058
110 


56242.059
111 


56242.060
112 


56242.061
113 


56242.062
114 


56242.063
115 


56242.064
116 


56242.065
117 


56242.066
118 


56242.067
119 


56242.068
120 


56242.069
121 


56242.070
122 


56242.071
123 


56242.072
124 


56242.073
125 


56242.074
126 


56242.075
127 


56242.076
128 


56242.077
129 


56242.078
130 


56242.079
131 


56242.080
132 


56242.081
133 


56242.082
134 


56242.083
135 


56242.084
136 


56242.085
137 


56242.086
138 


56242.087
139 


56242.088
140 


56242.089
141 


56242.090
142 


56242.091
143 


56242.092
144 


56242.093
145 


56242.094
146 


56242.095
147 


56242.096
148 


56242.097
149 


56242.098
150 


56242.099
151 


56242.100
152 


56242.101