Affordable Housing Activists Sue Feds for Withheld Funds

by Alyssa Figueroa on July 12, 2013

The Right to the City alliance filed an unprecedented lawsuit against the Federal Housing Finance Agency (FHFA) and its acting director, Ed DeMarco, on Tuesday, for illegally withholding at least $382 million from the National Housing Trust Fund, an affordable housing federal fund established in 2008.

Right to the City is a national alliance of 50 grassroots organizations in 17 cities. Its major campaign, the Homes for All campaign, unites renters, public housing occupants, homeless families and underwater homeowners to fight for affordable housing.

The 2008 Housing and Economic Recovery Act required that Fannie Mae and Freddie Mac contribute a portion of their revenue—0.04 percent of every dollar in new mortgage purchases—to the National Housing Trust Fund. As a result of the 2008 financial crisis, however, the FHFA suspended its contributions. Now, the mortgage finance giants have reported $28 billion in record-setting profits in 2012, but have yet to contribute to the fund.

After two years of pressuring the Obama administration to fund affordable housing, the Right to the City alliance said it could not wait another day. The alliance has filed a lawsuit in the U.S. District Court for the Southern District of Florida to enforce the FHFA and DeMarco contribute what they owe to the fund. The $382 million would secure the largest new investment to low-income housing in more than 30 years.

Rachel Laforest, executive director of Right to the City, said during a press conference on Tuesday, “Unfortunately, an investment in public housing has not been a trend in this country.”

She said from 1995 to 2008, more than 200,000 units of publicly subsidized housing have been demolished, while hundreds of thousands more units are slated for demolition. Currently, 11 million Americans pay more than 50 percent of their income on housing. Meanwhile, more than 3 million Americans remain homeless, half of whom are children.

Danielle Stelluto is one of those homeless Americans. She is a member of Picture the Homeless, one of Right to the City’s member organizations, and a plaintiff in the lawsuit. Stelluto is a single mother of a 5-year-old son and a 3-year-old daughter, all currently living in a shelter in the Bronx, NY. Stelluto said after five months of living in a shelter, she was able to move into a three-bedroom house after receiving a housing voucher. After a year and a half, however, she lost the voucher after Mayor Bloomberg discontinued the program. She has since been living in a shelter, away from family and friends. Because of her long commute to work and her need to obey the shelter’s curfew, she had to leave her job and take a job as a home health aid, where she now makes less than $10,000 a year.

She added that Section 8 in NYC is closed, while the wait list for public housing in the city is 10 years.

Stelluto said:

I’ve been striving to pick myself up, but it seems almost impossible at times. I’ve never been more stressed out in my life, between my kids’ loss, the loss of the voucher and the loss of a roof over our heads…I’ve dealt with depression, anxiety and feeling like I’m running on a hamster wheel.

Angela Samuels, another plaintiff in the case, is a member of Miami’s worker center, another Right to the City’s member organizations. Samuels said she grew up in Miami, went to college and became a nurse. However, she lost her job after 26 years, and was evicted from the house where she grew up after 43 years.

She said, “I never considered how hard it could be to find an affordable place to live. I never thought that I would find myself unemployed. Not in this country. Not in this century.”

Samuels is currently living at her sister’s house while she tries to secure steady housing. The waiting list for public housing and section 8 in Miami are closed.

She added, “People going through foreclosure, eviction and all those that can’t afford a place to live…We are fed up. We’re not taking anymore of this. We need affordable housing.”

Sheila Crowley, president and CEO of the National Low Income Housing Coalition, said that millions of working-class people, seniors and people with disabilities are completely cut out of the housing market.

She said:

The thing that’s important to know today is that all the federally assisted housing, including public housing, including vouchers, including the project-based section 8 stock as well as some of the smaller programs for elderly and disabled people, all of that is under threat because of the severe cuts to the domestic discretionary programs. All of HUD’s programs were subject to sequestration and so we’ve seen across the board cuts in all of those.

Crowley said that she hopes this lawsuit gets the attention of DeMarco, who has the authority to make sure that Fannie Mae and Freddie Mac make the necessary contributions to the trust fund so the program can get underway.

But, she adds, this initial source of funding just gets the program started. She said, “It is by no means efficient to address long-standing, and huge unmet needs…And it is our goal to continue to push through as many different avenues of funding for the trust fund to bring it to scale.”

She said other ways to finance the housing fund include modifying the mortgage interest deduction, passing the Commonsense Housing Investment Act of 2013 and instituting the Robin Hood tax.

LaForest said it is important to remember that the housing crisis is not over:

On paper it appears that we’re coming out of the housing crisis because many of the Wall Street entities and hedge funds that were responsible for the housing crisis in 2007 and 2008 are going in and buying up huge swathes of foreclosed homes and turning them into rental properties. And these are now rental properties that not only can’t be afforded by the people who previously lived in the homes, but can’t be afforded by much of the surrounding community either. So we are on the precipice of another housing bubble that further exacerbates the situation.

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