Professionalizing the field of Financial Counseling: Why it Matters

Posted by Bob Annibale and Jonathan Mintz on May 25, 2016

Few of us grew up learning everything we needed to know in order to make smart financial choices. Maybe we learned a few valuable tips from family or friends, or perhaps we picked up some financial management skills in school.

So it's unsurprising that roughly 65 million Americans turn to a financial advisor for help with managing money—from developing a basic financial plan, to planning for retirement, to more sophisticated wealth and investment advice.

For those who have the means to afford them, paid financial advisors often wield credentials such as "Certified Financial Planner" or "Investment Advisor Representative"—titles that signal quality and accountability to their clients. Similarly, for providing tax advice and preparation it might be a Certified Public Accountant that is required.

But what about families who cannot afford a paid professional—families who are financially vulnerable and rely upon free financial counseling and coaching services to get out of debt or repair their credit score? Where are the necessary standards, business models, enforcement and training to ensure that a low-income family in Texas or South Dakota or New York City receives the same quality of financial advice as those who are able to pay?

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Imagine if Banks Had a Rating Showing Compliance with Consumer Law?

Posted by Josh Silver on May 23, 2016

When consumers shop for new cars or other major products, they often like to consult with Consumer Reports or some other resource that rates companies selling the products. Imagine if we had a Consumer Reports for banks that provided ratings on how well they treat consumers and the extent to which they complied with consumer protection and fair lending law. Wouldn’t that be a wonderful resource?

Since 1980, 36 years ago, federal bank agencies have been rating banks for their compliance with consumer protection and fair lending law. But there has been one major rub. The ratings have been secret! Not much help for consumers.

The federal bank regulatory agencies have just issued a request for comment on their proposed reforms to the consumer compliance rating system. But the ratings would still be secret!

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Advocates: Let’s Get These Details Right From the Beginning

Posted by John Henneberger on May 18, 2016

It’s rare when a major new national housing program comes along.

The National Housing Trust Fund, a signature accomplishment of years of advocacy by the National Low Income Housing Coalition, is a rare opportunity to increase the housing supply for the poor.

Whether it incorporates the lessons we have learned and is even available to low income Americans, and to people of color, depends on the guidelines adopted at the state level.

The discretion ceded to states to adopt guidelines means that states will decide who gets housed and their quality of life in their new home. Initial guidelines, once adopted, tend to remain in place for the long term. So it’s vital that we get the details right from the beginning.

Grassroots community leaders, advocates, and housing providers must insist that their state’s National Housing Trust Fund allocation guidelines serve the intended target population of the new program: extremely low income (ELI) households, or those earning less than 30 percent of their area’s median income. Existing housing programs have too often not housed people in these groups. Based on conversations we’re having in Texas, I'd like to suggest some things community leaders, advocates, and housing providers should focus on.

Because of what we've learned over the past few years about exclusionary practices relating to employment requirements, minimum income, credit rating, and eviction history, we are advocating for “low barrier housing.” Responding to the research on the importance of community in children’s life outcomes, we are also advocating robust compliance with fair housing.

Employment and income: Apartments that require potential tenants to provide proof of employment, or monthly earnings at three times the cost of rent, are largely inaccessible for ELI households. These requirements—which have become near ubiquitous in the unsubsidized housing market—are creeping into subsidized housing. They disadvantage a significant portion of ELI individuals who are elderly, or people with long-term disabilities who often cannot work full-time jobs and rely on Supplemental Security Income to help with the costs of housing and other necessities.

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Why Should “Community Development” Only Be Urban?

Posted by Miriam Axel-Lute on May 13, 2016

"I'm tired of feeling rural America is so alone," said Lisa Mensah, USDA Under Secretary for Rural Development to the attendees at the Rural Housing Summit hosted at the Federal Reserve this past Tuesday.

Several of the day's speakers echoed her sentiment, and spoke of feeling frustrated trying to get attention and resources for the work they do. But as Erika Poethig noted in her remarks on the closing panel (which I was fortunate enough to be moderating), distressed parts of urban areas (especially in smaller urban areas that are often overlooked even in discussions of urban areas) and rural areas have a lot in common. Obviously there are some very real differences, but there are enough similarities that it seems that there ought to be more potential for making common cause than currently exists. 

Here are some of the similarities I noticed as I listened to the points being made throughout the day:

  • Persistent poverty, and the difficulty of getting people to pay attention to it. Persistent poverty—areas where high levels of poverty have been in place for decades—are highly prevalent in rural areas. Metro areas don't have entire counties that qualify as persistently poor, but at the neighborhood level they absolutely do, despite more attention to gentrification.
  • Being worried about what the mantra of mobility and geography of opportunity means for the place-based work they are doing. I heard from rural practitioners pretty much the same concerns I've heard from urban place-based practitioners about losing funding or competitive points for work to bring investment and better quality housing to places that desperately need it because they are not high opportunity areas.
  • Segregation and inequality shape the physical landscape and people's opportunities. Poverty in rural areas, as one map showed, has different predominant racial characteristics in different parts of the country, but as John Henneberger noted in the closing panel, segregation in those areas, and disparate conditions "across the tracks" is a major feature of those areas and is driving population loss.
  • There is a tremendous interest in using housing as a unifying platform for delivering services, improving health, and making comprehensive change.
  • Low cost housing—but low incomes mean there's still a high housing cost burden for many. Clearly many urban markets actually have very high cost housing—but in others it remains relatively low cost—just not low enough compared to incomes.

And then there were the two ways in which speakers suggested that the rest of the community development field might look to rural areas for leadership and partnership:

  • The whole country is experiencing a major wave of aging, but rural America is, for various reasons, ahead of the curve—how they handle this challenge could provide lessons for the rest of the country.
  • Due to lower density, rural nonprofits have not been able to specialize—they've remained "comprehensive." While this presents capacity challenges, it also presents opportunities for thinking in creative and connected ways.

There are absolutely unique challenges about working in rural America as well, and they shouldn't be overlooked or subsumed in a larger agenda that doesn't acknowledge the diffrences. Nonetheless, I was struck by these many points of connection. If hot market coastal boomtowns and small struggling rust belt cities belong in the same movement for place-based approaches to health communities and fighting poverty, then it seems like rural areas belong there too.

(Photo credit: "Delta Farm House," by Jimmy Smith via flickr, CC BY-NC-ND 2.0)

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Washington, DC and the Future of Equitable Development

Posted by Dominic T. Moulden and Gregory D. Squires on May 10, 2016

For three consecutive years, ONE DC and George Washington University have come together to examine and respond to the various trajectories of uneven development that have framed and in all too many cases limited life chances for many of the long term residents of Washington, DC and the nation’s metropolitan areas generally. This year’s conference, which took place on April 5, was titled, “A Moment or a Movement: Why Black Lives Matter on the Path to Equitable Development in Washington DC,” and signified the centrality of race in equitable development discussions.

ONE DC is a membership-led organization in the District’s Shaw neighborhood that is fighting resident displacement by utilizing strategies where, “those directly affected by the issues make decisions related to the campaign or movement; minimize hierarchy within their organization to maximize shared power and equity of voice; and utilize direct action as an effective means to compel decision makers to implement decisions made by the community.” George Washington University is a traditional private university, but one that is increasingly engaged with various segments of the DC community of which it is a part. 

In the opening keynote interview, renowned labor activist and scholar Bill Fletcher reminded the audience how global investment practices created “dead cities” (e.g. East St. Louis, Camden) and dying neighborhoods within cities around the nation.

There were some heated debates.  Some participants called for a strong workers movement as key to equitable development, observing that poor and working class African Americans do not always have the same interests as professionals and middle class African Americans, some of whom are gentrifiers themselves, and partners in local corporate growth coalitions—the response to which, by others, was that such an approach was unnecessarily divisive.

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Jane Jacobs: Defender of Cities and their People

Posted by Peter Dreier on May 9, 2016

On April 10, 1968, New York state officials scheduled a public hearing to discuss their plans for an expressway that would have sliced across Lower Manhattan and displaced hundreds of businesses and the homes of 2,000 families. The expressway’s opponents, including Jane Jacobs, a writer who lived in Greenwich Village, considered the hearing a sham. Jacobs noticed that the microphone was set up so that speakers addressed the crowd, not the transportation officials seated on the stage. When speakers asked the officials questions about the project, they refused to answer, saying that they were just there to listen.

When it was Jacobs’ turn to speak, she gave a blistering critique of the highway plan. Then she announced that she was going to walk up on the stage and march past the officials’ table in silent protest, and she welcomed others to join her. About 50 people followed Jacobs to the stage. “You can’t come up here,” a top state official said. “Get off the stage.” Jacobs refused, so the official summoned the police and shouted, “Arrest this woman.”

Jacobs was taken to the police station and released, promising to appear in court. The next day, and for several days afterward, her arrest was headline news. When she appeared in court on April 17, the city had changed the charges from disorderly conduct to second-degree riot, inciting a riot, criminal mischief, and obstructing public administration, all more serious criminal charges. She was told that she faced anywhere from 15 days to one year in prison for each charge. Many of New York’s leading liberals came to Jacobs’ defense, offering to create a legal fund and writing letters and articles protesting her treatment. The charges were eventually dropped.

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Putting the Impact in Impact Investing

Posted by Bill Bynum on May 6, 2016

Impact investing is a popular idea that promises to channel the power of market capitalism into serving the common good. Broadly defined, impact investing is a way for individuals, philanthropies, institutions, or governments to invest in enterprises that generate measurable, beneficial social or environmental impacts alongside financial returns.

While I agree with the premise of impact investing—that it is possible to do well while doing good—I am afraid that absent extraordinary diligence, its promise won't be realized in the most persistently impoverished places in America. My concern grows out of my two decades of experience in community development finance in the Mid South as CEO of HOPE.

When it is suggested to me that impact investing is the tool that will direct capital into places like the Mississippi Delta and into organizations like the CDFI I lead, I think about the distinctive features of persistent poverty areas that make this avenue unlikely.

Impact investing, like the capitalist system it attempts to harness, rewards institutions and places with proximity to thriving economies, political power, and population density. Those are advantages we just do not have. Here are examples of two government initiatives in impact investing with the best of intentions, and, certainly, with good measurable results—they just haven't worked proportionately well here in the Mid South.

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4 Groups That Need to Change to Make Mixed-Income Communities Work

Posted by Bill Traynor and Frankie Blackburn on May 5, 2016

As long time affordable housing developers and community builders now working in the area of public housing transformation, we appreciate the discussion of mixed-income housing in the new issue of Shelterforce. For many years we have believed in the ideal of mixed-income communities, and have experienced genuine success in our work, as well as authentic moments of personal gain, growth, and fun in our personal lives by living side by side with diverse neighbors. The truth is, however, that these moments have been hard won and few and far between.

Putting people in spatial proximity to each other and genuinely “activating the mix” as our colleague Dr. Mark Joseph of the National Initiative of Mixed-Income Communities says, are two very different things. It turns out that our movement (or industry, depending on how you view it) of professionals: private housing developers, advocates, and public housing authorities who are seeking to transform public housing projects into mixed income housing, has pretty much nailed “spatial proximity,” but has a long way to go toward “activating the mix.” Meanwhile, this great experiment—one of the few anti-poverty public policies that can be claimed by a country that has a hard time even gulping up the word “poverty”—is at risk.

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The Complexity of Compliance

Posted by Diana Yazzie Devine on May 4, 2016

Native American Connections (NAC) is a leader in the development and management of high quality, affordable housing communities. It owns 534 multi-family units with another 106 units currently in development predominantly along light rail in Central Phoenix.

To meet the housing needs of low- to extremely low-income individuals and families, NAC uses an array of public housing resources. Though the use of public housing resources makes the projects cost effective for both NAC and its residents, the compliance that comes with the programs not only creates an operational burden for the agency, it is an invasive process for residents.

Qualifying for residency includes verifying income and assets for all residents, including earned and unearned income for the adults and children that will live in the home. While this seems easy enough, and necessary in terms of reducing the risk of fraud, the actual process can be quite uncomfortable for both the applicant and the property manager.

Imagine having to ask a newly remarried mother of three about the status of her court-ordered child support from her previous marriage. On a path to forming her new life, she must disclose sensitive information as she learns that her child support order might still count as income, even if she's never received it. Months of bank statements are required as well as documentation of the custody of all children in the household. The list goes on.

Other families must recount their hardships, possibly including the loss of their home to foreclosure during the most recent recession. Stories of job loss, catastrophic medical events, and the breakup of families are common, and most often heard from people who’ve never previously sought out public housing. More and more, this population includes seniors who are retiring and adjusting to living on fixed incomes. Disclosing this much personal information is not what they’d anticipated—but if they don’t participate, they miss out on the opportunity to gain safe and affordable housing. NAC property management staff must verify every detail, which makes the process time-consuming and frustrating for all involved.

The rules around Section 8 are a recurring point of frustration.

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Does Screening for Eviction Records Violate the Fair Housing Act?

Posted by Eva Wingren on April 29, 2016

We tend to think of the Fair Housing Act as covering access to housing—getting “into” housing. But it also applies to staying in that housing. In other words, it applies to evictions. A landlord may not discriminate when deciding what merits eviction any more than when deciding who to rent to.

Unfortunately, it seems that they do. At a talk hosted by the National Low Income Housing Coalition, National Housing Conference, and Coalition on Human Needs yesterday (April 28), writer and Harvard researcher Matt Desmond shared findings from his book Evicted that should give us pause.

Evictions are much more likely to happen, he said, given the same amount of rent past due, to families with children. This should be a violation of the Fair Housing Act, since family status is a protected class and disparate impact counts as well as outright discrimination. There is also evidence of racial disparities in eviction rates.

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