The U.S. Conference of Mayors is joining a growing chorus calling on the U.S. Department of Housing and Urban Development, Fannie Mae and Freddie Mac to stop selling pools of non-performing loans to “Wall Street speculators,” and requesting that the pools be sold to nonprofits instead.
At the U.S. Conference of Mayors’ annual meeting, held June 19-22 in San Francisco, the group passed a resolution “urging the sale of severely delinquent mortgages to nonprofits for foreclosure prevention and affordable housing strategies.”
The mayors cite a study released last week by the Center for Popular Democracy and the ACCE Institute, entitled “Do Hedge Funds Make Good Neighbors?: How Fannie Mae, Freddie Mac and HUD are Selling Off Our Neighborhoods to Wall Street.”
The report, which can be read here, states that nearly all of the roughly 130,000 mortgages that HUD has auctioned off since 2012 have been sold to Wall Street hedge funds and private equities firms, which the groups say is a big problem.
“An initial examination into four of the largest purchasers of HUD and Federal Housing Finance Agency loans has unearthed an array of disturbing business practices, ranging from those that clearly run counter to the goals of homeownership preservation and neighborhood stability to those that break laws, deceive homeowners, and harm taxpayers more generally,” the study claims.
The groups argue that HUD and FHFA should sell these troubled mortgages to entities working to preserve homeownership and create affordable housing, not to Wall Street speculators with a history of defrauding taxpayers and harming homeowners, tenants and neighborhoods.
The U.S. Conference of Mayors agrees.
In the resolution, which can read here, the mayors say they plan to use the groups “position and authority” to urge major owners of delinquent mortgages to sell them to qualified nonprofits to enable homeowners to stay in their homes through foreclosure prevention strategies.
According to the ACCE Institute, the group of mayors now hopes to sit down with Fannie Mae, Freddie Mac, HUD and several major banks to seek agreement around new, more community-centered, strategies for their sale of troubled mortgages.
The resolution was sponsored by Libby Schaaf, the mayor of Oakland, California, and co-sponsored by Eric Garcetti, the mayor of Los Angeles; Bill DeBlasio, the mayor of New York City; Ras Baraka, the mayor of Newark, New Jersey; Tom Butt, the mayor of Richmond, California; Sam Liccardo, the mayor of San Jose, California; Tom Bates, the mayor of Berkeley, California; Charlie Hales, the mayor of Portland, Oregon; William Peduto, the mayor of Pittsburgh; Betsy Hodges, the mayor of Minneapolis; Mark Kleinschmidt, the mayor of Chapel Hill, North Carolian; Joe McElveen, the mayor of Sumter, South Carolina; Laurel Lunt Prussing, the mayor of Urbana, Illinois; Chris Rey, the mayor of Spring Lake, North Carolina; Philip Stoddard, the mayor of South Miami, Florida; Lisa Wong, the mayor of Fitchburg, Massachussetts; Paul Soglin, the mayor of Madison, Wisconsin, and Ralph Becker, the mayor of Salt Lake City.
The addition of the U.S. Conference of Mayors as part of the effort to steer delinquent loans to nonprofits is a move in a positive direction, the ACCE Institute said.
“You’d think these federal agencies would listen to taxpayers, and do what’s best for struggling homeowners and our neighborhoods, but they haven’t been,” said Gisele Mata of ACCE. “Our hope is that now that we have Mayor Eric Garcetti and dozens of other mayors from across the country standing with us, HUD, Fannie Mae and Freddie Mac can’t keep ignoring us.”