Tuesday, February 12, 2008

Acorn Housing: Housing Assistance For the Poor or Bailouts For the Affluent Greedy?

As many of you readers who know me are probably aware, Acorn is a non-profit that I richly love to hate.

Let me count the ways.

Well, for starters, ACORN didn't help its case with me by launching a vicious and extremely personal attack on me during the the campaigns for 49th Ward Alderman. Acorn was supporting our incumbent, while I supported Don Gordon, and their people seized upon a very barbed comment I posted on Craig Gernhart's blog, in which I was critical of parents of the six hapless children killed in a NOH apartment fire, on the grounds of their lack of personal responsibility. ACORN distributed a flier with my comments, with my name, around the ward as evidence of my "racism", even though my comment completely lacked any racial references whatsoever, and was merely critical of parents who were irresponsible enough to breed prolifically on an income that barely supports one person.

Now Acorn is offering assistance to middle-class borrowers who got in over their heads in Monkeyshine Mortgages on overpriced houses. In this election year, every pandering politician, including Dubya as well as our Dem candidates, is at work concocting schemes to support the unsupportable: millions of deeply underwater borrowers buried in trickster mortgages that are now resetting en masse, on houses that never were worth what they paid for them, that they never could afford to begin with, and are now rapidly losing value.

The stated purpose of the organization is to assist low-income borrowers in finding suitable, decent housing, and to work to combat unjustified utility rate hikes and to help poor people in obtaining services and assistance in paying for their utilities.

However, it now appears that ACORN is devoting most of its efforts to assisting a particularly undeserving class of "victims", namely middle-income borrowers who bought much larger and more expensive homes than were necessary to house them decently, with trickbag mortgages with terms that pretty much guaranteed, almost in so many words, that they would not be able to afford the payments too far into the future, for houses that were never within the borrower's means to begin with and were obscenely overpriced to boot, thanks mainly to the flood of E-Z money made available to anyone who could sign an application.

Today's The New York Times, in its article, MORTGAGE CRISIS GOES BEYOND SUBPRIME LOANS, detailed the cases of a couple of people who are seeking assistance in hanging on to their overpriced houses. One is Brenda Harris, 53, a Las Vegas casino analyst, whose $2400 a month payment on her $392,000 suburban home is about to reset to (at least) $3400, and whom ACORN has agreed to work with in her campaign to get her lender to ease the terms of her mortgage:

Home prices in the North Las Vegas neighborhood of Brenda Harris, a technology analyst at a casino company , have fallen 20% to 30%. The builder who sold her a new three-bedroom home on Pink Flamingoes Place for $392,000 in 2006 is now listing similar properties for $314,000.

But Ms. Harris does not want to leave her home.She estimates that she has spent $40,000 on her property, about half for a down payment and much of the rest on a deck and landscaping (my emphasis).

It gets better. Read on.....

"I'm not behind in my payments, but I'm trying to prevent getting behind," Ms. Harris said. "I don't want to ruin my credit".

To which I say, well, sell the house, take the hit, move into a $1,000 a month apartment, and get a loan to pay off your deficiency while you still have good credit. In two more years, you'll have recovered and you can buy a nice place for $200,000 or so.

However, Ms. Harris doesn't feel that she should have to make these types of adjustments, for she is a member of Amerika's Entitled Middle Class, and should get assistance to live in a house she can't afford because that's what she "wants", and ACORN thinks so, too.

The article goes on:

In addition to the declining value of her home, Ms. Harris will soon be hit with a sharply higher house payment. She has an option adjustable rate mortgage, a loan that allows borrowers to pay less than the interest and principal due every month. The unpaid interest gets added to the principal balance. She is making the minimum payments due on her loan, about $2,400.

But she knows that she will not be able to pay the $3,400 needed to cover her interest and principal, which she will be required to pay once her loan balance hits 115% of her starting balance. And under the terms of her loan, which was made by Countrywide Financial, she would have to pay a prepayment penalty of about $40,000 if she chose to refinance or sell her home before May 2009 .

What can we figure out about this woman's situation from the facts stated in the article I've quoted?

Well, for one thing, she isn't anywhere near being poor. She stated that she can afford (though barely) her current monthly payment of $2,400 a month. That means she earns at least $75,000 a year, and most likely more. Last I heard, $75,000, which is almost twice what I earn, was not only pretty far above the poverty level, but is pretty far past the median income of most Chicago, and Las Vegas, earners. This lady is not a hardship case, folks.

She also stated that she has spent about $40,000 on the place for her downstroke and frivolous improvements. Half went for the down payment, or about $20,000. That means she put less than 10% down for the home, leaving her with a $372,000 mortgage, which a woman with professional employment and assumed numerical competence ought to be able to figure is well beyond her means, as it is nearly five times her annual income.

We can deduct, also, that if she could buy a new, single-family 3-bed home, that she could easily, with no financial strain, have bought an absolutely fantastic two-bed condo for, say, $200,000, or even less, in Vegas, even at the fantasy prices of 2006.

Oh, but I forget, she didn't want a condo. She wanted a single family house. Shouldn't she be able to get what she wants because that's what she wants, without reference to her ability to pay for it?

We can also readily see that Ms. Harris assumed a Negative Amortization loan, and walked into it with her eyes wide open. This woman has no excuse for ignorance of the terms of her mortgage, and her statements prove that she had full knowledge of what she was entering into.Why did she not just back away and settle on a cheaper place? After all, we are not talking about an 82-year-old sharecropper's daughter who never had the opportunity for education. We are talking about a well-paid woman with professional status and the financial wherewithal to afford to pay $2,400 a month, and who could drop many notches down on the housing ladder and still live comfortably and well. A $392,000 house goes way beyond basic necessity.

Yet ACORN is stepping to the plate to assist this greedy,spoiled, self-indulgent pig, along with our federal government.

I work in an office in the Uptown neighborhood, and when I walk the streets in those parts, I see tragedy everywhere. The streets are teeming with people suffering from crippling mental illness, including combat veterans, who are living in the streets, being assaulted, digging for food in dumpsters, begging for change, and becoming victims of violent crimes.

I don't see ACORN reaching out to these hapless people, though the need is extremely visible. ACORN is nowhere in evidence in Uptown, at least not that I can see, and I also have not heard of the organization making any effort to lobby for lower utility rates or for the removal of utility taxes, which are especially brutal for the poor.

Do the ACORN people grasp that their efforts on behalf of people like this woman means that they have less help to offer the truly needy and deserving?

This worthless organization now seems to exist solely to dispense undeserved services to self-made middle-class victims, and, of course, to attack local bloggers. Those of us who really want to assist the poor, ill, and truly victimized might just want to withdraw their support from this group, and dedicate their funds and energies to one of the many charities that actually assist the people who need it the most.


dave said...

First... ACORN Housing and ACORN are two separate organizations, though ACORN Housing did come out of ACORN and they still work closely together.

Second... ACORN and ACORN Housing has been been very active for years on utility rates and taxes. You can read some of the information by doing some really simple research. Or I can just do it for you - look here.

Third... you are taking one isolated example to claim that ACORN cares more about the "affluent greedy" than they care about "the poor."

Fourth... ACORN and ACORN Housing have been very active in low income neighborhoods in Chicago, helping many low income people both get into homes and stay in their homes. BUT... for the most part, people have to go get help from ACORN Housing. And a very wide range of people use ACORN Housing's services.

I think that you are justifiably pissed about what happened during the Moore/Gordon race. But you really should not base an attack on one isolated story and poor/no research.

The North Coast said...

Sorry, but you are the one who needs to do research.

If you follow my title link, you will get to ACORN, www.acorn.org, the parent organization.

Right there, on the home page, is a big announcement, PRESERVING HOME OWNERSHIP-ACORN and COUNTRYWIDE FIND SOLUTIONS FOR BORROWERS.

Continue to read the article on their site, "Acorn and Countrywide Announce Agreement to Help Homeowners Avoid Foreclosure". There, you see that Ms. Harris is being assisted in keeping to help middle-class homeowners keep their houses, so she is NOT an "isolated case".

This is not ACORN housing. This is the parent organization ACORN, so I am correct.

Before you contribute again, you might, if you truly care about assisting the genuine needy, write to these people and demand that they save their efforts and funds for the truly needy, and the best thing they could do for middle-class morons over their heads in overpriced houses is to "assist" them in squaring with reality and help them into rental apts they can afford.

chicago pop said...


Good stuff!

dave said...

If you follow my title link, you will get to ACORN, www.acorn.org, the parent organization.

That's fair. But then you should probably change your headline to not say, "ACORN Housing." Further... you never linked to the NY Times article, so there was nothing to look at to determine who was actually helping Harris. After looking at the article, it clearly states that ACORN Housing was who helped her, not ACORN.

Further... the announcement that you point to says nothing about Brenda Harris. It simply says that ACORN and Countrywide have reached an agreement. The agreement with COuntrywide is about raising industry standards, not about helping Harris get a new mortgage.

The two articles are pretty clear. ACORN reached a deal with Countrywide to raise industry standards. ACORN Housing assisted Ms. Harris in keeping her home.

Further... I know for a fact that ACORN will assist a wide range of people with their mortgage/housing issues. They also continually help low and middle class income individuals and families into homes through facilitating affordable mortgages.

And you like to claim that ACORN isn't doing anything about utilities. You did it on Craig's blog today, even after I pointed out a clear example of them doing exactly what you claim they don't.

Further... ACORN Housing's focus is on home ownership, and they assist people with matters related to that.

There, you see that Ms. Harris is being assisted in keeping to help middle-class homeowners keep their houses, so she is NOT an "isolated case".

I don't even know what this sentence means. But with that said, you are pointing to one middle class income case and using it to assert that ACORN doesn't help poor people. That would fail Logic 101. First of all, ACORN Housing fully admits to assisting BOTH low and middle class income individuals and families. So it is perfectly inline with their mission and values. Second, assisting a middle-class individual does not equate with not assisting lower-class individuals. But you probably already know that.