Full text of Cascade (Federal Reserve Bank of Philadelphia) : Cascade, No. 72

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No. 72 Fall 2009

PUBLISHED BY THE
COMMUNITY AFFAIRS
DEPARTMENT OF THE
FEDERAL RESERVE BANK
OF PHILADELPHIA

INSIDE:
2 — Message from the
Community Affairs Officer
3 — Strengthening the Low
Income Housing Tax Credit
Investment Market
4 — Stimulus Bill Opportunities
and Challenges for Delaware
5 — Stimulus Bill Websites and
Reports
6 — States Fight Foreclosure
Rescue Scams
6 — 5 Tips for Avoiding Foreclosure Scams
8 — Spotlight on Research: Will
Income Inequality Be Reduced
by the American Recovery and
Reinvestment Act of 2009?
14 — Delaware Enacts Payday
Lending Law
14 — Pennsylvania Law
Covers Home Improvement
Contractors
16 — Calendar of Events

A C O MMU NI TY DEVELOP MENT P U BLI CAT ION

CASCADE
HUD Awards $95 Million to Third District for
Neighborhood Stabilization
By Jacob Arem, Community Affairs Intern

Twenty-seven Camden homes rehabilitated. A blighted Chester apartment building demolished. Financial assistance to
troubled borrowers in Delaware’s Sussex
County. These and other activities are getting underway as part of the nearly $4 billion Neighborhood Stabilization Program
(NSP) created by the Housing and Economic Recovery Act of 2008 (HERA) to aid
communities hit by the foreclosure crisis.
Funds are being distributed on the basis
of a formula aimed at areas of greatest
need, and the largest grants are going
to California, Ohio,
Texas, Michigan,
and Florida. However, the Third Federal Reserve District
also stands to gain
from the program:
A total of $56 million is headed for
central and eastern
Pennsylvania, $20
million is going to
southern New Jersey, and nearly $20
million is targeted
to Delaware.
The NSP is being
called the most
significant housing program since
the Housing and

www.philadelphiafed.org

Community Development Act of 1974.1
It aims to deal with foreclosures at the
neighborhood level in order to mitigate the
risk that vacant or foreclosed houses can
...continued on page 10

1
See Alan Mallach, “How to Spend $3.92 Billion:
Stabilizing Neighborhoods by Addressing
Foreclosed and Abandoned Properties,” Discussion
Paper, Federal Reserve Bank of Philadelphia, October
2008, available at http://www.philadelphiafed.org/
community-development/publications/discussionpapers/.

Delaware County, Pennsylvania, received a $6.7 million grant under the Neighborhood Stabilization Program to demolish the blighted Penn Hills apartment
complex in Ridley Township. Pennrose Properties, LLC will develop 26 townhouses on the site for rent to low- and moderate-income households. (Photo
provided by Pennrose Properties)

1

CASCADE

No. 72
Fall 2009

CASCADE is published three times a year by
the Federal Reserve Bank of Philadelphia’s
Community Affairs Department and is available
at www.philadelphiafed.org.
Material may be reprinted or abstracted
provided CASCADE is credited. The views
expressed in Cascade are not necessarily those of
the Federal Reserve Bank of Philadelphia or the
Federal Reserve System.
Send comments, address changes, and
subscription requests to Keith L. Rolland at (215)
574-6569 or keith.rolland@phil.frb.org.
COMMUNITY AFFAIRS DEPARTMENT
Kenyatta Burney
Senior Staff Assistant
(215) 574-6037
kenyatta.burney@phil.frb.org
Jeri Cohen-Bauman
Lead Administrative Assistant
(215) 574-6458
jeri.cohen-bauman@phil.frb.org
Christy Chung Hevener
Consumer Specialist
(215) 574-6461
christy.hevener@phil.frb.org
Andrew T. Hill, Ph.D.
Economic Education Advisor
(215) 574-4392
andrew.hill@phil.frb.org
Amy B. Lempert
Community Development Advisor and Manager
(215) 574-6570
amy.lempert@phil.frb.org
Erin Mierzwa
Community Development Specialist
(215) 574-6641
erin.mierzwa@phil.frb.org
Dede Myers
Vice President and Community Affairs Officer
(215) 574-6482
dede.myers@phil.frb.org
Harriet Newburger, Ph.D.
Community Development Research Advisor
(215) 574-3819
harriet.newburger@phil.frb.org
Keith L. Rolland
Community Development Advisor
(215) 574-6569
keith.rolland@phil.frb.org
Marvin M. Smith, Ph.D.
Community Development Research Advisor
(215) 574-6393
marty.smith@phil.frb.org
Brian Tyson
Research Assistant
(215) 574-3492
brian.tyson@phil.frb.org
John J. Wackes
Community Development Specialist
(215) 574-3810
john.j.wackes@phil.frb.org
Todd Zartman
Economic Education Specialist
(215) 574-6457
todd.zartman@phil.frb.org
2

Message from the
Community Affairs Officer
While we are still a long way from
everything looking rosy, there are
some signs that the economic crisis
has reached a bottom and the financial
system is beginning to recover. In the
community development world, large
amounts of federal funding from the
Housing and Economic Recovery Act
of 2008 (HERA) and the American
Recovery and Reinvestment Act of
2009 (ARRA) are expected to generate positive results. In May 2010, at
this Fed’s biennial conference on older
communities, we will look at changes
as a result of the foreclosure crisis and
the opportunity that new federal funding brings. But long before next spring,
you will want to hear what is happening, so read on.
The Neighborhood Stabilization Program, which was created by the HERA
last year, is providing more than
$131 million in funding to the states
of Delaware, New Jersey, and Pennsylvania and another $41 million to
individual cities such as Philadelphia,
Pittsburgh, and Newark. The article
by Jacob Arem provides more details
on who has received first-round NSP
funds and how they will be spent.
One of the most difficult consequences
of the financial crisis has been the
delay of construction of many low-income rental housing units. Lately, investors have had smaller appetites for
purchasing the tax credits that finance
these important affordable housing
units. As the prices for equity investments have fallen, a gap in financing
has developed. The ARRA provides

two means of getting these projects
going again, and Buzz Roberts of the
Local Initiatives Support Corporation
writes about other ways to improve
the likelihood that these projects will
be built.
While all three states are expecting
multiple types of funding through the
ARRA, Delaware has clearly identified its plans in an article by the state’s
lieutenant governor, Matthew Denn. In
his article Denn talks of the challenges
of 1) understanding the contents and
requirements of the ARRA quickly
and accurately, 2) letting the citizens
of the state understand the opportunities, 3) remembering that the ARRA
is a temporary stream of funding, and
4) planning to keep tight controls on
spending without slowing down the
disbursement of the funding.
And just when you think the foreclosure problem cannot get worse,
we hear more stories of efforts to
trick desperate homeowners. New
Jersey has taken legal action against
a number of companies and individuals, and Pennsylvania has issued cease
and desist orders against several outof-state companies. Both states and
Delaware are implementing marketing campaigns to alert consumers to
these foreclosure prevention scams.
See Keith Rolland’s story about these
plans.
In future issues, we will continue to
bring you stories on individual communities’ recovery efforts.

Strengthening the Low Income Housing Tax Credit
Investment Market

By Buzz Roberts, Senior Vice President for Policy and Program Development, Local Initiatives Support Corporation,
Washington, D.C.
The low income housing tax credit
(LIHTC) has been the federal government’s most successful program for
producing quality rental housing for
low-income families and individuals.
It has created jobs, revitalized lowincome communities, and expanded
low-income families’ and individuals’ access to geographic areas that
offer relatively good employment
and educational opportunities.
By engaging private capital and
imposing financial discipline, the
LIHTC has produced over 2 million
affordable rental homes1 while incurring an annualized foreclosure rate
of less than 0.1 percent.2
Historically, the financial services
sector has provided 80 to 90 percent
of LIHTC investments, a result of
its real estate financing expertise
and regulatory mandates to address
low-income needs. Fannie Mae and
Freddie Mac have provided about 40
percent of LIHTC investments, and
banks motivated by the Community
Reinvestment Act (CRA) have also
provided about 40 percent, led by the
largest banks. Insurance companies
and other investors have provided
additional LIHTC investments.
However, the substantial losses that
many financial institutions have
recently incurred have eliminated or
reduced their ability to use tax credits. Since these credits are payable
over a 10-year period, and the future
tax liability of financial institutions

The nonprofit Alliance for Building Communities used a $3.5 million LIHTC investment to convert
a historic 1902 knitting mill into 27 apartments for older people in Hamburg, Pa. The investment
came from a multi-investor fund organized by the National Equity Fund, a subsidiary of the Local
Initiatives Support Corporation, which also provided a loan and grants to the nonprofit. The rehabilitation complemented $1.6 million in streetscape renovations to the commercial district.

has become more uncertain in the
current environment, the risk that
the investment will not be profitable
because the tax credits cannot be
claimed as scheduled is problematic
for some financial institutions.
Fannie Mae and Freddie Mac had
stopped making new investments
even before entering federal conservatorship last year. While some
banks have kept investing, others
have cut back substantially. Overall,
in 2008 LIHTC-based investment
dropped to about one-half of the
$9 billion invested in 2007. Many
observers expect about the same

level of investment or less in 2009.
Moreover, current investors that
cannot use tax credits are reportedly
trying to sell their portfolios, and the
mere prospect of such divestment
is further destabilizing an already
weak investment market.
The investors still in the market can
take their pick of projects and command much higher rates of return.
From a public policy perspective,
however, that means each dollar of
tax credit generates less capital for
housing, and many high-priority
deals are not getting done because
they now have financing gaps, are
...continued on page 12

1

Source: National Council of State Housing Agencies.

2

Ernst & Young, “Understanding the Dynamics IV: Housing Tax Credit Investment Performance,” (2007), p. 49.

3

Stimulus Bill Opportunities and Challenges for Delaware
By Matthew P. Denn, Lt. Governor of Delaware, Dover, Del.
Delaware, like all other states, will
reap significant benefits from the
American Recovery and Reinvestment Act (ARRA), but the state faces
significant challenges in implementing the law as well.
By our current estimate, over the
next three years $902 million in both
operating and capital funds will
flow to Delaware state government
through formula and discretionary
grants, another $245 million will
come to federal agencies for projects
in our state such as the Amtrak train
station in Wilmington and Dover
Air Force Base, and $31 million more
will be given to counties, municipalities, and private nonprofits. (To put
this in perspective, Delaware’s annual operating budget, including state
and federal funds, is approximately
$4 billion.) These numbers will almost certainly increase as Delaware
is successful in obtaining competitive grants. The high ratio of funding
received by the state compared to
that received by local governments
reflects the fact that, in Delaware, the

Matthew P. Denn, Lt. Governor of Delaware

4

vast majority of government services
are delivered at the state level.

sides. Most of the funding is split
between the Delaware State Housing
Authority and the other four county
and municipal housing authorities.
Two-thirds of the federal monies will
increase the spending levels of four
ongoing programs: the Community

Although there are no precise stateby-state projections, hundreds of
millions more will go to individual
Delawareans in the form of federal
tax benefits and
incentives and
direct grants
The first and most pressing [challenge]
and loans. Tax
is simply to understand the contents
provisions in the
ARRA include
of the thousand-page bill and what it
an extension of
means for the state.
alternative minimum tax relief,
an expansion
Development Block Grant (CDBG),
of the earned income tax credit, and
the HOME Investment Partnernew or expanded credits and deducship, the Homelessness Prevention
tions for purchasing new vehicles,
program, and the Public Housing
especially alternative-fuel vehicles;
Capital Fund.
for first-time homebuyers; for energy
efficiency; and for college education.
The CDBG is a flexible funding
stream intended to provide comRoughly speaking, a third of the
munities with resources to address a
money coming to our state will go towide variety of unique community
ward filling Delaware’s budget gaps
needs, including but not limited to
for fiscal year 2009, which ended on
rehabilitating affordable housing
June 30, and the next two fiscal years.
and improving public facilities. The
The next third will go directly to
HOME Investment Partnership proconstruction — the aforementioned
vides low income housing tax credits
federal agency projects, highways
to be distributed competitively to
and transit, housing, and environdevelopers of such housing. The
mental projects. The final third will
Homelessness Prevention program
primarily be divided among more
provides financial assistance and
than 50 different state-run programs
services to prevent individuals and
already funded in whole or in part by
families from becoming homeless
the federal government. To stimulate
and to help those who are experithe economy as quickly as possible,
encing homelessness to be quickly
Congress generally chose to increase
re-housed and stabilized.
funding to existing programs rather
than create new ones, which would
The types of housing assistance
require a lengthy ramp-up.
available include emergency shelter,
short-term or medium-term rental
About $63 million of the stimulus
assistance, housing relocation and
package formula funding for Delastabilization services, mediation
ware will go to housing and comof landlord-tenant disputes, credit
munity development programs on
counseling, security or utility deposboth the operating and the capital

its, utility payments, moving cost assistance, and case management. The
Public Housing Capital Fund pays
for modernizing existing low-income
housing stock.
In addition, for the first time, the
ARRA is also making nearly $23
million worth of grants in lieu of tax
credits available to developers of
low-income housing. The Delaware
State Housing Authority will make
awards to finance the construction
or acquisition and rehabilitation of
qualified buildings for these grants.
Delaware is also seeking additional
millions in competitive grants for
housing capital, neighborhood stabilization, community development,
and economic development.
Some private nonprofits in Delaware, primarily Head Start agencies
and our federally qualified health
centers, have already been the recipients of direct stimulus grants. Delaware’s other nonprofits benefit from
the formula funding of the stimulus
package primarily through the Community Services Block Grant (CSBG).
The CSBG is an ongoing program,
but the ARRA provides a bonus payment of $5 million, about 1.5 times
the recent annual appropriation
level. CSBG funds are distributed to
nonprofits not by a state agency but
by an umbrella organization, First
State Community Action, on a statewide competitive basis.
The ARRA’s most direct beneficiaries
in the business community are the
construction contracting companies.
All of the more than $400 million
for construction will be allotted to
the private sector through competitive bids – for roads, bridges, new
and expanded wastewater treatment
facilities, public drinking water
supplies, and energy efficiency
retrofitting. The broader business
community can also benefit from the
ARRA’s direct competitive grant op-

portunities, especially in alternative
energy, considerably expanded SBA
loan programs, and tax relief.
Delaware continues to face a number
of challenges in receiving its stimulus
funds. The first and most pressing is
simply to understand the contents of
the thousand-page bill and what it
means for the state; we must also ensure that we meet all of the deadlines
and requirements of the law. Meeting
all of the deadlines and complying
with every requirement are ongoing
tasks, tasks made somewhat more
difficult given that we do not have

one employee whose only job is to
handle the stimulus package.
A second challenge is making Delaware’s citizens aware of their stimulus opportunities. We have made
full use of Delaware’s Clearinghouse
Committee, a joint committee of the
executive and legislative branches
charged with reviewing all federal
grant applications, including those
related to the ARRA. The committee graciously doubled its meeting
schedule to accommodate the long
list of stimulus-related grants. Its
...continued on page 15

Stimulus Bill Websites and Reports
Federal grant opportunities related to the American Recovery and
Reinvestment Act (ARRA) are identified at www.recovery.gov. A useful
source for finding and applying for federal grants is www.grants.gov.
Information on ARRA-related spending in Pennsylvania, New Jersey,
and Delaware may be found at www.recovery.pa.gov, http://www.state.
nj.us/recovery/, and http://www.recovery.delaware.gov.
The U.S. Small Business Administration has information on ARRA-funded
small business programs at http://sba.gov/recovery/information/index.
html.
A Local Initiatives Support Corporation summary of ARRA-funded
programs may be found at www.lisc.org/; select policy and “Sustainable
Communities and the American Recovery and Reinvestment Act: Items of
Interest and Details.”
An Enterprise Community Partners summary of ARRA programs may be
found at http://www.enterprisecommunity.org/public_policy/.
A Brookings Institution report “Implementing ARRA: Innovations in
Design in Metro America” may be found at http://www.brookings.edu/.
HUD tracks ARRA funding for HUD programs at www.hud.gov/recovery.
The IRS describes ARRA tax incentives for businesses at http://www.irs.
gov; select newsroom and 2009 fact sheets. For ARRA tax benefits available
to taxpayers, select newsroom and news releases.
The Center on Budget and Policy Priorities provides state-by-state estimates
of ARRA spending affecting low- and moderate-income individuals at
http://www.cbpp.org/files/1-22-09bud.pdf .
5

States Fight Foreclosure Rescue Scams
As part of a growing concern about
foreclosure rescue scams, Pennsylvania, New Jersey, and Delaware
are filing lawsuits, issuing cease and
desist orders, and mounting advertising campaigns to reach homeowners who need help.
Marge DellaVecchia, executive
director of the New Jersey Housing

and Mortgage Finance Agency, said,
“Although legitimate assistance from
HUD-certified housing counselors is
available without charge to homeowners, too many homeowners are
falling victim to foreclosure rescue
scams being perpetrated by individuals and companies that are not licensed by any state or federal agency
and that are charging homeowners

The Federal Reserve Board

5 Tips for Avoiding Foreclosure Scams
1. Work only with a nonprofit, HUD-approved
counselor.
If you are looking for help to prevent foreclosure
(www.federalreserve.gov/pubs/foreclosuretips/
default.htm), be sure the counseling agency is on the
Department of Housing and Urban Development’s
list of approved agencies. Visit HUD’s website for
an easily searchable list of HUD-approved housing
counseling agencies (www.hud.gov/offices/hsg/sfh/
hcc/hcs.cfm), or call 877-HUD-1515 (877-483-1515) for
more information. If you are approached by foreclosure counselors—by mail, phone, or in person—make
sure the counseling agency is HUD-approved before
you do business with them.

fill out forms for you. Be sure to talk with an attorney
before signing anything that transfers the title of your
home to another party.
5. If it sounds too good to be true, it probably is.
If you feel you may be the target or victim of foreclosure fraud, trust your instincts and seek help. For
tips on spotting scam artists, visit the Federal Trade
Commission’s webpage on foreclosure rescue scams
(www.ftc.gov/bcp/edu/pubs/consumer/credit/
cre42.shtm). Report suspicious schemes to your state
and local consumer protection agencies, which you
can find on the Federal Citizen Information Center’s
Consumer Action Website (www.consumeraction.gov/
caw_state_resources.shtml).

2. Don’t pay an arm and a leg.
You should not have to pay hundreds—or thousands—
of dollars. Most HUD-approved housing counselors
provide no-cost counseling services and many more
provide low-cost counseling. Do not agree to work
with a counselor who collects a fee before providing
you with any services or who accepts payment only
by cashier’s check or wire transfer. In general, do not
pay money to anyone unless you know exactly what
services you will receive.
3. Be wary of “guarantees.”
A reputable counselor will not guarantee to
stop the foreclosure process, no matter what
your circumstances. Working with a legitimate counselor can certainly increase your
chances of keeping your home—but be wary
of people who promise a sure thing. Again,
get the details of your transaction, along with
any promises, in writing first.
4. Know what you are signing—and be
sure you sign it.
Don’t let a counselor pressure you to sign
paperwork you haven’t had a chance to read
through carefully or that you don’t understand.
Don’t sign any blank forms or let “the counselor”

Visit www.federalreserve.gov/consumerinfo for more information on mortgage and other consumer topics.
0309

6

for help that is not forthcoming.”

Legal Actions
The state of New Jersey has filed
a total of 11 civil mortgage fraud
lawsuits since June 2008. The lawsuits have named 102 individual and
corporate defendants whose actions
have affected more than 950 victims,
as well as property worth more than
$29.1 million.
New Jersey has also obtained indictments or guilty pleas in seven
criminal mortgage fraud cases involving a total of 10 defendants. The
defendants have been charged with
victimizing close to 60 individuals
and banks in connection with loans
worth approximately $11 million.
Delaware’s attorney general has filed
two cases alleging mortgage rescue
fraud since October 2008. The cases
involved four individuals and one
corporate defendant.

Administrative Actions
In May, the Pennsylvania Department of Banking (DOB) issued cease
and desist orders to six out-of-state
mortgage modification companies.
The DOB is also working with servicers and the Pennsylvania Housing
Finance Agency (PHFA) and sending
letters that encourage homeowners
to seek help from qualified housing
counseling agencies, caution homeowners about companies offering to
help modify mortgages for a fee, and
publicize assistance available from
the state’s programs.
A working group of representatives from the PHFA, the attorney
general’s office, the DOB, and the department of state has been meeting
since May 2009 to address consumer
complaints that have been received
by housing counselors. The com-

plaints substantially concern foreclosure rescue scams. The agencies
explore whether companies cited in
the complaints are properly licensed,
have posted required bonds, and
have complied with other laws.
The agencies and offices discussed
complaints involving 41 companies
at a July 16 meeting, said Bob Bobincheck, director of strategic planning
and policy at the PHFA. Bobincheck
noted that “a lot of the results of the
inquiries are behind the scenes.”
In Delaware, the attorney general’s
Mortgage Fraud Task Force was
launched in June 2009. Composed of
the Delaware Department of Justice,
the Delaware State Housing Authority, Office of the State Bank Commissioner, Delaware’s HUD-certified
housing counselors, and nonprofits
that provide housing services, the
task force sponsored three housing
workshops that brought together
homeowners, state agencies, housing
counselors, nonprofits, and mortgage
servicers. The task force provides
operational and marketing support
of housing events coordinated by
member agencies. Homeowners
are directed to a unified statewide
housing events calendar at www.
deforeclosurehelp.org. The attorney
general’s Mortgage Hotline has been
established at (800) 220-5424 for mortgage assistance and referral services.
Legislation
Two Pennsylvania bills were signed
into law in June. One prohibits a
mortgage broker or originator from
being the sole recipient of communications from lenders in an effort
to ensure that consumers receive
monthly statements and other notices
intended for them by their lenders.
The other bill protects mortgage company employees who report illegal
activity or take part in an investigation from retaliation through reduced
salaries, termination, or other actions.

Foreclosure
Scams

The thought of losing one’s home through foreclosure
is a frightening prospect. In desperation, many
homeowners fall victim to con artists who offer to help them
save their homes, but ultimately make the situation worse.
These con artists cheat homeowners out of thousands of
dollars and their homes through deceit, deception and lies.
WHAT IS FORECLOSURE?

HOW TO AVOID THEM
consumerbrief
The difference between the sales price and amount owed
is called Surplus Funds.
The deed holder is entitled to the Surplus Funds. The con
artist who bought the deed, sometimes for a small amount,
is entitled to apply for the Surplus Funds. The original
homeowner who would have been entitled to those funds
loses out on potentially tens of thousands of dollars.
HOW HOMEOWNERS CAN PROTECT THEMSELVES

Foreclosure is the equitable proceeding in which a bank
or other secured creditor sells or repossesses a parcel of
real property (immovable property) due to the owner’s
failure to comply with an agreement between the lender
and borrower called a “mortgage” or “deed of trust.”
THE SCAM: TRANSFER OF DEED
Homeowners are urged to transfer their property deed for
a minimal payment offered by the con artist. The con
artist may promise to transfer the deed back after certain
conditions are met. A homeowner may receive a few
thousand dollars in return for signing away his or her
ownership of the home but can end up losing tens of
thousands of dollars in equity due to the homeowner as
well as the title to the home. The con artist’s verbal
promises go unfulfilled.

When homeowners are contacted about foreclosure
options by a third party, homeowners should:
■

Contact their lender. They may be able to work a
re-payment plan (forbearance agreement) that is
within a homeowner’s budget;

■

Seek legal advice through a trusted attorney, not
one appointed by the company or individual
soliciting them;

HOW THE HOMEOWNER LOSES AND THE CON ARTIST PROFITS

The Foreclosure Process
Often times, after obtaining the deed, the con artist
allows the home to go through foreclosure. At the sheriff ’s
sale*, the home often sells for more than what is owed to
the mortgage company and the taxing authorities.
* A sheriff's sale is an auction of property conducted by the sheriff
following a court order to seize and sell a property to pay a debt after
notice to the public.

Revised 03/19/09

Delaware’s Mortgage Rescue Fraud
Protection Act, which took effect
January 1, 2009, protects homeowners after an action for foreclosure is
filed on a principal residence. The
act regulates foreclosure consultants
who claim that they can save a
homeowner from foreclosure, for a
fee, by requiring that a consultant
sign a written contract with the
homeowner that includes all the
terms and provides for a right of
cancellation. Moreover, the act
prohibits payment before services
are complete. Details are at www.
attorneygeneral.delaware.gov/
mortgageforeclosure.

Consumer Education
Pennsylvania and Delaware are
mounting advertising campaigns to
encourage homeowners to seek help
from qualified housing counseling
agencies and to caution homeowners about companies offering to help
modify mortgages for a fee.
In Pennsylvania, the PHFA will
sponsor the ads, including some in
conjunction with the DOB, explained
Bobincheck. All the ads will direct
consumers to the state’s housing
counseling network and will contain
contact information for counseling
...continued on page 15

7

Will Income Inequality Be Reduced by the American Recovery
and Reinvestment Act of 2009?
The financial crisis and the current
recession have caused widespread
hardship throughout the economy.
In addition to unprecedented
measures undertaken by the federal government to quell the turmoil in the financial markets, the
government has also implemented
the multi-billion-dollar American
Recovery and Reinvestment Act
of 2009 (ARRA), which, according
to the administration, “will lay the
foundation for a robust and sustainable 21st century economy.”1 A key
objective of the ARRA is to save as
well as create several million jobs.
The income from the jobs (and
other provisions in the ARRA) will
provide much needed assistance to
millions of households. This will be
welcome news especially for those
at the lower end of the income scale,
where the performance of family
income has lagged behind those at
the top of the income distribution.
In the absence of corrective economic
measures, the recession would likely
exacerbate the unequal distribution of incomes among households.
But given the actions taken by the
current administration, at issue is
what impact the ARRA will have on
household income inequality. This

1

concern is the subject of a study by
Ajit Zacharias, Thomas Masterson,
and Kijong Kim.2 The following is a
summary of their findings.

Background
The authors point out that average
growth in output and employment
levels during the 2000s is much
lower than that from 1950 to 2000;
moreover, the average growth rate
in median family income is even
lower than the levels for output and
employment between the same two
periods. Thus, it is unlikely that
any improvement will occur in the
unequal distribution of income. To
complicate matters, the financial
crisis and the onset of the recession could serve to increase income
inequality.
Among the measures to address the
economic situation, the government
has employed a package of expenditures and tax cuts under the ARRA.
In addition to creating millions of
jobs, the act is expected to “provide
relief to low-income and vulnerable households especially hurt by
the economic crisis and, at the same
time, support aggregate demand.”

The authors analyze the effects of the
ARRA. More specifically, they “provide a preliminary assessment of
the Act in terms of its likely impact
on median household income, gaps
between advantaged and disadvantaged population subgroups, and
income inequality.” They hasten to
underscore the preliminary nature of
their analysis. They note that a great
deal of money under the ARRA remains to be spent and the decisions
regarding the manner of allocation
are still to be determined. Thus,
their analysis is tentative and subject
to change with the refinement of
their methods and the availability of
better data.

Methodology
The analytical approach taken by
the authors includes “constructing
a baseline scenario; estimating the

See http://www.recovery.gov/?q=content/act.

2
Ajit Zacharias, Thomas Masterson, and Kijong Kim, “Distributional Impact of the American
Recovery and Reinvestment Act: A Microsimulation Approach,” Levy Economics Institute of
Bard College, Working Paper 568 (June 2009).

8

Marvin M. Smith, Ph.D.,
Community Development Research Advisor

increase in employment by industry and occupation due to ARRA;
and simulating the accompanying
effects of changes in earnings on
the distribution of money income.”
The authors used data from the 2008
Annual Social and Economic Supplement (ASEC) to construct a baseline
of labor conditions and distribution
of income against which to measure the effects of the ARRA. Since
these data cover the experiences of
individuals and households in 2007,
they adjusted the data to reflect labor
force conditions in January 2009 and
total income for adults in 2008.3
The effects of the ARRA are assessed
only through its creation of new
employment and the resulting effects
on earnings. The authors refer to this
approach as “comparative-static,”
since they do not “take into account
how other changes in the economic
environment would affect employment and income distribution in the
current and future years.” Given the
prospects that unemployment will be
relatively high in the next few years,
the authors consider their simulated
effects of the ARRA a “best-case
scenario” for employment.
The authors undertake their derivation of the fiscal stimulus from the
ARRA over the 2009-2011 period
by first estimating the impact of
tax cuts, transfers, and subsidies on
gross domestic product (GDP) and
the resulting change in employment,
and then estimating the employment
effect of government purchases of
goods and services. In the former
case, they use a “set of multipliers
that convert an additional dollar of

government expenditure (or tax cut)
into an increase in GDP.” They draw
on the “low” and “high” values for
the multiplier used by the Congressional Budget Office (CBO). While
the authors use the CBO’s high
value, they use the midpoint of the
range as their “medium” value.4 In
the latter case, the authors use two
alternative assumptions. Under the
first assumption, they distribute the
increase in government purchases
among various government industries, which is referred to as the
“government” assumption. The second assumption calls for distributing
the final demand (from government
purchases) primarily across private
industries (with a limited amount
to government industries) and is
known as the “private” assumption.
The authors also assume that the
“additional demand for labor created
by the stimulus would be met by an
increased supply of labor from the
pool of ‘employable’ individuals in
the ASEC.”

Findings
Combining the employment estimates generated from government
tax cuts, transfers, subsidies, and
purchases of goods and services
under their various assumptions, the
authors wind up with four scenarios:
Government High, Government
Medium, Private High, and Private
Medium.
Estimates of Job Creation. The authors compare their estimates of
jobs created under the ARRA from
2009-2011 under the four scenarios
(which range from 6.1 million to

8.8 million) with those of the CBO
and the administration’s Council of
Economic Advisors (CEA). They
note that there is a “remarkable coincidence” that the new job estimates
under their two “medium” scenarios
(6.1 million under Government and
6.3 million under Private) are almost
identical to the CEA’s estimate (6.2
million).5 Nonetheless, given the
decline in employment stemming
from the recession and the likelihood
of more job losses in the near future,
the authors conclude that the “job
creation effect of ARRA is primarily
a (partial) replacement of lost jobs.”
Effects on Earnings and Household
Income. The authors find that the
impact of the ARRA will have little
effect on overall income inequality.
More specifically, “the bottom 60
percent of households are unlikely
to see any notable improvement in
their money income as a result of
ARRA,” while the incomes of the
top 40 percent will probably not be
adversely affected.
They also find that “it is unlikely that
the ARRA will have any palpable
effect on redressing the substantial
gaps in money income that exist
between nonwhites and whites,
single-female headed families and
married couples, and less-educated
and college graduates.”
In light of their analysis, the authors
suggest that a “comprehensive
employment strategy that goes well
beyond the ARRA” be implemented.
They further indicate that public
employment should play a key role
in this alternative strategy.

3

These adjustments were necessary to capture the “steep rise in joblessness during 2008 and the accompanying changes in earnings.”

4

The authors distribute the resulting increase in GDP among the major industries, which, in turn, gives rise to increased employment by industry.

5

It is remarkable since the authors used a considerably different methodology and assumptions.

9

HUD Awards $95 Million to Third District for
Neighborhood Stabilization
...continued from page 1

pose to community stability. NSP
funds may be used to “(A) establish
financing mechanisms… including
soft-seconds, loan loss reserves, and
shared-equity loans… (B) purchase
and rehabilitate homes and residential properties that have been
abandoned or foreclosed upon, in
order to sell, rent, or redevelop…
(C) establish land banks for homes
that have been foreclosed upon, (D)
demolish blighted structures, [and]
(E) redevelop demolished or vacant
properties.”2
A crucial feature of the program is
its emphasis on geographic targeting. Since resources are limited, the
program is intended to stabilize
neighborhoods in transition or on
the verge of decline, not to revitalize entire cities. Income targeting is

income. The U.S. Department of
Housing and Urban Development
(HUD), charged with distributing
NSP funds, urges grantees “not only
to stabilize neighborhoods in the
short-term, but to strategically incorporate modern, green building and
energy-efficiency improvements in
all NSP activities to provide for longterm affordability and increased
sustainability and attractiveness of
housing and neighborhoods.”3
The NSP provides grants of at least
$19.6 million to every state as well
as direct assistance to municipalities
based on a formula that considers
high numbers or percentages of foreclosures, subprime mortgages, and
mortgage defaults and delinquencies.

Direct HUD Allocations

Since resources are limited, the program
is intended to stabilize neighborhoods
in transition or on the verge of decline,
not to revitalize entire cities.
a requirement, with all funds aiding
individuals and families at or below
120 percent of area median income
and at least 25 percent of each grant
directed toward households earning
50 percent or less of the area median

The HUD formula
provided direct
grants to three
municipalities in
the Third District:
Philadelphia, Allentown, and York
County.4

Philadelphia
received nearly $17 million directly
from HUD, which, along with an additional $3.8 million allocation from
the state, will be used to acquire and
rehabilitate approximately 215 properties. The Philadelphia Redevelop-

2

U.S. Department of Housing and Urban Development, Federal Register, 73:194, October 6, 2008.

3

U.S. Department of Housing and Urban Development, Federal Register, 73:194, October 6, 2008.

ment Authority will use NSP funds
only on blocks with a vacancy rate
below 5 percent. Eighty percent of
funds will be directed to nearly two
dozen ZIP codes, including neighborhoods in lower Northeast Philadelphia, Olney, Oak Lane, and West,
Southwest, and South Philadelphia.
The city of Allentown will spend
most of its $2 million grant on acquisition and rehabilitation, while York
County (excluding the city of York)
will use its $2 million allotment on
a mix of acquisition, rehabilitation,
and demolition.

State Allocations
Each of the three Third District states
used a competitive application process to distribute its federal grants.

Pennsylvania
Of Pennsylvania’s $60 million grant,
nearly $35 million will go to communities within the Third District. The
Pennsylvania Department of Community and Economic Development
(DCED) awarded funding based
on applications from municipalities, redevelopment authorities, and
nonprofits.
Pennsylvania used a data-driven
approach to target funds, according
to Ed Geiger, director of DCED’s
Center for Community Development. “We relied on the HUD risk

4
Other direct federal grantees in this region are, in Pennsylvania, Allegheny County ($5.5 million) and Pittsburgh ($2.0 million); and, in New Jersey,
Newark ($3.4 million), Union County ($2.6 million), Paterson ($2.3 million), Jersey City ($2.2 million), and Bergen County ($2.1 million).
5
The HUD risk score measures estimated risk of foreclosure and abandonment on a 0-to-10 scale. A complete listing of the risk score and data for each
census tract and block group is available at huduser.org/DATASETS/nsp_target.html.

10

scores5 but also heavily weighted
the neighborhoods and communities that met the definition of middle
markets, which directly corresponds
to the ‘tipping point’ neighborhoods
that were espoused…by Alan Mallach,”6 Geiger explained. “These are
neighborhoods on the margin that
could go either way, getting dramatically worse or better. These places
are likely to be the most effective
places to infuse public money. The
Reinvestment Fund helped us better
define those neighborhoods, which
we began calling middle markets, as
ones that had an average sales price
between 50 and 130 percent of the
county’s median sales price.”
The state’s largest grant, for $6.7 million, will go to Ridley Township for
the demolition of part of the blighted
Penn Hills apartment complex, with
some land to be redeveloped by
Pennrose Properties as LEED Silver7
townhouses and the rest placed into
a land bank. Other major recipients are Philadelphia ($3.8 million),
Scranton ($3.0 million), and Cambria
County ($3.0 million).
Pennsylvania expects that, statewide,
the NSP will fund the acquisition
and rehabilitation of 630 units, the
demolition of 308 blighted units,
limited land banking, and financial
assistance for homeowners.

New Jersey
The New Jersey Department of
Community Affairs divided up New
Jersey’s grant of $51.5 million based
on a competitive application process open not only to municipalities
and nonprofits but also to for-profit
developers. The $20 million alloca-

NSP Research
Community Affairs researchers across the Federal Reserve System are
finalizing plans for a study of the planning and early implementation
phases of the Neighborhood Stabilization Program (NSP). Data collection will begin in the near future. The study will include interviews
with a sample of NSP directors throughout the country. Data from a
number of sources, such as the census and Home Mortgage Disclosure
Act, will provide background information on conditions in the communities where interviews are conducted.
tion to southern New Jersey includes
grants of $2.5 million to each of four
entities: the Cumberland County
Empowerment Zone Corporation,
Gloucester County, Trenton, and a
Camden project of for-profit developer RPM Development LLC.
Execution plans vary widely: The
city of Burlington will act as its own
developer, while several other localities have hired Triad Associates, a
housing development consulting
firm, to manage their programs.
Statewide, the NSP will fund at least
200 acquisitions, 150 rehabilitations,
50 demolitions, and 20 new units.

Delaware
Delaware received the minimum
state grant of $19.6 million, distributed by the Delaware State Housing
Authority (DSHA) to New Castle
County ($7 million), Wilmington
($5.6 million), Kent County ($2.5
million), Sussex County ($2 million),
and Dover ($1.5 million). The DSHA
projects that funding will be available to acquire and rehabilitate 150
units in the state while also carrying out some demolition in older
areas. Delaware’s NSP recipients
will team up with a wide range of
partners, ranging from local housing

authorities to nonprofits such as the
Diamond State Community Land
Trust, Habitat for Humanity, and
United Cerebral Palsy of Delaware.
Delaware has already launched
a billboard, radio, and television
campaign promoting homeownership and is focusing particularly on
housing counseling.
The HERA requires NSP recipients
to spend all funds within the next
four years. Meanwhile, the American
Recovery and Reinvestment Act of
2009 appropriates another $2 billion to the NSP to be awarded not
by formula but by a national competitive application process. HUD
is expected to release the results by
December 1, 2009.
General information on the NSP is
available at www.hud.gov/nsp. For
information on Pennsylvania, visit
newpa.com or contact Ed Geiger of
DCED at (717) 787-5327 or egeiger@
state.pa.us; for New Jersey, visit www.
state.nj.us/dca or contact Diane Kinnane
of DCA at (609) 633-6182 or dkinnane@
dca.state.nj.us; for Delaware, visit
destatehousing.com or contact Victoria
Powers of DSHA at (302) 739-4263 or
vicky@destatehousing.com.

See Alan Mallach, “How to Spend $3.92 Billion: Stabilizing Neighborhoods by Addressing Foreclosed and Abandoned Properties,” Discussion Paper,
Federal Reserve Bank of Philadelphia, October 2008, available at http://www.philadelphiafed.org/community-development/publications/discussionpapers/.

6

LEED, or Leadership in Energy and Environmental Design, is an environmentally friendly building rating system developed by the U.S. Green
Building Council with four levels of certification: certified, silver, gold, and platinum.

7

11

Strengthening the Low Income Housing Tax Credit
Investment Market
continued from page 3

perceived as too complicated or
risky, are in locations that get less
attention from CRA examiners, or
involve potential bank investors that
already have enough investments
to meet their CRA needs. Although
there is a shortage of LIHTC investment in most places, rural areas and
smaller cities tend to be especially
disadvantaged. Similarly, most investors would rather avoid complex
projects that provide housing for
the homeless or other special needs
populations, as well as those that
would preserve federally assisted
housing or otherwise use federal rent
subsidies.
The recently enacted American
Recovery and Reinvestment Act
provides temporary grant funds to
jump-start stalled projects but does
nothing to reactivate the investment
market.
Three ways to attract private investment from both experienced and
novice investors are:
1. Congress could permit investors
to “carry back” LIHTCs from existing projects for five years from
2009-2011 tax returns, provided
the investors make new LIHTC
investments of an equal amount.
Under current law, an investor
without enough tax liability in a
given year to use the LIHTCs it
has earned can “carry back” the
credits one year by amending its
tax return for the previous year.
However, many current investors face more than one year
without profits, so they need a
longer carry-back period in order
to claim the LIHTCs. This would
stimulate new investments immediately and discourage the sale
12

of current portfolios in a weak
market. In addition, investors in
new projects should generally be
permitted to carry back LIHTCs
for five years at any time during
the 10-year term of the LIHTCs.
This policy would address the tax
risk for most LIHTC investors.
Extending the carry-back to five
years would require legislation,
which Congress could consider
later this year.

in a region that includes a bank’s
local “assessment area.” However, supplemental inter-agency
Q&A guidance (revised January
6, 2009) presents two obstacles.
First, Q&A §__.12(h)-6 limits
credit for regional investments to
banks that are already adequately
addressing the community development needs of their major
assessment areas. The desire
to address local needs is valid.
However, a bank with numerous assessment areas may not
be certain at the time it needs to
make an investment decision that
a subsequent examination will
conclude that the bank has met
this requirement. For example,
after hurricanes Katrina and Rita

2. Regulators could increase the
flexibility of Community Reinvestment Act (CRA) policies
concerning regional investments.
Regional and local banks could
greatly expand their LIHTC
investments, but many of these
banks need (and want) to coinvest with others through large
regional or national
funds. These funds
offer safety, risk
diversification,
and efficiency,
especially for
relatively new and
small-scale investors. However,
current CRA policy
guidance limits
the recognition of
investments made
through regional
and national multiinvestor funds,
thus undermining
the effectiveness of
the CRA to motivate such LIHTC
A $16.8 million low income housing tax credit investment
from JP Morgan Chase helped finance the rental units shown
investments. The
above as part of an 11-phase HOPE VI redevelopment plan in
CRA regulation
Camden, N.J. The project, Carl Miller Homes, was completed
itself does allow
in December 2008 and used solar panels to help meet power
recognition for
needs. Michaels Development was the developer, and the Cambank investments
den Housing Authority provided significant additional funding.

in 2005, the banking regulators
issued special policies encouraging banks nationwide to invest in
rebuilding the Gulf Coast. One
bank considered investing in the
redevelopment of public housing
in New Orleans. After checking with its regulator, however,
the bank decided not to invest
because it was told it had not
invested enough in another market — even though the supply of
LIHTC capital in that other market already far exceeded demand.
As a result, LIHTCs in Louisiana
are going unused, even though
thousands of units are ready to
begin construction. It should be
possible to find another standard
to encourage banks to meet
local needs without discouraging
regional investments.
Second, Q&A §__.12(h)-7 gives
bank examiners discretion to
grant less CRA credit for investments in large regions. However,
many funds require regions as
large as a quadrant of the country to be workable and efficient.
Many banks are reluctant to
invest in such funds because they
will not know how much CRA
credit they will get until they
are examined perhaps a year or
more later. A very large bank can
avoid these obstacles and target
its LIHTC investments to the locations where it will get the most
CRA credit by investing directly
or by enlisting LIHTC syndicators to set up a fund in which it is
the sole investor. Ironically, these
approaches divert money from
the broader multi-investor funds
that regional and local banks
prefer. Adding sufficient flexibility should not require a statutory
or regulatory change; the four
federal banking regulators could
jointly modify the Q&A guidance
on the CRA.

3. Fannie Mae and Freddie Mac
could guarantee LIHTC investments made by others. Because
the future status of Fannie Mae
and Freddie Mac is uncertain, it
may not be practical for them to
make new LIHTC investments for
their own portfolios. However,
they could use their considerable expertise to help restore
the LIHTC investment market
by guaranteeing investments
made by others, including both
banks and other less experienced
corporate investors. In past years,
other financial companies have
provided such guarantees but
are no longer in a position to do
so. Guaranteeing LIHTC investments would provide a source of
profit to the GSEs and credit risk
protection for investors. The GSEs
might also attract new investors
by dividing what is normally a
15- to 17-year investment into
shorter segments. The Federal
Housing Finance Agency, which
oversees Fannie Mae and Freddie
Mac as their conservator, could

encourage and support this guarantee approach.
The LIHTC has been the linchpin in
numerous successful public-private
partnerships for over 20 years. As a
public policy instrument, it has also
helped to rehabilitate the reputation of federal housing production
policies and was the model for new
markets tax credits and other policy
innovations.
Problems with home mortgages and
commercial real estate have created
a financial crisis and touched off a
deep recession. LIHTC investments
continue to perform well economically, but the financial crisis has
curtailed new investments. A few
new policies could go a long way
to restoring the LIHTC investment
market and the housing, economic
vitality, and partnerships that depend on it.
For information, contact Buzz Roberts
at (202) 739-9264 or broberts@lisc.org;
http://www.lisc.org/.

Additional Resources Provided for LIHTC Projects
The American Recovery and Reinvestment Act (ARRA), approved by
Congress in February, provides two resources to states to help start low
income housing tax credit (LIHTC) projects that stalled because equity
investments became less available.
HUD is administering $2.25 billion through the Tax Credit Assistance
Program (TCAP). Under TCAP, Pennsylvania is receiving $95.1 million,
New Jersey $61.2 million, and Delaware $6.6 million. Information on
TCAP is available at http://www.hud.gov/recovery/tax-credit.cfm.
In addition, each state can convert into cash a portion of the LIHTC
authority the Treasury Department allocates by formula. Each state
can exchange up to 40 percent of its 2009 allocation and 100 percent of
its unused 2008 allocation. States would use the HUD funds and cash
received in exchange for LIHTC authority to fund housing development
projects that meet LIHTC requirements. For further information, go to
http://www.treas.gov/recovery/LIH-grants.shtml.
-Buzz Roberts
13

Delaware Enacts Payday Lending Law
Delaware Governor Jack Markell
signed legislation regulating payday
lenders. The signing took place at a
July news conference at West End
Neighborhood House (WENH),
a Wilmington nonprofit that announced statewide expansion of
its small loan alternative to payday
loans. The nonprofit’s small loan
product, Loans Plus, provides sameday cash loans averaging from $300
to $500 for up to three months with
interest rates that do not exceed 15
percent. WENH provides related services such as financial literacy education and the opportunity to establish
or re-establish positive credit.
Governor Markell said at the signing, “Predatory lenders have devastating effects on our communities,
and I’m proud that West End took

the initiative to offer a safe alternative to high-interest payday loans.
While Loans Plus helps people
with the cash they need now, more
importantly it helps them plan for
the future and decrease their dependence on short-term loans.”
The new law adds an annual surcharge of $1,500 per office for
payday and title lenders in Delaware. The standard annual fee for
all licensed lenders in Delaware,
including payday and title lenders,
is $250 per office. The surcharge on
payday lenders will fund financial
literacy education and promotion of
low-interest community-based loan
programs. The law limits a consumer’s debt exposure on a title loan to
the value of the vehicle.

In the past 18 months, West End has
made $160,000 in loans to nearly
400 people, of whom 93 percent
have successfully repaid their loans,
WENH said.
WENH is making Loans Plus available statewide in a partnership with
the United Way of Delaware, Wilmington Trust Company, Catholic
Charities, and the YWCA. Other supporters include Barclays Bank, the
Federal Home Loan Bank of Pittsburgh, ING Bank, and TD Bank.
For information, contact Barbara Reed,
director of WENH’s housing and financial management program, at (302) 6584171, ext. 176 or breed@westendnh.org.
-Keith L. Rolland

Pennsylvania Law Covers Home Improvement Contractors
Pennsylvania’s Home Improvement
Consumer Protection Act, which
became effective July 1, requires all
contractors who perform $5,000 or
more in home improvements in a
year to register with the Pennsylvania attorney general’s office.

Complaints involving home improvement or repair projects are one
of the top subjects of calls to the attorney general’s Bureau of Consumer Protection. In 2008, the attorney
general’s office received more than
2,100 consumer complaints involving
home improvements and filed legal
actions seeking more than $2 million
in refunds, fines, and civil penalties
against “no show” contractors and
others doing substandard work.
Attorney General Tom Corbett said
that the act is intended to protect
consumers from unscrupulous contractors, provide new protection for
consumers who hire home improvement contractors, and authorize
criminal penalties for home improvement fraud.
“This legislation gives us new tools

14

to identify and prosecute problem
contractors,” Corbett said. “It will
also help consumers avoid frustrating and potentially expensive problems in the future.”
Almost 32,000 Pennsylvania contractors have registered since registration started on March 23. All
registered contractors are required
to have at least $50,000 of personal
injury liability coverage and $50,000
of property damage coverage.
Consumers can check the registration status of any home improvement contractor in Pennsylvania
at www.attorneygeneral.gov or
1-888-520-6680. Consumers can also
contact the Better Business Bureau,
check contractors’ references, and
obtain multiple estimates.

Stimulus Bill Opportunities and Challenges for Delaware
meetings are open to the public. In
addition to establishing an extensive
stimulus-related website, we held
a series of six “stimulus suggestion
box” public meetings throughout the
state, as well as four business opportunity meetings. In addition, we did
targeted outreach to the Delaware
nonprofit, disabilities, and faithbased communities.
A third challenge relates to the use
of what is, by definition, a temporary funding stream. Many ARRAfunded programs contain standard
federal grant language requiring that
the funding supplement rather than

replace state funding. This requirement needs careful thinking, since
any new spending must not create
an obligation down the line, when
federal funding ends, that the state
may be unable to afford.
We continue to be challenged to
meet the law’s dual goals of tight
controls to avoid waste, fraud, and
mismanagement and rapid expenditure of the funds to promote the
quickest possible economic recovery.
While these goals are not mutually
exclusive, there is nonetheless a
dynamic tension between the two.
Tighter controls slow down spend-

States Fight Foreclosure Rescue Scams
agencies in the area, he said, adding
that “most of the advertising will be
on radio and television, although as
we move into the more rural areas of
Pennsylvania we will use more print
ads and ads on gas pumps.”
Delaware’s marketing campaign will
include advertising on billboards and
buses about a state-directed website,
www.deforeclosurehelp.org, and a
hotline operated by the Delaware attorney general’s Office of Consumer
Protection at (800) 220-5424. Foreclosure prevention workshops will be
listed on the website.
In addition, New Jersey provides a
consumer brief, “Foreclosure Scams:
How to Avoid Them,” at http://
www.njconsumeraffairs.com/brief/
foreclosure.pdf.

Foreclosure Mediation Programs
New Jersey’s Judiciary Foreclosure
Mediation Program enables quali*

... continued from page 5

ing, and rapid spending requires
more strict controls. Finally, we all
need to manage expectations about
the stimulus package. Undoubtedly, it has created and will create
and preserve jobs and stimulate the
economy; it is also of considerable
help in balancing our state’s budget
this year and next. But the stimulus
money is not a panacea; there is not
a federal stimulus dollar for every
possible expenditure, nor will it fill
Delaware’s budget gap all by itself.
More information is available at http://
www.recovery.delaware.gov.

... continued from page 7

fied homeowners who are facing
foreclosure to receive help from
HUD-certified housing counselors,
licensed attorneys, and a neutral
mediator to resolve loan delinquencies. Distressed homeowners can call
the state’s hotline at (888) 989-5277
or visit www.njforeclosuremediation.org.
A proposed court-supervised Residential Mortgage Foreclosure Mediation Program in Delaware is under
review by the state’s Superior Court.
The program would require lenders’
attorneys filing foreclosures to notify
homeowners of
the availability of a
state hotline and of
housing counselors
who could assist
them. Mediation
sessions supervised
by volunteer attorneys would be held
in each county.*

For information, contact Bob Bobincheck
at (717) 780-1801 or bbobincheck@phfa.
org; www.phfa.org; http://www.state.
nj.us/dobi/njhope/; James J. Savage at
(973) 877-1280 or james.savage@dol.
lps.state.nj.us; http://www.state.nj.us/
dobi/njhope/; Matthew Heckles at (302)
577-5001 or matthew@destatehousing.
com; www.attorneygeneral.delaware.
gov/mortgageforeclosure; deforeclosurehelp.org; http://www.destatehousing.
com/.
-Keith L. Rolland

A wide rrange of information
on forecl
o
foreclosures, including
community resources, is availccommun
aable on the
t Philadelphia Fed’s
Foreclosure Resource Center at
Foreclosu
F
http://www.philadelphiafed.
http://w
h
org/foreclosure/.
org/fore
o

The Philadelphia Court of Common Pleas started a Residential Mortgage Foreclosure Diversion Pilot Program in April 2008.

15

CASCADE
Federal Reserve Bank of Philadelphia
100 N. 6th Street
Philadelphia, PA 19106-1574

PRESORTED STANDARD
U.S. POSTAGE PAID
Philadelphia, PA
PERMIT No. 529

ADDRESS SERVICE REQUESTED

Calendar of Events
15th Annual New Jersey Governor’s Conference on Housing and Community Development
September 22-23, 2009, Atlantic City Convention Center
For information, contact Carmen Santiago at csantiago@njhmfa.state.nj.us; http://www.state.nj.us/dca/.

Institute for Financial Literacy’s Annual Conference on Financial Education
October 21 – 23, Hyatt Regency at Penn’s Landing
The conference offers professional development for financial educators and the opportunity to learn about current
trends and funding strategies.
For information, contact the institute at (207) 221-3611 or conference@financiallit.org; http://www.financiallit.org/default.aspx.

Housing Alliance of Pennsylvania’s Annual Homes Within Reach Conference
December 9-11, 2009, Harrisburg, Pa.; www.housingalliancepa.org/events/.

SAVE THE DATE! Reinventing Older Communities
May 12-14, 2010, Hyatt Regency Philadelphia at Penn’s Landing
This fourth national biennial conference organized by the Federal Reserve Bank of Philadelphia and sponsors
examines issues confronting older communities, including the impact of the credit crisis on homeowners and
communities and the opportunities generated by economic stimulus funds.
For information, contact keith.rolland@phil.frb.org.

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