A recent news report by the Kentucky News Connection (Public News Service) quotes Charla Peter, communications director for the Kentucky Housing Corporation, explaining the underlying cause of families' shaky housing status is often affordability.

"When the average wage in Kentucky is $10.91, to afford Kentucky's fair market rent at the average wage, a renter must work approximately 45 hours per week, every week, all year through."

According to Peter, another factor in the increase year-over-year is that many were not counted in 2009 due to the ice storm that impeded a complete survey. She adds that Kentucky's double-digit unemployment rate and overall economic downturn play into the spike, as well.

Another goal of the survey, says Peter, is to help alter the public's perception of homelessness, which is not always a person living on the street, or a person with substance abuse issues.

"It takes one incident, a job loss, a family illness or death, a change in familial status such as a divorce. It could be catastrophic to our families if they're not prepared."

The point-in-time count is used by the U.S. Department of Housing and Urban Development to determine the amount of funding agencies will receive to assist the homeless. The Kentucky Housing Corporation receives more than $11 million federal dollars a year to serve the homeless in 118 counties.

More information and the full report can be found here.

From KFTC Jeffrson County member Linda Stettenbenz:  The chapter's been getting more involved in the Affordable Housing Trust Fund.  Join them for these meetings to support afforcable housing!

The Affordable Housing Trust Fund would generate $10 million annually.  Programs would benefit individuals and families at or below 50% of the area median income ($14,421.50), with 50% of funds set aside for those at 30% and below of median income ($8,652.90)  The need for this fund is great:

• In the 13 county Metro Louisville region, 26% of renters and homeowners combined, or nearly 80,000 households, pay more than 30% of their incomes for housing.
• 11,251 homeless women and children (for some reason I don’t have the statistics on men) used homeless services in 2005.
• In Metro Louisville, 10,758 households are currently on the Section 8 waiting list.
  

 The AHTF is an opportunity to make our community stronger, more productive and efficient.  It would help reduce the strain on services for people cycling in and out of homelessness.  It would generate revenue for the city, jobs, and opportunities for struggling people to maintain housing and therefore have a better chance at health and success in their goals.  This will ultimately create a healthier community for all of us. 
 
In 2006, the mayor formed the Affordable Housing Trust Fund Task Force, which recommended unanimously that the AHTF be created.  The proposal passed by ordinance by a 25-1 vote, with bipartisan support.  A broad coalition of supporters has worked hard for a long time to keep this moving, and the Task Force is now reconvening.  What is needed at this point is mobilization of everyday citizens to the mayor that this issue has not gone away—and he needs to appoint the board to get things moving; and to show city council that we appreciate their support and stand behind them in their efforts to move forward.   This is where KFTC comes in.  There is a lot of momentum behind this issue already, and it’s happening now.  The AHTF meshes well with our vision of economic justice, and it’s a great opportunity for KFTC to act locally.  

Organizers of the AHTF are scheduling a series of meetings with councilmembers to strategize and reaffirm support.  All meetings will be held at City Hall, 601 W. Jefferson St., meet by security inside the 6th st. entrance.  Please mark the following date, and try to attend--we're looking for lots of folks to come out:

Wednesday, August 26th, 4pm--Government Accountability and Oversight Committee meeting--EVERYONE

Also, IF YOU LIVE IN ONE OF THESE DISTRICTS AND ARE A CONSTITUENT, please try to make it to: 

Brent Ackerson, District 26, Friday, August 21, 1:30-2:30
Mary Woolridge, District 3, Thursday, August 27, 1-2
Jon Ackerson, District 18, Thursday, August 27, 2-2:25

Don't know your metro district?  Click here.
For more information, contact KFTC member Linda Stettenbenz at lstettenbenz [at] yahoo.com

We All Know the Way Back Home

While Wall Street was bundling subprime mortgages into collateralized debt obligations (CDOs) to spread their risk and collect the lucrative fees, the Federation of Appalachian Housing Enterprises (FAHE) was investing in people one homeowner at a time.  In its last fiscal year, FAHE, a regional non-profit of 45 housing organizations based in Berea, KY, made 159 mortgages valued at $11.3 million to low-income families and those facing predatory lending. 

One of those loans involved a single mother lured by a “teaser” rate into switching from her fixed-rate mortgage to an adjustable-rate mortgage (ARM.)  After 12 months when she wanted to switch back to her original fixed rate, she discovered a hidden prepayment penalty that would have added nearly $8,000 to her loan balance.  Meanwhile, the ARM’s interest hit 16 percent, increasing her monthly payment from $425 to $900.

“We focus on the long term success of the borrower,” says Jim King, executive director of FAHE.  “What we offer is predictable and fair, no gimmicks or games.”

In September FAHE worked with this single parent to refinance her home with a fixed rate and a monthly payment she can afford.

With its clientele the principal target of subprime mortgage lenders, FAHE demonstrates the ethical way of dealing with modest income folks to insure their dignity while developing their community.  It counsels with clients and determines their level of affordability.  Key is personal contact.

"It’s face to face,” says King.  “We ask the person do you understand what you are buying.”

Contrast this honesty with the intricacies of Wall Street.  To expand the securities market, investment bankers encouraged unregulated mortgage brokers to write subprime mortgages, i.e. loans on residential real estate with a high risk of default.  Some of the justification for the subprime market lay with the steadily increasing value of housing, but in the climate of lax regulation many investment bankers simply ignored or hid risks.  

The risky subprime mortgages were then bundled together as CDOs to look like a security, and with the approval of an “independent” rating agency, they were sold with an investment-grade rating.  Investors around the world scooped them up eager to earn a higher return on these supposedly safe investments.  Meanwhile, the risk of the CDOs and default insurance heightened and spread throughout the entire economy.  Soon the amount of default exposure was almost impossible to calculate.

While home mortgages represent the largest troubled asset triggering the current financial crisis, defaults on commercial mortgages, leveraged buyout loans, credit card-backed bonds, student loans and auto loans are also increasing.  As bankers made riskier loans, they fabricated new ways of packaging them.  Eventually, the subprime market collapsed and the house of credit crumbled.

The fallout from the crisis will be long and palpable.  Already $2 trillion has evaporated from pension funds indicating many older Americans will be working longer.  The millennial dream of cutting poverty in half by 2015 appears a diminishing hope, while rising food and fuel prices are increasing poverty and hunger.  More than 70 companies have ceased underwriting student loans, robbing an untold number of middle class kids a chance for a college education.

The bankers and Wall Street cared only about their fees, and not about the likelihood of repayment.

In contrast, the housing specialists at FAHE live the home ownership dream with their clients.  People of faith recognize the FAHE folks, paid far less than Wall Street brokers, collect the psychic income of knowing they are contributing to the real economy, and don’t gamble with the lives of people. 

John Rausch is a member of KFTC from Powell County and the director of the Catholic Committee of Appalachia.