September 8, 2016
Fighting Financial Exploitation of Elders
The Consumer Financial Protection Bureau has issued a Report and Recommendations on Fighting Elder Financial Exploitation through Community Networks. The Executive Summary opens,
The widespread prevalence of elder financial exploitation destroys the financial security of millions of older Americans annually. In response to this crisis, hundreds of communities across the United States have created collaborative networks to protect their older residents. These networks, which often bring together key community stakeholders and resources, engage in varied activities designed to prevent, detect, and respond to elder financial exploitation. (3)
The CFPB’s recommendations include,
- Professionals working with or serving older adults should create networks in communities where they do not currently exist, especially in communities with a large number of older people.
- Members of existing networks should seek to expand resources and capacity as needed.
- Elder abuse networks that do not focus on financial exploitation should develop activities and the capacity to respond to elder financial exploitation by seeking to include as network members professionals with financial expertise, such as forensic accountants. Also, they should implement educational programs for older adults, caregivers, and professionals on how to prevent, detect and respond to financial exploitation.
- Elder financial exploitation networks should seek to include law enforcement as network members and to encourage their meaningful participation in network activities, including but not limited to educational or case review efforts.
- Because financial institutions are uniquely positioned to detect that an elder account holder has been targeted or victimized and to take action, elder financial exploitation networks should seek to include financial institutions, large and small, as network members. Similarly, financial institutions should seek to join and participate in local networks.
- To help ensure the network’s long-term sustainability, financial exploitation networks should implement strategies to institutionalize the coordinator role as a permanent staff position.
- Networks in areas with older Americans of diverse linguistic, ethnic and racial backgrounds should seek to engage stakeholders that serve these populations and deliver educational and case review services relevant and appropriate to these populations.
- Networks should seek to expand coverage into rural areas by creating regional networks through which resources can be shared and by using teleconferencing and videoconferencing in lieu of travel when necessary.
- Networks engaging in educational activities, especially those networks with limited resources, should use existing federal, state and local educational resources. (4-5)
These recommendations are all good as far as they go, but we are only beginning to understand the extent to which seniors’ financial judgment may be impaired by diminishing cognitive functioning and social isolation. I would hope that over the next decade, we can develop a more effective defense of seniors’ finances from the predators who circle and circle until they can pounce with impunity.
September 8, 2016 | Permalink | No Comments
Thursday’s Advocacy & Think Tank Roundup
- This report, titled “Women are better than men at paying their mortgages,” by the Urban Institute discusses the relationship between mortgage lending and payments with gender statistics.
- Building Justice published a report on the complex history of race in America, including how it intersects with housing, has never been simply black and white. Some of the country’s first “sundown towns,” all white towns in which people of color were not welcome to live or even be seen after dark, began in the late 19th century on the West Coast first against the Chinese.
- In a paper titled “Credit Expansion, Competition and Housing Prices, the authors document the effect of policy-induced credit supply on fueling asset price that leads to the financial crisis, and broad economic outcomes. By comparing loans that fall under the current conforming loan limit (CLL) to those under the old limit last year in a diff-in-diff setting, we find there is a direct effect of CLL change on credit supply and on prices of homes financed by the expanded credit. Increase in credit supply in the new conforming loan market also crowds out private capital in the jumbo loan market. We also find significant effects of CLL change on broad economic outcomes, such as regional home price, employment and business growth.
September 8, 2016 | Permalink | No Comments
September 7, 2016
Alternative Living Arrangements
Realtor.com quoted me in Can You Live in a Storage Unit or Van? How Legal These ‘Homes’ Really Are. It opens,
Yes, we know: Finding affordable housing can be tough. Tougher than tough. And that has led people to push the boundaries of what “home” is—living in vans, boxes, and a slew of other stopgap solutions. Call them creative, call them desperate. But can you call them legal?
Well, that all depends on the specifics. Check out this list of alternative living arrangements people have tried to see what leg you can stand on if the cops show up at your door.
Can you live in a storage unit?
At face value, it would seem like this one could work, especially for the types of storage units that are more freestanding as opposed to those housed in multifloor buildings. And, more than a few homeless people have tried it. But, owing to ordinances and a lack of amenities, this one is considered a straight no-go.
“Most of the time, building codes are there for your protection, and storage units aren’t built for human habitation: There won’t be two means of egress, plumbing, or electricity, and ventilation may be an issue,” says attorney Robert Pellegrini, whose law firm, PK Boston, assists its clients with residential zoning and permitting. There’s also no kitchen, bathroom, or windows.
Bottom line: It’s illegal and possibly dangerous.
Can you live in a van?
A house on wheels? Yes, living in your car or van has become a bit of a thing in pricey-but-young areas like Silicon Valley. But doing so requires some fancy maneuvering.
“There are certainly modifications that you’d want to make to a typical van. But if you don’t run up against vagrancy regulations, there are plenty of Wal-Mart parking lots around for you to call home,” says Pellegrini. “I’d suggest a safe deposit box and better-than-average auto security, but this is definitely doable—just ask all the baby boomers driving around the country in their RVs.”
The trick is to find venues that don’t consider van living illegal.
“Many jurisdictions do not allow people to sleep in public, and this has sometimes been interpreted to include sleeping in a vehicle,” says David Reiss, academic program director for Brooklyn Law School’s Center for Urban Business Entrepreneurship.
For example, in Beaverton, OR, you can’t park a vehicular residence in a commercial lot overnight, but in Boise, ID, you can as long as you have permission from the owner.
To check the status of where you are, do an internet search for “public sleeping + [your current location]” and see what comes up, or look at this report from the National Law Center on Homelessness and Poverty (there is a list of places where it’s OK to sleep in public starting on Page 165).
* * *
Can you live in a box?
Could you build a wooden box in the living room of a friend’s apartment—like in the recent case of an illustrator in San Francisco, CA, who did just that? It became a national story when the city’s chief housing inspector got wind of the box abode and put up a fuss.
“In the San Francisco case, it doesn’t seem that this artist’s box violated local laws,” says Reiss. “Safety investigators are going to be less interested in how people choose to live within their own legal apartments than in how landlords might choose to split up an apartment to jam more and more people in it.”
In other words, if you put one more roommate in your apartment in a wooden box, OK. But if you were to put 10 of those boxes in an apartment and try to rent them out? Well, safety investigators might balk.
Still, it’s not completely unlikely someone might try that.
“Now, more than ever, people are looking for ways to offset the skyrocketing costs of living,” says Pellegrini. “I predict that people’s resourcefulness and practicality will stretch the definition of ‘home’ in order to make ends meet.”
September 7, 2016 | Permalink | No Comments
Wednesday’s Academic Roundup
- The nature of housing supply is critical for the functioning of the housing market, macroeconomic forecasting and policy setting. This study addresses a gap in the cross-country comparative literature by providing novel insights into the nature of new housing supply in 14 countries observed quarterly between 1970 and 2015.
- This paper analyses how borrower liquidity constraints and home equity relate to the realized loss given default (LGD) using the quarterly U.S. residential mortgage loan-level data observed from Q2 2005 to Q1 2015. We define defaulted loans with zero-LGD as cure loans and those with non-zero LGD as non-cure loans. We find robust evidence that the borrower liquidity constraints and positive equity are explaining cure, while negative equity explains non-zero loss.
September 7, 2016 | Permalink | No Comments
September 6, 2016
Tuesday’s Regulatory & Legislative Roundup
- An article on Dealbook, discusses the whistle-blowing program, which the SEC chairwoman has called “a game changer for the agency.”
- The federal Consumer Financial Protection Bureau unveiled proposed rules in June that take aim at short-term payday loans charging triple-digit annual percentage rates. This article discusses how the payday lending industry is bracing for a regulatory crackdown.
September 6, 2016 | Permalink | No Comments
Mortgages for Borderline Borrowers
BiggerPockets.com quoted me in 7 Mortgage Qualification Tips for Borderline Borrowers. It opens,
It’s super easy to qualify for a mortgage when you have an 800 credit score, a six-figure salary, no debt, and 20% to put down. But that isn’t everyone’s story.
It’s far more difficult to be approved with a 620 credit score, a low five-figure salary, some outstanding debt, a car loan, and 3% for the down payment. You can still qualify, but it’s a LOT more difficult. And you’re not going to be getting the lowest rate around.
I asked some experts for their mortgage qualifying tips for borrowers who run the highest risk of being turned down. Here’s what they had to say:
7 Mortgage Qualification Tips for Borderline Borrowers
Go FHA
“Applicants with a low credit scores should be sure to look for lenders who offer FHA-insured mortgages. The FHA will insure mortgages with lower credit scores than most others will accept. Borrowers with small savings should look for lenders with low-down-payment requirements. Again, an FHA-insured lender may be the right match, but Fannie Mae and Freddie Mac also have programs with low down payment requirements, so applicants should ask their lenders about those as well,” says David Reiss, a Law Professor at Brooklyn Law School who also writes at REFinBlog.com.
J.D. Crowe, President of Southeast Mortgage of Georgia agrees. “Those with less-than-ideal credit scores sometimes have home loan options through the Federal Housing Administration. The FHA works with approved lenders to help applicants who have lower credit scores and small down payments, and can offer as much as 96.5% financing.”
You can find the other six tips here.
September 6, 2016 | Permalink | No Comments
September 5, 2016
The Capital/Labor Split
Thomas Piketty
To commemorate Labor Day, a quote from Thomas Piketty’s Capital in the 21st Century:
On August 16, 2012, the South African police intervened in a labor conflict between workers at the Marikana platinum mine near Johannesburg and the mine’s owners: the stockholders of Lonmin, Inc., based in London. Police fired on the strikers with live ammunition. Thirty-four miners were killed. As often in such strikes, the conflict primarily concerned wages: the miners had asked for a doubling of their wage from 500 to 1,000 euros a month. After the tragic loss of life, the company finally proposed a monthly raise of 75 euros.
This episode reminds us, if we needed reminding, that the question of what share of output should go to wages and what share to profits— in other words, how should the income from production be divided between labor and capital?— has always been at the heart of distributional conflict. In traditional societies, the basis of social inequality and most common cause of rebellion was the conflict of interest between landlord and peasant, between those who owned land and those who cultivated it with their labor, those who received land rents and those who paid them. The Industrial Revolution exacerbated the conflict between capital and labor, perhaps because production became more capital intensive than in the past (making use of machinery and exploiting natural resources more than ever before) and perhaps, too, because hopes for a more equitable distribution of income and a more democratic social order were dashed. I will come back to this point.
The Marikana tragedy calls to mind earlier instances of violence. At Haymarket Square in Chicago on May 1, 1886, and then at Fourmies, in northern France, on May 1, 1891, police fired on workers striking for higher wages. Does this kind of violent clash between labor and capital belong to the past, or will it be an integral part of twenty- first- century history? (39, footnotes omitted)
September 5, 2016 | Permalink | No Comments
