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Federal Reserve Bank of St. Louis
Gearing Up for Green Jobs:
What Can We Expect?
Partners
IN COMMUNITY AND ECONOMIC DEVELOPMENT
FEATURES
8
More than Their Share : Property Taxes
in Atlanta Neighborhoods Hardest Hit
by Foreclosure
Prop('l'I~ l,l\.l'S ol'll'll f;1il to rdll'l"I t!I{' shri11k
i11g \ ail!(' or IH>llH'S in 1wighhorhoocls lH•m II~
a!T(•<·tl'd il~ ron·< lw,un•s . . \tlanta \l'ighhm
hood ll1·\ l'lop111<•11t !'art 1wrsh ip is
11
ork1 ng to
l'('llH'cl~ disparit u•s.
12
Looking Beyond Foreclosures : Part 1
l'hl' mortga_g1 < ns1s 1s \'ha11g11lg It( l har,Wl\'r
or housi11g fill.ti\("('.\\ it h S('\ l'!al illlJ)Cll I.tilt
irnpli\'al ions 1'01 allorcl;tl>l1· and !'air housi11g
polic~· and pr,l<'t i('('.
COVER STORY
16
Transportation Costs Tip the
Affordable Housing Equation
or t ra1,sJH>1t at H>ll 1s a \TII l<'al fa\'t or 111
Tl1<· ('o-,t
Gearing Up for Green Jobs:
What Can We Expect?
New "green" jobs are an important piece
o r the nation's economic recovery strategy.
Bu t to make the most of their po tential Lo
boost employment, policymakers and planners
will need good systems to anticipate demand,
create educational infrastructme and monitor
programs that provide opportunities.
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Federal Reserve Bank of St. Louis
<il'cid111g
11
IH•I lwr hrn1si11_g is I rul~ allordahh>.
Tl1<· '"Jlousi11g and Transportat1011 ,\IT,inlallllit~
!11<1<·\.·· <11-,JH'ls srn11<• asst1111pl io11s ,dH>III t IH' \'OSI
of c Cllllnllll lllg.
19
USDA Program Opens
Doors for Rural Homebuyers
III t IH•
11
a kl' ol' t hl' snlipn Ill\' 111ort gag(' nis1s.
r11ral h1inwhu~ 1•rs 11 ho lll'('d hl'lp 11 it h d<l\\ 11
pa~ llll'lll s or ha\ 1· il'ss-t ha11 JH'ri'( l I \ rpd1t an·
t 11111ing i11<'n•.1s 11gh Io I h<· l ~I l \'s ( ;uara111 l'c•d
Loan l'rogralll for assista11<·<·.
22
The Rough Road to Rebuilding: Interview
with Milton Bailey, President of Louisiana
Housing Finance Agency
24
Spotlight on the District Mississippi and Georgia
FROM THE CAO'S DESK
STEERING CLEAR OF FORECLOSURE PREVENTION SCAMS
Mortgage-related fraud and scams are nolhing new, bul
nove l forms of these
illicit activities are certainly on the rise.
As early as the 1970s, " flipping" properties had become a common problem, especially in
inner city neighborhoods. Lower income conm1unities were frequenl ly tar geted by in\'eStors or developers who purchased vacant or clil apiclatecl homes and resold Lhem for huge
mark-ups. Flippers would typically sell the properties among th emselves several ti mes
before fina lly passing the houses on to homebuyer s at inflated market values. They would
acid a fresh coat or pa int and do some minor cosmetic work, but seldom made subs tant ive
repairs. These properties were nevertheless often so ld as rehabi li tated homes for much
more than they were worth.
Mortgage fraud has become more ophisticated over time and more difficult to detect.
Some organizations have hired their own appraisers and titl e companies to elevate properiy
values quicker and issue clean title. Fraud has also been detected in loan files, where it is
nol LmcoI11111on to find falsified applicati ons, pay stubs, tax retu rns and bank statements that
overvalued homes and sadclJed homeb uyers with loan terms they could nol afford.
The U.S. Treasury and the Financial Crimes Enforcement Network es tim ate the cost of
mortgage fraud to the i ncluslry as high as $25 bi ll ion in 2008, when over 65,000 Suspicious
Activity Reports were filed. A report by Lhe Mortgage Assel Research In stitute (MARI)
inclicales th e majority of mortgage scams detected l asl year wer e con nect ed to appl ication fraud and fal sification of financia l statemenls.
In addition to these common scams, which are still prevalent, new form s of fraud are
appearing. T he cu rrent deterioration in t he housing market and the rising number of foreclosures has spawned a wave of new activ ities in Lhe gu ise of fo reclosure prevention services.
Th e e "rescue" scams target consumer s in clanger of losing their homes to forec losure.
They claim their services will help homeowners save their property, bul they nearly always
fa i l to del iver. Th ese con-arti sts, who may also claim to provide foreclosur e counseli ng,
make a profiL by collecting upfront fees or cashing in on mortgage payments that are never
paid lo the lenders. Ultimately their actions strip equity and haslen foreclosm e.
Foreclosme schemes may also promise rescue loans, loan refinances or workouts. Legal
forms designed to look like loan documents are presented to consumers, bul those who fall
into the trap find they are actually signing transfer of title documents and surrendering legal
tights to tl1ei.r properties.
The Federal Reserve System is following emerging predatory forecl osure schemes closely
and taking steps to arm consum ers against them. For exan1ple, the Feel has launched adve1°
tisements in movie theaters in some of th e highest foreclosure markets in th e country lo
inform cons w11 ers abou t these illiciL practices. We are also working close ly with nonprofit
organizations and legitimate counseling agencies to ensure thal homeowners threatened
wi th forec losure r eceive reli able assistance from reputable organizations.
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Federal Reserve Bank of St. Louis
Juan C. Sanchez
Vice President and
Community Affairs Officer
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Federal Reserve Bank of St. Louis
Gearing Up for Green Jobs:
What Can We Expect?
POLICYMAKERS LOOKING FOR A SILVER LINING TO THE DARK CLOUD HOVERING OVER THE U.S.
ECONOMY ARE SEEING GREEN. SOME ARE HOPING THAT NEW JOBS CREATED BY ALTERNATIVE
ENERGY AND ENVIRONMENTAL INDUSTRIES WILL ACT AS A PANACEA FOR THE NATION'S SPUTTERING
ECONOMY. BUT HOW MUCH CAN WE COUNT ON "GREEN JOBS''TO JUMPSTARTTHE RECOVERY?
A recent study by Geo rgia Institu t e of Tech nology's
Enterprise Inn ovation I nst it ul C', a lon g wil h the Cit y and
Reg iona l Plannin g Program ancl Sc hool of Publ ic Poli cy,
indi cates t hat to rnakP l lw most of grc pn industri<'s, we' ll
rr ncwablc sources by 202fi, we wou ld gcncralc !J million
npw j obs ( English cl al, 200G) .
Th ese \·a r y i ng project ions arc based on a w hol e range
of clifTcre nl approac hes lo eve r yth in g from how gr een
ha\·c l o understa nd th em be li er (Yo uti c cl a l , 2008).
inclu st r y is ddincd t o what sa ri s of rnocl rls arc usccl Io
T he st ucly I ric s Io clarify some basic qucsl io ns I o c-rpal c
link g rPc n indu stry l o j ob incrPases. Cl arify in g so rnc or
a clearer picture o f w hat to cx p ec l from itl\'C'stm enl in
1lwsc
env i ronmc nla l ly consci o us econo mi c clP ve lopm cnl.
ex pe ct from I hp "g re en rc•vo lul ion."
What exac tly is a gr een job·> What sort of demand w ill
approaches w ill gi \·e us a be t t cr iclca of wh al lo
.Ju st wha l is a g r een j ob or a g r ee n in dust r y'7 Wou ld a
we sec fo r g reen work<' rs, and wh al kind s o f job-slots wi ll
high lcc h photm·o lt aic plant that supplies rpncwablc solar
Ihcy n11· Whal w ill it l ake to in itialc gr cPn proj rcts that
r ner gy at cl ccrcas ing costs w il h increasing effi ciency br
cr eate the j o bs·> A ncl what kind of cclu cal io nal prepa r a-
co nsid ered "gr een"- e\'C'll thou gh it works w ith cn\·iro n-
tion will workers need lo sl cp into I he 1ww posit ions·>
mcnt ally nox ious chcrni cals'7 Can ex istin g cons tru c tion ,
7
manufac turin g, ul ility an d sc r \'ice ind us I rirs be seen
Crunching the numbers
Focus on green technologies has prompted a w ide range
o f csl imalPS abo ut the num b er of g reen jobs w e ca n
as part of I he gr een l ech sec t o r if they arr implr nwnl in g
sl rat eg ies to r ecl uc-r th eir cm ·i ronmcn t al foot prin t ·1
Once we have ddinecl w hat a gree n job is, how can we
ex p ec t from i m ·rs tm cnl in a ll crna l ive cIw r gy sou r ecs
a nti c ipate I he m ag nituclr of t hr nerd for a grer n work-
a nd fupls. The l1.S. Confnencp of Mayors in 2008 esli -
fo rce·> Will I hr need in crease in cre mentally o r gracl ua 11y· 1
mal Pd 4.2 millio n new green jobs m ·c r thP ncx l :30 yea r s.
Or will the grow l h of g r ee n ind ustry mir ror t hr I raj rc -
A sl udy p ubli shed by the Ccnlcr for A merican Progress
t or y of inform atio n t echnology. wh ich rrquircd a hu g<'
predict s that an invest mcnt o f $100 billion in g rcrn tec h-
workforce with new skill s?
nol ogies wo uld res ult in an cstimalrcl 2 mi llio n gr ee n
jobs o\·e r a l wo -yc ar period (Pollin <'I al , 20 08).
RAND Corporal ion analysi s (Toman Pl al, 2008) , and
Wh al clo policy makers need to dot o help peopl e and
industry benefit fro m th e g reen rnovemenP
In Grorg ia Tec h's study, " Ener gy and Em·ironm r nlal
th e l ' nin•rs ily o fTe111wssec's Agr icultu ra l Econ o rnics
1Nork force
Divi sion, fo uncl I hal if wr could reac h th e goal sci by I lw
c l a l , 20 08), we loo k at th e deman d for g r ee n job s in
25x25 A lliance or obtaining 2'i percent of ou r energy fro m
(;corgi a at I lw hig her ed uc al ion l e\·c l as c-o mp ar<'cl I o
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Federal Reserve Bank of St. Louis
Ne0cls: Suppl_v and Drma nd in Grorgia" ( Yout ie
3
the supp ly of green 11·orkers, and WC' project the typC's
Gm·C' rn mC'nt classi fie at ions of pub I icly a1·ai I able in for-
of C'duca tion al programs thC' st atC' co ul d institute' to
mation rC' nect t hC' dil C'mma of captur ing jobs in energy
address this tlC'C'd.
and C'lll·i ronnlC'ntal arC'as. EnlC'rging clC'an technol ogiC's
are but a very sma ll part of mu ch broadC'r Nor i h AnlC'ri-
What is a Green Job?
DC'fi ning "grC'C' n jobs" is cri t ical to t racking and antic-
can Indu strial C'lass ificat ion System (NA ICS) classes.
(NAIC'S is tlw sta nd ard used by F'ecleral statistica l agPn-
ipating their impact on the N·onom_y. Cnless C'COnomic
c ies in cla ssifying businC'ss Pstablishnwnts and jobs by
analysts can find grC'C'n jobs in 1·ario us d atabase's, it
industry typ 0.) F'or C'xamplC', fu C'i cell s (which are a typC'
11·ill bC' difficult to kno11· if g rC'C'n inclustries ar e IJC'ing
of battC'r_y designC'd to rC'ducC' C'missions) arC' includC'd in
suffi ciently cu lt i1·at C'cl to grow new jobs.
NAICS class :3:3:59, ''Al l Othe r i\IiscellanC'ous EIC'ctr ical
One clC'finition was posed in a recent TL\1E :\lagazine
EquipmC'nt and Compo11C'nt i\ l anufacturing." This class
quoting Phil AngC' liclC's of thC' Apollo A lli ancC', a busi11C'ss,
C'ncompasses qu it e a di1·erse range of C'iC'ctrical deYiCC'S
labor, C'twi ronnlC'nta l , and co mm unity coa lition that pro-
in add ition t o fue l cC'ils - such as bC' ll s, garage do or
molC's clean t C'Ch nologies ancl pra ct icC's, as WC'I I as works
op enC'rs, surgC' supprC'sso rs and partic le' accPIC'rators .
t o maxi mize' t hC' eco nomic promi se' t hC'y ho lei (May 26 ,
2008) . Exp laining how "greC' n collar jobs'' diffC'r from
A co mp ari so n o f six na tion a l and st a t e st udies of
gr een i nclu stries fo u nd that I hC' defin iti ons I hey usC'd
oth er jobs, AngC' lides states th at a grPC'n collar job mu st
were not necessa ri ly consis t ent: So me coun ted con -
pro1·iclC' a li1·ablC' wagC' and " rC'duce 11·aste ancl pollution
1·pntiona l energy sout-cC's such as oi l and gas extrac -
and bC'nC'fit t hC' C'lll·ironmen t .'' (SC'e Wa lsh 2008 for morC'
t ion , C'IC'ctric power gC'nC'rat ion , and pC'I roleum refin er-
on '·grC'C'n collar jobs." ) This definition illl·oh·C's two con-
iC's as pa rt of the energy and elll·ironmC'ntal industry
cepts (w ith thC' notion of fair wa ges being Pncle mic- t o
c lu st0r (fo r C'xampl 0, the President's lli gh Growth Job
both) : ( 1) consC't"l"at ion of C'nC' rgy resources and (2) mini-
Training study), whilC' othe rs only included emer ging
mi zat ion of nC'gal il'e C' n1·ironmC'ntal impacts. Whi le thi s
cle an tC'c hn o log ies (['or C'Xa mpl e, thC' Mas sac husett s
defin ition cC'rta inly makes se nsC' at thC' concC'pt ual IPvC'i,
Clean Energy ClustC'r study). Some p laced the con-
it doesn't help distinguish grC'P n jobs from ol hC'r ty pC' s of
stru ct ion ind ustry under the " hi gh performanc0 build -
occupat ions in C'x istin g databases.
in g" o r "g r C'en bui ldi ng" catego r y of g r een jobs , w h ile
A definition that would makC' it possible for economists
ot hers foe-used so lely on C'ne rgy resou rce' ancl elll·iron-
to track the impact of green jobs hast o navigate' bet WC'C'n
nwntal c-onsult ing servic-C's. It would surely bC' helpful
m ·erly nat-ro11· and 01·C'rly broacl undC'rst andings. A na1-ro11·
for gm·ernment classifications to create a pC'c-ial class
approach might , for C'xample, focu s str ictly on C' mC'rging
for rC'nC'wabl0 C'n er gy and environm ental indu st rie s.
clean technologiPs such as fuC'I cC'ils to 0stirnatc- thC' num-
similar to the ones they created for information technol-
ber of tlC'w j obs that wi 11 be CTC'a t C'd .
ogy incl ust ri es, w hich wC're formerly sc-a tlC'rNI across
OnC' thin g we- know abo ut grC'C'n act i1·iti0s is that t hC'y
form platform t C'Chno logies a net t C'chn iques that ca n bc-
several NAI CS classC's.
Likewise, no standard definiti on exists o f what is and
appliC' d to a var iC'ty of exist i ng as WC' II as future ind us-
what is not an C'nC'rgy or C'nvironmental occupation. Th C'
t ri es and occupations. In its broadC'st undC'rsta ndin g,
Standard Occupation Classification (SOC) system pub-
C'nergy and C'lll·ironm0ntal indu striC's could include' any
lished by th e Office of ManagC'ment and Budget (0 18)
businC'ss that monitors its USC' of C'nC'rgy and the waste
in 1999 is used by the LS. Bureau of Labor Statistics to
it emits, because' att0ntion to th C'SC' issues rC'presC'nts a
portray ancl projC'et occupational Pmployment info1rnation.
change in tlw ll'ay all businC'ss is bC'ing done. :\Jany C'xist-
Like thC' NAICS-based analysis of industriC's, SOC classifica-
in g business0s a re crC'ating tlC'W pos ition s for e1wrgy
ti on systPms y ield a w idely di1·erse pict tll'C' of grC'en jobs,
and elll·ironnlC'ntal spC'cialis l s t o acldrC'ss tlwse changC's.
clepencling on how th e information is assC'ssed. F'or exam-
llow analys t s come t o terms w ith thi s problem of scope
pl e', thrC'C' of sevC'n SOC-based rC'p0tis on green jobs agree
aff'C'cts most C'st imatC's oftlw im pact o f gr eC'n indust ri C's
that th C' c-ategory Emironmental EnginC'C'ring TC'chnicians
on job prod uct ion.
(SOC 17-:3025) is a grC' C'n occupati on. But only one soureC'
4
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Federal Reserve Bank of St. Louis
VOLUME 19 , NUMBER 1
Explaining how "green collar jobs" differ from other jobs, Angelides
states that a green collar job must provide a livable wage and
"reduce waste and pollution and benefit the environment."
considers :\lining and GC'ologica l EnginC'ns ( 17-:21 :) l ) as a
grC'C'n occupatio n.
A lt ho ugh at prC's ent th ere' is no resolutio n to tlwsC' dd"-
The rPsults showed that ( ieorgia has -rn,ooo employees
workin g in C'n er gy a nd c n\·ironm C' ntal indu st ri cs.
Ex istin g firm s in tlw sC' indu stri es cx pcr i(•nce cl a mo cll•s t
initio na l di km mas, it is import a nL to bC' awarP o f how
clpc-Jin C' in cmploy mC' nt o f less th a n 2 p Prcc nt IJ pt wePn
approac hPs t o mc asu r Pm ent a ffpe t v ario u s a nal ys Ps of
2001 a nd 200 6. F utu r e p roj ec ti o ns indi ca te' a
g rpen jo b grow th a nd t o kC'e p thi s in mine! wh en r e\' iPw-
innPaSC' in C'mployrn ent in I hC' gr C'C'n tC'ch industri es is likC' ly
ing estim at C'S o f needs assoc iatecl with gr ee n jobs.
(i
p cr cC' nt
by :20 1-1. From an occupati onal standpo in t, proj Pclio ns to
:201-1 indicate that tlw stal l' w ould llC'C'ci 1,:3-10 wor kPrs annu-
How many new green jobs can we expect? A case study
ally in t he 26 targeted C'ncrgy and cmi ron m ental occ upa-
Reli able dat a about gr een jobs is impo rt ant fo r assC'ss-
ti o ns. includi ng bo th nc\1· positi ons and rPp lacC'nw nts fo r
ing how w<'il C'clu ca tion a l syst C'ms a re' nwetin g t hC' nC'C' ds
o f n ew a nd C'x i stin g g r ee n in dust ri es. Our st ucl y t o ok
c• mpl oyccs that leave tlH' w orkfo r ce'.
A co mpari so n o f es tim at es of dC' m a nd fo r \Y orke r s
probl C'm s o f C'st imalion into accounl as we trice! to deter-
w ith th C' current suppl y of graduat e's in r elC'va nt field s
m ine whet hC'r ener gy ancl em ·ironmental ind ust ri Ps can !JC'
from Llw st at. e's pub l ic and pri\·at C' post seco ndary edu -
enh anced by t hC' ex perli sC' proclucC'cl by the stat p's higher
c- al ion a l sy st ems sho w C' cl a modC's t sho rt fa! I. Forty- four
educati o nal sys tPm.
o f (i co r g ia's public a ncl pri\·at c pos t seco ndary Pclu c a-
Th e t pa m's Ps tim ati o n p roc-Pss drPw o n c! Pfiniti o ns
t ion a l in stitu t i o n s hm ·p rC'IC'\·a nt o ffC'rin gs in m os t o f
o f green inclu st ri C's th at in cludPd th e' mining o f C' ncrgy
tlw 61 t a r ge t ed in stru ct io na l progra m s r c lat c cl t o o ur
resources; ge11C'r ati o n , t r ansmi ss io n a nd di str ibut io n of
d efi n i t io n of g r cC'n j obs.
ener gy rPsouI-ces by a p ublic-u t ility; m anufacl uring of
\Vh C'n we matclwcl th e' number o f gradu ates fro m thPsl'
ener gy and em ·i ro nmental products; and em ·i ro nnw nta l
p ro g r a m s- spec ifi ca ll y th e m ·Nag<' an nu a l n u mb (• r
and enprgy-r C' lal C'd resea rch a nd development , t r ea tmcnt
o f g raduate's b C' tW C' C'll 200·1 and 200 6 in lhC' targe tC'cl
and r emediati o n scn·ic-C's. Th e' dd initi on did no t includ e
in s tru c t ion al p ro g r am s- 11·ith t hC' a nn ua l c! Pm crnd for
th e co ns tru ct ion ind ustr y becau se it die! not compo rt
P1npl oycPs in t.lw 26 enPr gy and pnvironmcntal occupa -
with an ex istin g stat e economic- de\'C'lopm ent st andard .
t i on s uncln anal ys i s,
T he analysi s appli ed tlH' definiti o n by using 12 NAI C' S-
annua l shortfall of mo rl' th an 1-10 workl•rs in SC'\'C'll o cc u-
based indu stri ('S, :26 occ upa ti ons and 61 pos tsPcondary
pati ons. Tlwse occupatio ns ar e mos tl y in pm ·ironment a l
C' ducat io nal spC'c ia li za ti ons.
eng inC'N in g, includin g cJ1 pm ica l t ec hn ic ia ns a nd o tlw r
FEDERAL RESERVE BANK OF ATLANTA
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Federal Reserve Bank of St. Louis
W('
founcl a n C' s timatC'cl O\'E' r a ll
5
l echnic ians, as we ll as in at mosphN ic, m ateria ls, and
in state go,·ernment, such as I he state of Virginia's certi-
c nvi ro n men I al sc ience ar eas .
fi ed energy manager directi ve.
Althoug h tlwsc sho rt fall s ar c notab le, th ey ar en'I o f
Third , I rain ing and ed ucational programs should re,-i cw
a m ag n ii ude I o meel I he hopes of nat ion al obse r vers
and updal c their course' o ffer i ngs in r esponse Io I he cur-
who have Ii kc1wd gr een job g rowth Io t hat o f tlw clol -
renl and potentia l needs o f green indusl ri cs. 'v\l hi le engi-
com era of tlw 1990s. Th e reason s for thi s di sc repa ncy
nC'ering and environmcnl al sc ience programs an ' certainly
are many, includ ing:
centra l in mee tin g th ese needs, manage ment and policy
A lac k of c-la rity exists aboul which re1w wablc and
sciences c-onccnt rations arc also important as companies
a lternath·c ene r gy tech no l ogies 11·ill be widely
and go1·C'111rnents look for c:-..1)e1iise in sustainability repoIi-
and comnwrcially accepl ccl. For example, biofucls
ing and carbon footprinl ing. Tlw degree o f breadth neces-
attracted tlw largest sha re o f wntu rc capital in 2006,
sa ry in th e green technology domain 11·ill rC'qu irC' ca ref ul
the n dropIwd by more than 50 percent in fa1·or o r
attention because o f the c-ross-disciplimuy natlu-c o f training
so la r t echnol og ies by 20 07, acco rdin g to a 2008
required lo address it.
r eport by Pri ce waterhous cC'oopers.
Tec hn ica l training CC' rli fica t C's and progra ms w ill also
Tlw impact o f t lw retire men I of engineers and sc ien-
play an i m port anl ro lC' in prov iding hi gh perfo rman ce
tists who came oul of energy cri sis of tlw 1970s and
building skill s for in sl a ll C' rs, operato rs, code o ffi c ials,
have had decades o r experi en ce ( inc luding in nuclear
home C' nc' rgy ra ters , Leader ship in E1w rgy and Envi -
energy facility construction) is uncc1ta in.
ronm ental Desi gn ( L EED) professio nals and ot h er
Tlw demand for high perform ance bui.ldings remains
trades. A number of bes l prac l ices across the l ·.s. in
unreal ized. The extent to which businesses and house-
green technology educ·al ion and program de,·elopment
holds wi ll adopt (and pay for) smart practi ces in cxisl-
can be rev iewed for setting up and opera ! ing pilot train -
ing and new bu ildin gs is a pcrti1wnt conside ral i on.
in g prog rams, some o f which may r eq uire spC'c ialized
Such practi ces in clude aUcnlion to bu ild ing materi als,
fac il ities ran ging from small-scale bio-rcfin erics to ro of
land scapin g, site and transportal ion r elat ionsh ips,
space fm solar power technology in stall ati on.
interior design, lighl ing and use of day light, refri gera-
F'ourlh , ,rny approach l o action should l ake inl o accounl
tion , c1wrgy mana geme nl and use of r cncwablC's ,
both the need to an ti cipal c demand and th e need to reflect
water management , waste minimiza ti on and recycling.
on potential. In anticipating demand, poli cym akers should
be aware' th at market dy namics that arc gradua l today
Green Jobs and Community Development
Within t his uncerlain enY ironment, what alt ernative's
could become sharply cli srupti,·e tomorro 11·.
At tJ1c same t:i.Jiw, a U1oughtful approach to issues would
ar e a1·ail ab lc fo r dec ision makers t o h<'lp ensure thal
match resC'a.rch lo clist..incti1·e local charactc1·ist..ics and needs
people and i ndu st ry bC'nefit from th e green mm·C'mcnl ·1
as well as entrepreneurial ,rnd commercial markels. II. would
First , monil ori ng nC'w prog rams to make lh c mosl
also consider th e o fferings and capabilities of existing train-
o f oppor l un iti es in r C'cent fC'd C' ral lC'g islali on is imp or-
ing and education providers and aim to make opporlunilies
l anl. Fo r exa mpl e, po l icy m a k C' rs shou ld be awar e or
f'or partic ipating in the C'nergy economy widely availabl e.
signifi ca nt pro1·isions of the American Recm·er y and
With oul this clual app r oac h, a reg ion 's im·cst ment
Rein ves tment Act (ARRA) stimulu s package for t ax
may unde rshoot potential benefits fo r il s businesses
credits, resea rch and de1·elopmcnt , state planning grants,
and citizens or fail to pay off.
and energy infrast ructure.
Second. many state and loca l g01·c rnm ents ha1·c
paved lh e way with legislatio n devoted to th e deve lop-
■
Tl11S artIc,e 1,as 'Mitten by Jar You•,e Pl1.D. 1arage of pol cv services for
the Enterprise lnno1at1on lnstih1te ard Jr adIunct ,ssociate professor in
t11e School of Public Policy at Georgia Institute of Tecl111ology.
m ent of gr een econ o my jobs and training programs ,
such as the Gove rnor's Climal c Change and Green Co l-
For more information:
lar Jobs l egislal ion i n I he stal c of Washingto n. Oth ers
Corps Network. www.corpsnetwork.org
L11111tless Vistas. Inc .. www.limitlessvistas.org
have issued stipul ation s that encourage gr een ac ti vil ies
GreenForAII, www.greenforall.org
6 FRASER
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Federal Reserve Bank of St. Louis
VOLUME 19 , NUMBER 1
Refere nces
,I B. o,, La Torre Ugartt D. Je,• ,en. K. Hellw111ckel, C.. Mena,cl. J.
01 B Robe ts. R IV, ;h ~1 2( l)t '<0vember, 2 J Re, e:. at E
t ri;y for "it Jrntect States b, 202':> AgrIc ,Jr al Jnu Lonon111 lmr ,icts
Knoxville. TN L, I1er•, , JI Tenni>ssee
E
'w
Glas111e er A 2007. Energizing Appal<1cl11a Global Ch.illenge· And The
p,osµert of a Rert.1-.atle Ener,11 Future Arp1Iacl1rn Reg101 a' Cnrn •1.
s,on. \Vast I•,'tJn D.C
Poll11 R Garrett Peit,er H.. Heu tz. J.. , d Scl1arlier. H. !2008 Septe, 1ber
Green Recove1y A Program to Create Good Jolls ,111cl St,1rt Bu1ld1ng a Low
Carbon Econo111v Mas~.achusetts Pollt1c1I Economy RPS< arclI Institute ;ind
the Ce1•ter for Americ,111 Progress.
Toman. M. Gritt,n. J. Le111pert. R (2008) ·npacts on LS Enerev Expen
~,tcre and Greenh" e G, s Em, ,s,ors if In r ,,. Rt rnalilt: E er~,
Jse Sa, ld Mor Ld, CA RAND Cor~orat1on
JS Confertrce of ~I1,Jrs (20tl8 0ctobu Gree11,.
Econo1111es Lexmgton, MA Global Insight, Inc.
in US Me!'O
halsl Br,an (May 26. 2008) Wrat ,s a Green CoI ar Job. Ex<1ctly >
TIME Magazine
Youtie. J Dru111111ond. W.. Brown. M.. Meffert. W. for t11e ICAPP Program.
(2008. Septeml1er) Energy and E11v1ro11111e11tal Workforce Needs Supply ancl
Demand 111 Georgia. Atl.111ta. Georgia: Georgia Tech Rese,11cll Corpor.it1on.
Pric1!1,,1terhouseCoopers. 2008 Clea11tecl1 Cornes of Age, Pricewilterl10use
Coopers ant1 t1 Ie National Venture Cap1till Assoc1at1011 IJJsed 011 tla!a prov1cled
IJy Tlio111µso11 Reuters.
'I
Preparing a Green Workforce
Green workforce development programs are sprouting up every-
Limitless Vistas Inc. (LVI ), a green workforce training program in
where. These programs train people for jobs that crea te products or
New Orleans, continues to train workers. It provides instruction in
services designed to mini mize environmen tal impact- in industri es
wea therization, biodiesel production, environmental science technol-
like agriculture, natural resource conservati on, clean transportation
ogies, brownfield remediation and life skills to disadvantaged youth
and fu el , renewable energy production , energy efficiency, green build-
between the ages of 17 and 25. Of th e 160 students to comple te
ing construction , pollution prevention and environmental clean-up.
LVl 's program since its inception in 2006, approximately 60 percent
Some programs target specific populations fo r training, such as at-risk
have found their way into jobs or higher education, according to Jose
youth, low-income individuals or the unemployed.
Cruz, senior field manager of LVI. He said students receive a stipend
Many of these initiatives are facing challenges, but the time is right
for fi nding solutions. Not on ly are green industri es growing, bu t many
opportunities exist for such programs to receive federal dollars.
The Corps Network, wh ich works in commun ities aro und the
coun try to initiate green train ing and service program s for youth,
understand s the obstacles tha t con front green workfo rce develop-
while they are being trained .
The organi za tion relied on seed gran ts to get establ ished , but it
now fo llows a sponsor-match funding model-a lso known as a fee for-service model- that is helping LVI become a sustainable nonprofi t.
A relatively new national organization , Green For All, offers support
for green workforce development programs. Created in 2007 with the
ment. Sally Prouty, Pres ident and CEO of the Corps Network, shared
mission of bringing about an inclusive cl ean energy economy, Green
the experience of one green workfo rce developm ent initiative in
For All provides guidelines for best practices, links to resources, and
Mississippi: "Progra ms need both ca pital and operating dolla rs.
discussion forums where green workforce development practition ers
The Gulf Coast Conserva ti on Corps (GCCC ) closed its doors in spite
can share their knowledge.
of great successes ." The GCCC train ed 72 youth , who contributed
25,085 hours of service to th eir communi ty.
Prouty continued, "Project partn ers were delighted with the quality
(and quantity!) of work. However, [the GCCC was] unable to attract
According to Prouty, another key to success is expanding collaboration efforts from traditional, industry- specific partners to include new,
non-industry-specific partners-academic and vocational institutions,
local governmen t agencies, and firm s with an interest in comm unity
the local res ources re qu ired to match the fed eral investment that
development. She believes "cooperative identificati on of the most
was available." In addition to lack of loca l funding, Prouty cited other
substantial challenges and cooperatively developed solutions" will lead
hurdles such as securing partnerships, ma king sol id connections
to high-quality, effective green workforce development programs.
with green employe rs, and understanding the skills and competencies required for green employment.
■
Written by Jessica D111, research assistant at the Federal Reserve Bank
of Atlanta .
FED E RA L RESERVE BANK OF ATL ANTA
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
7
More than Their Share: Property
Taxes in Atlanta Neighborhoods
Hardest Hit y Foreclosures
AS THE FORECLOSURE CRISIS CONTINUES TO DECIMATE NEIGHBORHOODS ACROSS THE
COUNTRY, IT LEAVES IN ITS WAKE DISPLACED FAMILIES , VACANT HOMES AND THE POTENTIAL
FOR INFLATED PROPERTY TAXES.
Property taxes
t hat fa il to reflect sin king ma rk(•t
closed and bank-ownecl sa les were cons iderPd "i n\'alid "
,·a lu es c-reatr an unfair burclPn on rc•s icl ents o f hi g h-
or outly ing sa les and not reprPsPnt ati\'e o f tlw market as
forec-losure neighborh oods. A tl anta NP ighborh oocl Op,·C'l-
a wholP.
opment Partnnship (AND P), a hous in g nonpro fi t th at
llowPvcr, th e real esta te market in Gl'orgia ancl met ro
for 18 yra rs has foc used on cl p,•clop111P nt, lP1Hling ancl
A tl anta has changed dramat ica lly over the last two years.
pu blic po li cy to suppo rt mixPd-income comm uni ti es, has
GPorgia ranked eighth in the nati on in forecl osu re filings
identified the nrPcl to address proprrty La x clisparitiPs as
in 2008. Last year, there \\'ere more than 85,000 foreclo -
a critica l part of a co mprehe nsive r eg ional foreclosu r P
su re fi lings in t he state-44 percent rnorr than in 2007 and
response strategy.
a 117 prrcent more than in 2006. :\letro At Ian ta accounts
"Di st res sed neig hborhoods will not begin to st abi-
for 81 percent of Georgia's fo reclosures. In fact , Atlanta
li ze and comr out of t hi s cris is until \'acanl homrs are
rank s thircl nationa lly (behind only Las \'egas and Detroit )
occupied aga in ," saicl .John ()'Ca ll ag han , pr rsicle nt a nd
in th e nu mber of vacan t renta l units ancl single fam ily
CEO of ANDP. "When proper ty taxrs arp out of line with
homes, according to U.S. Census Bureau statisti cs.
tru e ma rket va lu es, it not on ly hurt s fam il ies strugg l ing
ANDP first cl evelopecl rxpe r ipnce in t he impac-t of p rop-
to ke ep their homes, it deters rut ure buyer s from mov i ng
erty tax iss ues on lo wer-inco rn e fami l ies in 2008 , when
into the neighborhoocl- lem·ing honws empty and \'a lues
th e organ i zation led a success ful effo rt to double t he
dep r essed. Thi s is both an N Juit y iss ue, ensur in g that
l lomest Paci Exernp tion fo r the City of At Ian ta and Fult on
impacted homro\\'ners do not pay more than their share,
County. Through its "Krep Atlantans llome" campaign,
and a ne ighborhood recovery issue."
ANDP fo und legislative sponsors in the Georgia General
\\'h at accounts for inflated property taxes in high-fore-
Assembly; r esearc hed best practices on ll omesteacl
closure com mu nit ies·? L'ntil very recently, tax assessors in
Exempt ions ; built a broad net work of support within ancl
Georgia and many other states did not consider forec losed
bPyoncl the affordable housing community; and general Pel
and bank-owned home sales in t hei r proper ty valua ti on
hu nd reds o f ca lls and emai ls to IPgislators.
assessment formulas , wh ich include a review o f recrnt
comparab le sales. As a matter of standa rd practice, fore-
8 FRASER
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At tlw cl ose of the 2008 General Assembly SPSsion, legislators vol eel to in cr easr the At lanta-Fu lt on l l omestead
VOLUME 19, NUM B ER 1
Exemption from $15,000 to $30,000 over three y0ars. (It
t h e 15 highest-forec losure ZIP codes would account for
had not be0 n updated sinc0 1993.) Vo t ers ove rwhelmin gly
an estimated $71.5 milli on in prope rty tax ove rpayment
appro\·ccl t lw measure on th e Nm·embcr ba llot , resu lting
if cl ram at ic re assessments we re not made in 2009. T he
in an es tima t ed $23 mill ion ann ua lly in propert y t ax Scn--
ri sk for ove r pay m ent in Cl ay t on, DeKalb and Pullon
in gs for low- and moderate-income homeo w ners.
Counties wa s significantly higher than in suburban Cobb
" v\le knew from o ur Hom estea d 0ffort s an cl cx p0ri-
ancl Gwi nnett Counties, where foreclosure filings wer 0
ence in developme nt th at hi gher property t axes we re a
less prc\'alent . In Pu l1 on County's :30310 ZIP cocl0, com -
se ri ous obs t acle for lowe r-income nei ghbo rhood s," sa id
prised o r largely minorit y, urban n0ighborhoocls loca ted
Sharon Gay, ANDP's Board Chair. "As we retooled AN DP
south wes t of clownt own A tlanta , the media n sa les pric0
to fo cus all of our at t ention and reso urces on forpc]osure
was $38,500 , but t he m edian appra ise d \'aluc was m ·cr
r0sponse, we clircc tecl our policy effort s to aclclrcss the
$120,000. With out clo wnwarcl va lue adju stme nt s, :303 10
impact oft h0 cr isis on property taxPs.''
homeow ners wou ld overpay th eir taxes by an 0st imat0cl
awragc o f $1,-164 annu ally or $12:2 per month , resulting in
Research shows highest-foreclosure areas run
greatest overpayment risk
To unclerstancl and quantify th e risk for overpayment of
a total ZIP code ove rpayment of $ 10.4 m illion.
"We cx pec t0cl to SE'e some overpayment ri sk met ro-w icl0
clue to th e m·crall decline in home sales pric0s in A t Ian t a,
propert y ta xes in At lanta's hi ghest- foreclos ure neighbo r-
but we were surprised to find th at tl1cs0 l!5 ZIP codes alone
hoods, ANDP hired Rob ert Charles Lesser and Compa ny
account eel for mor0 th an 80 percent of th e tot al met ro-w icle
( RCLCO), a national real estate ach-isor y firm , to compare
overpayment," said Da\·c Pierce, who m anaged the analysis
ho m e sa l e pri ces and tax-appra i se d va lues in th e fi ve-
for RCLC'O. RCLCO's r esea rch a lso r evea led that the
count y corE' or metro Atlanta (C layton , Cobb, DeKalb, Pul-
highcst-l'orc closure ZIP codes had a gr ea t er percent age of
l on ancl Gwi n nett Counties). Th e scope of RC LCO's rc\·icw
lower-income, minority and unemployed reside nts.
incluclccl t he 15 ZIP codes ac ross the metro core with th e
highest foreclosure fil ing rates.
Th e initial repo rt from RCLCO, whi ch inc luclecl home
sa les fro m th e first si x month s o f 2008, found tha t
FEDERAL RESERVE BANK OF ATLANTA
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
ln April 2009, RCLCO upclat ecl its ini tial analysis w ith
home sales data from th e second half of 2008. The tax cli sparit ies expanded significa ntly in late 2008 as sa l0 prices
cont inuccl to plummet in th e hi gh-forecl osun' ZI P codes.
9
and tax appraL N I ,·alu<', th e subu rba n c-ount i<'s- Cobb
and Gwin1lC'tt - also saw their m ·<'r pay 111<'nt ri sk c-lim b as
fo rC'closurrs int hr second hal f' o f' :WOS brgan to dr prrss
home pri c-rs.
··our upclatrd rrport showed that homrs in thr J.) highrstforrclosurr ZIP c-oclrs \\·r rr OYC'I-Ya lurcl by 1:3 percr nt relati, ·r
0
to currrn t markrt value, while nl('tro honl('s outsidr thosr ZIP
c-odrs wr rr o,·r r\'alur cl by 1:2 pr rc-C'nt ," said RCLCO's Piere-<'.
" It's i mpor tan t to notr tha t our resea rch did not incluclr
di st ressrd salrs on thr courthouse- steps," Pir rc-r addr d.
" \Ve- pullr d our sa lr s dat a rxclu si,·r ly fro m a multiple l ist i ng scr v icr, whi ch rcflC'c- t s on ly nr m's-l<' ngth r<'a l r st atP
tran sac t ions bC'l wrr n a wi ll ing sr llrr and a willin g buyPr.''
Outreach to tax assessors,
elected officials and homeowners
"Th rse a rc unp recrd c nt ed t i111 es ," sa id AN D P's
O'Ca ll ag han. "Tax assrsso r s across th <' co un t r _y ar <'
st r ugg li ng t o va lur prop erti<' S i n a r ap idl y ck c· linin g
ma rkrt a f't <' r y<'a r s o f st C'a d_y apprec i ati on . O ur goa l
f rom t hr brg i nnin g w as t o wo r k co ll aho ra ti,·<' ly w ith
th e- ch il'f' appr aisNs and t hC' ir boards t o b<' a pa rt of
Local governments are fac ng
t llC' soluti o n."
extremely tight budget
incl i,·idua lly ancl pro,·id<'d them 11·it h RC LCO's ana lysis i n
a1
heperd But e ca not tand
ANDP nl('t w it h met ro ch ief appraisers collr ct i,·dy and
adrnn cr o f' th<' public r<'lrase o f thr data. Th ey pr<'SC'nt c-d
t hr findi ngs to tllC' count y Boa rd s of Assrssor s, r<'gularly
att C'ndr cl publ ic Board nlC'et ings, and C'nc-ouragrd an opr n
by while homeowners mou mos
ancl ongo ing di alogue wi t h Board membrrs and sta ff.
vulnerable neighborhood are
ab out t he fi scal i111pac- t of dC' c-linin g p ropN t.Y t ax r (',·-
shouldering more than the1 fair
about th r t ax in equ iti Ps in h igh-f'orrc los ur<' co mmun i-
share of the tax burden
Kn ow ing that local govcrn nH' nl s would be conce rn ed
r nu r , AN DP a lso wo r k<'d t o <'du ca l <' <' IPc- t ed o ffi c ia ls
t ir s. Tax assC' sso r s, count y co m mi ss io1w r s and ot hPr
d ec t ed o ffi c ials wC' rc i 1w it<' d to parti c- ipal <' in a mr cli a
r vr nt t o r<' IPaSP t he RC' LCO fine! i ngs. A t Ian t a Cit y Coun c i I l\1 emlw r .Joye<' Shepr rd , w hos<' di st r ic-t i nc luck s on<'
o f' th e Cit y's hi gllC'st forrc-los ur<' ZIP co dc-s, was among
T hr overp aynlC'nt r isk f'or th r same l!:i ZIP cod rs jumprd
(i(i prn·pnt t o $ 118 mi ll ion. In th <' low-in conw nr ighbor-
hoods surrounding A tl anta's "[\1rner FiC'ld Stadium, th r
10
t hos<' at tr ndi ng.
"Local gm·ern m<'nts ar<' fac ing <'Xlrenwl_y ti ght budgets,"
sa id Sheprrcl. "But we cannot stand by w hi le- homrownr rs
rC'port found that homrmrners would pay $1,90-1 mmua.lly
in our mos t n il nNa bl e 1wig hbo rh oods ar r sho ulde ri ng
in C'XC-<'SS pro1)('r ty tax<'s \\·ithout an appropriat<' adjust-
morr th an t heir fair sharp o f' t hr tax burdr n. Tax o fficN s
mr nt in rn lu<'. \\' hi le Clayton. Fu lton and Dr Kalb cont i n-
arr lega lly bound to grt thi s r ight b~· issuing fair and acc-u-
ur e! t o show t hr biggest gap bet wC'en cu1TC'nt markc-t ,·alu<'
ratr assrssment s...
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Federal Reserve Bank of St. Louis
V OLUME 19 , NU MBE R 1
ShC'pPrcl introduced a rC"so lul ion , passC'd una ni mously
''Tlw paprr· rolr as public policy watchdog rPquired
by lhC' Atlanta City Council, urging Fulton County tax
c-onsistPnl and \·igilant attPnt ion to an issuP that's critica l
officials to "takC" direct action to update' tax app raised \·al-
to \"i rtual ly C'\·C'ryone in tllC' statP,.. lk111w1t addC'd. ·'E:\·en
uC's." And shortly t her C"af"tC'r, tlw Fu lton Coun ty Com mi s-
i r you don't own proper ty, I axe's arC' passPd on I o I Pnants
sio n approved a simil ar nwasun', introdu cC'cl by Com m is-
and collPc-l Pd in rp nts. Also, local go\·C'rn nwnts rply hem·-
sio11C'r Em ma Da rnC"II, C"ncouraging t h<' Coun ty Board o r
i ly on propC'rl y l axps t o fun d tlwir opC"ral ions."
AssC'ssors to "usC' innon1th·C' nwt hods to assC"ss propPr ty
valu<'s for t hC" :2001) cl igC'st, pa rt icularly i n 11C"ighborhoods
\\·ith high ratC"s of forC"closurC"."
Whil<' ANDP 's pri mary focus was addrC"ss ing tlw ta x
l nfor111Pd by llw propPrt~· lax rPsParch and nlC'dia cm·pragl', GC'orgia Stale' Senator Chip PC'arson introduc·pd a bi ll
mandating tax assC'ssors lo include' fon,c·losC'd and banko wn C"d sa lrs in l lw propNty \·alual ion procC'ss. Tlw bill
issuC' at t hC' d igPst IC"\"C'I, t he organiza l ion a lso rC"aclwd
w as passPd in tilC' fin al clays of tlw :200H (;c'11Pra l AssP mhly
o ut dir<'c- ll y l o ho nlC'ownP r s in affec t <'d commu nitirs l o
Sl'ssion and sig,wd into law- Pff"Pct ivr i mnwd ial l'ly- by
Pducat<' t hem about tlw tax d ispar iti <'s and ad vise t llC' m
<:m·prnor Sonny PPrcluC' o n Ap ril l.J.
on t lwir rights to fi le a tax payl' r assC"ssnwnl (TPA) . \\' hpn
s It
a hom<'m1·ner filrs a TPA thry hm·<' tlw opport unity to IC"II
tllC' county what they think tlw fair markC"t \·aluC" oft lwi r
i\ l C'lro Atlanta tax assPssors IJC'gan issuing
~oon tax
honlC' sho uld bC'. Th C' county is I llC'n r<'quirC"d t o rev i<'w
no l ic-C's in t llC' latC' spri ng. On 1ay :2G, 1lw Atla nl a .Jou rn a l-
l hC' propN ty's \·a lue and makP adj usl m C"n t s if ii d<'C' m s
Const it ul io n rC'po rt ecl t ha l t ax \·,dues Wl'rC' lowPrC'd fo r
c- ha ngps appropriate'. Pi lin g a TPA is c·ons idNC'd a " first-
111 0 1"('
stpp" loward ap1wa li ng propNty taxPs.
l k Kalb County lax officia ls failC'd to comply with thC'
ANDP madC" prC"sent at ions at nC"ighborhood associa ti o n
and community mC'etings in thP areas at gr<'at est risk fo r
Il l' \\'
t ha n :3!)0,000 hOlllC'S i n tlw li\'C' CO J"C' cou nl iC'S. \V h(' ll
law a nd rC'Cl ucC'd n1luC'S on on ly J:l,.)00 propNtiC's ,
DPKalb CEO Burre ll Ellis persuadC'd county assPssors
m ·C'rpaymC"nt. TllC'y also post Pd sl<'p-by-stC'p i nslruct ions,
I o J"C'C'Onsider I lw ir :2009 asSC'SSlllC'lltS. A SC'C'Ond round
a long wit h dC"ad li ,w a lNts, for fi l ing TPA fo rm s on t lw
o f notice's y ielclC'd r educt io ns on "10,000 homrs . A loca l
ANDP wC"bs i lP.
al I onwy ( in dC"pC' ncl C'nl o f ANDP) subsPqur nl ly filed sui l
against t lw coun ty, chargi ng t hat asspssors did not go far
Media focus raises awareness
Pnough in rC'ducing propPrty \·aluC'S. ,\c-tion on thC' suit
and · s · es legislation
is ppndi ng.
ConsistPnt nwd ia attC"ntion to t lw A:--:OP/HCLCO
A;-,'DP is preparing to r('pC'at thC' HCL('() analysis \,·it h
rc'srarc- h ovN I llC' las t tC' n mo nt hs in loca l nPws o ul IPI s
sa le's cl al a from 20 09 to rl'V iew how WPII lax assPsso r s
hr l pC'd lo ra i se' p ubl i c- awa n ' n<'SS, k('('J) l ax aSSC'SSO r s
did i n r('(lu c i ng propC'rly \"a lUC'S, SJ)C'Cifica lly ll'ilh i n tlw
ac·c·ot111 I ab IC", a nd f uC'i IC"g i sl at iYC' C'f'f'or l sa t I lw GC'o r -
I G-ZI P-c·cH IC' sl ud y arPa. T hat r ppo rl is sc-lwd u lC'd fo r
gia (;c'IH'ra l AssC"mbly 10 closP the gap he t wPPn homP
rP IC'aSC' in Octohpr.
pric·ps and tax app r aisPcl \·alm' s.
LPading local co\·NagP oftlw issuP was t lw Atlanta
"Tlw lax i11C"qu ily fac('(I by high-f'orC'c-losurP npighborhoocls is not unique' to Atlanta, but wp \l"('rC' hard-pressC'd
.Journal-Const it ut ion·s (A.JC"s ) s0n ior loca l gm·Prnllll' nt
l o find otlwr rpgions nationally lhal \l'(' rC' proacli\·ely
rPportN, D.L . lk nn Nt , w ho wrotP nunwrous arl ic lPs o n
add rpss in g 1hr issue," sa id ANIW's ()'Cal lag han. " \Vp
I lw propc' rty tax gap.
ho pC' t hat I hi s rrsPcu ch moclPI and I ilC' act ion by count y
"AssPss men t s havC' go l l C' n mo r e at tPnt io n I h is yPa r
than anytinw sine<' tlw parly JDDOs, w lwn the LPgislatur<'
r<'quir<'d P\'C'ry cou nty lo r rvalu0. All(I drsr n ·Nlly so,"
says BPnnett. ··Tlw rule's in place' in :2008 did not addrC'ss
a markPt w hrrr fo r eclosurC"S and bank-ownC'cl salrs wpr('
assrssors w ill SC' r ve as a moclC'i fo r nw t ro a r eas acr oss
t lw
country." ■
T s Jrt r,IP v.as v.
1ttP
by Sus, Ad;i, -;_ director c1 e,earch. 11ohry "1
info1~1 'on 101 the \11,ed lncof'l. C !T'mu, tie, Ir t1Jt1v• t\l'C') ,11 the A•'ant i
Ne,ghb\.: ·ood De~e,opmr,nt Partne, ,hip V.\\ ,. an<1p1 Ng
dominanl. That CTC'a t rcl I lw possibility for w ick d iscrr panciC's llC't wrC'n lax appraisa ls and ma r kC't \'a lurs."
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11
Looking Beyond Foreclosures:
Recent Trends in Residential Finance and Housing Markets, Part I
The U.S. mortgage crisis and th e larg<'r finan cial
One- re- suit o ft he- more st ringc-nt st andard s o f com ·en-
c ri sis th at f'oll owC'cl ha\·(' had , and will cont inu<' to ha\'C' ,
tion al lenders (th ose making loans no t directly guarant eed
wid C'spreacl impac ts on housing fin ance, housing markC'ls,
or insured by t he Fl IA or \ 'C' tcran 's Adm inistrat ion [\ 'A l)
and communit y ci C'\·elopn1C'nt. 1 !low will thC's<' shifts a ffC'c t
has bc-c-n a shift to loans insured by the- FI-IA. FII A mark<'t
homC'own ershi p and a ff'orclab l<' housing fin ance' ove r th <'
share, w hich had fa llen t o lc-ss th an HS pc-rcc-nt o f home-
near and lon g<' r t C'rm ? So m<' o ft h<' r epC'rc ussion s are'
purchase loa ns by t he 1090s, dropped c-\·c-n furth c- r from
alrC'ad y ev id <'nt ; others will ciC'pC'nd on ciC' vC' lopmen t s in
200:3 to 2006, as subpri mc- lenders capture-cl much of Pl !A's
t h<' broa c!N fin anc ial market s and th e rC'a l C'co nomy, as
sh are. F'i gurc I shows th at FIIA's shar e increase d from
\1·C'II as on poli cy resp onse's.
Alth ough it is impossible to discuss housing fin ance'
5 t o 7 pe rcent b<' tween 200-:i and :Z007 t o an es tim at ed
25 percent by ea rly 2009. At th<' sa me tim e-, the- raw numbc-r
iss ue's compl <'t <' ly out sid e th e cont ext of th e broadC' r
of com·c-ntional home purchase loa ns dc- clin ed subst an-
econ omy, responses closd y ti ed to changes in fi nancial
ti all y m ·er thi s pc-r iod. Th e F'I ! A's ex pansion , combined
mar kC' ts a.re th <' particular focus o f t his artic!C'- C'Specially
wit h th e con sc-r vat o rsh ip o ft he govc rn mc- nt sponsorc-d
trend s in hom <' purc hase' IC' nclin g, ho meown C' rship and
enterprises (GSEs), F'annic Mac and F'rc-dcl ic Mac, meant
t C'nur<' , and th e multifamily fin ance' mark<'l. Dan Imm c-r-
th at th e- fc-dera l gm·ernm c- nt be-came a cr itica l dri w r o f
glu c k, assoc iat e' prof<'sso r at th<' Geo rgia Institut e of
th <' mort gage markc- t by lat c 2008. Th e- Fedc-ral ll ousi ng
Technology, <'Xp lores th <'S<' issuc-s and th e policy implica-
Finance Agency <'SI imates that o\·er 9..J percent of mortgage
tion s in a t wo-part seri es. Part I c-xami nC's tlw c-xpa.nding
originati ons (purchase and re- finan ce) int he first quart er o f
ro le' oft he- F'cdc-ral Ilou sin g A ul ho r it y ( Fl IA) in home
2000 directly involved the F l IA, the VA , or F'annic IVla<' or
finan ce . Part II, t o appC'ar in th e- nex t iss ue- o f Pa I'/ 11 e 1-s,
Freddie Mac. 2 A lthough th e future of th e- GSEs will be th e
will loo k at th <' impli ca ti o ns on homeo wn c- rship ratc- s,
subj ec t o f substantial policy debate o\·er th e next year or
th e prosp<'cts for the- rc-nt al housing markc-t s, the uncc-r-
two, ii re-mains clPar that the- federal ro le- i n the- home- loan
taint ics in mull i-fa mily hous ing fin ance. and alt C'rnat i\'('
market has become more important t han c-\·cr.
tenure op t ions.
Figure- :2 utili z<'s data from LPS Appli c-d A nalytics, which
col lee-t s in format ion on loans sc-rvicc-d by 18 largc- mortgage
Homeownership Finance
ser\' ic-ers (including 9 oft he t op 10) . It shows th at re cent
A rguably no ac t i\' it y has been mo re affec t eel by t he
Fl!A loans (during th e fourth quart er o f 2008) constit ut c-d
cri si s th an that o f mort gage markc-t s. Even art er account -
a larger proporti o n of hom<' purch ase- ori gi nal ions in
in g for th e clc-mi se of subp rim e IC' ncler s, m any lend c- r s
higl1C'r-po\·e1ty ZIP codes than in lo\\'er-pm·e1ty ZIP codes.
hm·e tightened their own lend ing standard s. The- F'ederal
Thc-se fi gures may re flect diffc-rences in real or percei\·ecl
Resc-rve's quarterly Sc-nior Loan Of'ficc-r Survc-y shows that
risks across ZI P c-odc- types ( including diffc-rences in credit
mortgage lc-nclcrs began crea tin g stri ct er crc-dit standards
scores and clown payment s), differences in lending prac-
in 2007, and thi s continued through at least th e spring of
ticc- s across nc-ighborhoocl s, or other !'a ctors. Rc-gard lc-ss
2009, although the pace oft ighlening began to slow some
of th e reasons behind these- cli spariti c-s, t hc-y are important
in lat e :2008. llowe\·er, c\·en in c-a rl y 2009, ..J O pc-rce nt o f
to r ecogn ize. In pa rt because FH A loa ns are genera lly
lenders continued t o rein in cre dit standard s, w hile no
more- c-x pc-nsi\·c-, such di spa riti es cou ld ha\·c sign ifica nt
lendc-rs report <'d C'asing st andards.
consequences for lower-inc-ome communities. More- work
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Federal Reserve Bank of St. Louis
VOLUME 19 , NUMBER 1
Figure 1. FHA Becomes a Bulwark in the Home Purchase Market
c/>
&
30 %
g
;....:
:ii
§
~
..
..
..
..
..
..
.. ..
..
..
..
.. ..
..
..
..
..
..
..
'5°"
"'
i
"
"'§
a..
I
0
1
"'
.0
s
z
.....
....
.
2005
2006
«
~
"'
20 %
"'
g
c/>
15 °·,
;;,
_::
i
10 %
Number of Conventional. VA . or Jumbo Loans
Number of FH A Loans
FHA Share of All Home Purchase Loans
• Jan-Feb 2009 Is seaso nally adJusted, annua li zed rate:
2005-2007 total originations. FHA and market sl1are are
from HMDA; 2008 and 2009 based on FHA reports ,nd
% of estimated home sa les covered in HMDA in recent
years. Home sales estimated from HUD .
a..
5%
..
2007
~
25 %
••
~
I
0
0%
Data sou rce: FHA Single Family Act ivity Report: Home
Mortgage Disclosure Act data (www.ffied.gov)
Jan-Feb 2009 "
2008'
Figure 2. FHA Loans Represent a Larger Share of Recent Loan Activity in Lower-Income Neighborhoods*
* Note that the LPS data do not cover the entire market
and appear to cover FHA loans at disproportionately
high rates.
20 %•
0
0
0
~
<ii
10 - 19 %
Data source: LPS Applied Analytics. U.S. Census
c,;
>-
"'>
0
a..
"'C
'
5-9%
""
',,~"
"O
'
",a•
4'
'l
_:,:~~_J
u
a
"'
< 5%
0%
10 %
20 %
30 %
40 %
50 %
Percent of Owner-Occupied, First-lien Purchase Originations in
LPS App lied Analytics th at were FHA loans 4th Quarter 2008
is needed to unclerstancl w hat lies behind th ese d ispariti es
t he ave rage ereclil scor es o f FH A borro wers ha\·e ac tu -
and w hat t hey imply for lower-i ncome neighborh ood s.
a ll y i ncrea sed significa nt ly durin g t hi s tim e; m ea n FICO
In add it ion to t he geograph ic pa ttern s, PIIA loan s have
become t he dominant source of cred it for homebuyer s w ho
scor es fort hose re ceiv ing home purchase loans ro se from
608 i n Oc t ober :2 007 t o 67:3 by May :2 009. 3 Thi s suggest s
make clow n pay ments of less t han LO percent. I n t he fo urt h
I hal some re t renchmcnt by conventional lender s (a ncl/ or
quarter o f :2008, fewer th an 13 percent of conventional pu r-
pr i\·ate mor tgage insurer s or the GS Es) has feel th e ex pan-
c hase ori gin ati o ns in th e LPS A pp l ied An a ly ti cs data set
sion of Fl IA market shar e.
had loan-I o-va lue ( LTV) rat ios abm·e 90 percent, compared
l o ove r 81 p erce nt of FIIA lo a ns. Fewer than 4 per cent
Some Implications for Affordable
of com ·enl ional loans had LTV ra l ios of mor e th an 95 pe r-
and Fair Housing Policy and Practice
cent , compa r ed w il h m or e t han 6:2 percent o f Pl IA loans.
T he t re nds outlin ed here suggest a number of i mplica-
Whil e I he FII A has accep t ed som e oft he hi gher-r isk
ti ons for afford able and f'a ir housi ng policy and pra cl ice.
seg men ts o f th e m a rk et v is-a-vi s conve ntio nal lender s,
Pi rst, w h ile it is too early to say w hether an PllA markel
Digitized forFEDERAL
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Federal Reserve Bank of St. Louis
13
"After climbing from the mid 1990s through the early 2000s, the
homeownership rate in the U.S. began dropping during 2005, driven by
surging foreclosures."
share of25 percent (or perhaps substantially higher) wi ll
Department of I-lousing and Urban Development has itsel f
persist as a "new normal," it is likely that th e FHA wi ll play
recently inc reased scrutin y of FH A l ender s, the FHA's
a major role i n home purchase markets fo r quite a w hi le. 4
long-term history is replete w ith problems of property flip-
It will be important for the agency to modernize its oper-
pi ng scams and the li ke. Modern izi ng the FI-IA also means
ations ful ly and fo r pol icymakers and others to pay close
institutionali zi ng antifraud practices and systems fo r th e
att ention to th e operations and details of Lh is program ,
long run.
as it is likely to have substantial impacts on th e mortgage
Second, FI-I A's lar ger share of the ho me pu r ch ase
and housing market for the foreseeable future, especially
l oan mar ket in lo wer-in co me communities , w hil e not
in low- and moderate-income commun iti es. While the
un expec ted , suggests th e need for stro ng attention
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.S.
VO LU ME 1 9 , NUMBER 1
to f'air k•nding and comm unity re investm ent patterns
Endnotes
of com·en tion al ve r sus F'llA l ende r s. The pol ic ies and
For example. see M. Pinsky, N A11dre1,s. and P. Weech. Tl1e Economic Crrs1s
ancl Community Development Finance: An Industry Assessment. June 2009
Working Paper 2009 05. Federal Reserve Bank of San Francisco Cornmurntv
Development lmestment Center· and D. lrnrnergluck. · The Fo1eclosure
Crrs1s. Foreclosed Properties. and Federal Policy: Sorne lrnpl1c;it1ons for
Housing and Commurnty Development Pla11111ng.· Journal of the American
Plan11111g Assoc1at1on. 75(4). August. 2009.
James B. Lockl1art, Tl1e Roles of Fanrne Mae. Fredcl1e Mac. and t11e Federal
Horne Loan Banks 111 Stabilizing tl1e Mortgage Market. Presentation to tlw
National Association of Real Estate Editors. June 18, 2009.
U.S. Department of Housing and Urban Development, FHA Outlook. June
1 15, 2009
· The term ·new normal" l1as been used to clescribe expectations of various
systemic and substantial shifts 111 the long term nature of financial markets
or submarkets after t11e crisis, 1nclud1ng by Mark Pinsky. "Tl1e New Normal.
Tl1e Extrao1dinary Future of Opportunity Markets.· 111 The Economic Crisis
and Community Development Finance: An Industry Assessment. June 2009
Working Paper 2009 05, Federal Reserve Bank of San Francisco Community
Development Investment Center: and Mol1amed El Erian. "A New Normal."
PIMCO Secular Outlook. May 2009. The term l1as been previousl1 appl1ecl to
systemic sl1ifts 111 areas such as climate act1v1ty and perceived likelil10ods of
terrorist 1nc1cJents.
practi ces of conve ntiona l lenders a nd mo rt gage insurers
should be exami ned for potential f'air lend ing problem s
and impedim ents lo sou nd com munit y reinvest men I .
So-called "dec linin g m arke t " policies by mortgage in sura nce firms , for exampl e, should be ju stifie d based on
hard data th at ca n be exa rni1wd for disparate impact s
that may not be j ustified by business necess il ies.
In the nex t issue o f Par/11('1'S , Immer gluck w ill examine•
trend s in homeow nership nationally and in selec t metropo litan areas , ways Lo increase afford able tenure options,
and the cha ll enges facing multi fami ly housi ng
fin ance . ■
This article was wrrtten by Dan lrnrnergluck. Associate Professor. City and
Regional Planning. Georgia Institute of Tecl1nology. Tl1e aut11or thanks Ellen
Seidman and Alex Scl1wartz for comments on an earlier draft of t111s article. All
errors. omissions and opinions remain solely the autl1or's responsll11l1ty.
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15
Transportation Costs Tip
the Affordable Housing Equation
WHETHER YOU BUY OR RENT, HOUSING NEAR A BUSY URBAN JOB CENTER IS GENERALLY
EXPENSIVE IN MOST AREAS . THAT'S ONE REASON SO MANY AMERICANS CHOOSE TO LIVE
IN THE SUBURBS: MORE LAND, MORE HOUSE, LESS COST.
It seems like
an obv ious call , ri ght? Th e far ther you
household income or size. Densi ty, walkabi lit y, availabil-
li ve fro m the ce nter of t ow n, th e close r you ca n com e t o
ity of quality transit, and access to amenit ies like gro cery
affording your dream hom e. Maybe not. Recent research is
stores, schools and employment centers strongly influence
the number of cars owned by a family and th e mi les th ey
challenging thi s conventional t hink ing.
Th e Center for Neighborhood Technology (CNT) has created a new tool to gauge th e true affordability of housing by
drive, regard less o f famil y size or in co me.
Perhaps this find ing should not come as a surpri se a ft er
considering not only th e pri ce o f a home or an apartm ent,
a ll. lt see m s r eason abl e th at li v i ng fa r f rom employ-
but also the transportation cost associated with livi ng th ere.
ment and shopping centers in neighborhood s w ithout side-
Using the "Housing and Transportati on Afford ability Index,"
w alks and public tran sp ort at ion would make it necessa ry
researchers have discovered a potential finan cial challenge
for each adul t liv ing in th e household t o own and dri ve a
lurking behin d that suburban dream house: th e incr eased
car. Th erefore, th ose co nsider ing th e cost of rent ing or
cost o f tran sportation for commu ting to j ob cen ters swal-
buy in g a home should consider li \·ing i n a "local ion-effi -
lows up th e money saved by choosing a home on the urban
cient " neighborh ood th at can redu ce th e cost of transpor-
fringe. CNT is hoping its research will change federal, state,
tati on and thu s alter the a ffo rd abilit y ra nge o f housing.
and local housing and tran sportati on policies to account for
l 'nfortuna t <:'ly, standards current ly used to calculate
hou sing vouchers, Low I ncome Hou sing Tax Cred its, and
the true costs of housing.
eve n most hom e loa n s do not acco unt for th <:'Se liv i n g
ChallPngmg old a. ·sumpti
s a bot
0
co
s
A Brook in gs lnstitut e stud y condu cted by CN T in col -
cos t s. Indiv idu als and famili es ca n be placed in houses
th ey sho uld b e ab le to a ffo rd , but no t necessa r ily int o
lab oration w ith t he Ce nt er for T ra nsit- Ori ente d Oe\·el-
neighbo rhood s t hey ca n a fford. CNT is wo r k ing wi t h
opm ent uses th e Index t o look at housing a ffor dabil it y
t he Urban L and ln stitut e's Ter w i l l iger Center fo r Work-
in vari o us met ropoli tan regions. Th e first ph ase of the
fo rce llousing to create an ind iv id ual ll+T calcul ator l o
two -phase "Affordabi l it y I ndex" stu dy w as an in-depth
address the issue. Th is web-based ca lc ul ator wi ll make
analysis ort he St. Paul-M inneapoli s metrop oli tan r eg ion.
i t poss i ble for pros p ec ti ve rente rs an d hom ebuyer s t o
Surprisingly, the study found th at transport ati on demand
is not necessarily determin ed by household i ncome ancl
ent er an add ress to determin e the t ra nspor tati on costs
assoc iat ed with liv ing th ere.
size. Prev ious assump ti ons supp osed that larger, m ore
afflu ent fam ili es o wn ed more cars ancl drove further di stances than small er, l ess afflu ent famili es. However, CNT's
Trans o ·tatio
osts lte affo ·dab
y (ctur
Th e sec ond phase of th e B rooki ngs stud y gauge d
resea.rch reveals that neighborhood characteri sti cs are tllC'
t h e housin g a ffo rclab i lil y of 52 met ro po lit an reg ion s
dominant force influ encing transportation demand, no t
in th e Unit ed States. Traci it ionally, a home i s considered
Digitized 16
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VOLUME 19 , NUMBER 1
afforclablc i f pay ments cons ume no more
Mapping Affordability in the Atlanta Metro
than :30 percent of a family's incolll<'. T he new
nwa sure of aff'orclabi lity in c lud es the cos t or
tra nsportat ion. Accor ding to th e lnd0x, hous-
MAPl
Pickens
ing is afTorclabl P when housing ancl transport alion payments toge th er consume IPss th an
..JS ppn·pnt or a fam ily's income.
Aclcling transpmtation costs to thP calcul ation dnunat ically shifts th0 affordabilit y lanclscap<'. Map I aJlCI Map 2 caplLirC' tlw significant
impact of tlw ,ww system for assessing housi ng affordability in the At lanta metropolitan
region. Map I shows th 0 t racliti ona l a fford abi lit y sca l0, based solely on housi ng prices.
Map 2, on thC' ot her hancl , i ncli ca t('S af'fordabi I it y w hen transportation costs arc acid eel
to housing costs. Th e yc ll o\\· sha d 0d areas
repn'sPnl neighborhoods that ar0 afford able,
whPn'as the blu e shacl0d a reas show nC'ig hborhoocls that exceed the a ffordabil ity ceiling.
Tlw A tlant a Metro counties most a ffected by
transportation cos ts ar0 also th ose that have
Affordability Measured by Housing Costs as Percent of Income
D
Data not uvailable
30% of Area Median Income (AMI) Allocated to Housing
■ 30°, or Greater of AMI Allocated to Housing
" J Less than
seen the greatest spike in population O\'C'r the
last r0w y0a rs. l len r y (sout hcast o f A tl anta),
Douglas (west or Atlanta), and Rockcla lc (cast
or At Ian ta) counties gr01v raster tha n other
MAP2
count i<'S duri ng the last decade (ARC Hcgional
Snapshot 2007). Map l illustrat es why. By using
the ''clri\·c until you qualify" approach to find i ng an a ffo rd able hom e, t h0sc threC' co unties
all app0a red to be relati\'ely affordab le. But
om·<' transpor t at ion costs are consid0r0d, that
affordabil ity largely disappea rs, as ex hibit ccl
in !\lap 2.
I f n0ighbo rhoods are designed la rgC'l y for
autom obi le traffic without public tnu1sit as an
op t ion , the transpo rtation premiulll associated
with li \·ing in th ese neighborh oods lwcomes
highly dependent on gaso line prices. ()\·er tlw
las t eight yea rs, beginning in 2000, gasoline
Affordability Measured by Housing and Transportation Costs as Percent of Income
pric0s haw ri sen markecl ly, shifting a drastic
D
cost burclen to those who rely on daily au to-
Dat,, not 1, ll 1ble
] Less than 48° of AMI Allocated to Housmg and Transportation
■ 48% or Gr( ater of AMI Allocated to Housing and Transportation
mobil e tra\'el. Map 3 ancl Map '1 show th e stark
Source: Center for Ne1ghborl1ood Technology. Chicago. IL.
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17
Rising Gas Prices Affect Affordability
contrast between transportati on costs faced by
Atlanta drivers in 2000 as compared w ith 2008.
MAP3
Eve n th ough gaso li ne pr ices have cl ipped
Pickens
r ecen tl y, they are expec ted to cont in ue ri si ng ove r th e nex t 5 to 20 yea r s. In 2000, no
co unty i n th e metro ha.cl ave rage gas cos t s
excee d ing $2700 per yea r, w i th mos t und er
$1800. As th e 2008 m ap shows, a\·erage gas
expenses p er household lopped $2700 for the
majo rity of cou nties i n th e metro, wi th many
exceeding $:3600 annually.
aker
ar
Moving rrn ward, CNT plans to eiq.mncl its
w or k w ith Lhe help of fu nds from the Rockerf eller Foundation to analyze 337 of the largest
C. S. metro areas. Fu1iher research w ill det ermine w hether the relati onship am ong factors
such as loca ti on, density, city form and transAverage Annual Household Gasoline Expenditures - 2000
D
Data not available
■ Less tlian $900/Year
D $900 to $1.800/Year
■ $1.800 to $2,700/Year
po11ation costs holds for small cities as well as
large ones. Maria Choca Urban, program director of CN1~ hopes these fin dings will infiuence
Fuel efficiency Is based on 20.3 mpg.
the ne>..1: federal t1-ansp01tation bill. A more lc\·el
playi ng field would make it possib le for transit,
MAP4
walking and bicycling infrastructure to compete
w ith roads and highways for capital fu nds.
The good news is th at po licymake r s are
pa y in g at tent io n to CNT 's wo rk and even
begin ni ng l o ac t. In March, H UD Sec reta r y
Shaun Don ava n and D OT Secr et ary Ray
L alloo cl an nou nce d a new j oint ent i t y to
coordinate housi ng and t ra nsport ati on planning and in vestment. l n Jun e, th e U.S. Env ironm enta l Protection Agency cam e on board .
Thi s new integrated approach lo understanding housing clfTorclabilily may also have implica ti ons fo r th e lend i ng comm un ity, w hich
i s closely exami ning ri sk and t he long-ter m
sust a.inabi l ity o f a bor rower 's abi li ly to m ake
mo1igage paym ents. With many e>..7Jecling continued volatilit y in energy prices, both location
efficiency and home-energy-use efficiency may
Average Annual Household Gasoline Expenditures - 2008
D
D
Data not available
$900 to $1 ,800/Year
$1,800 to $2,700/Year
■ $2.700 to $3.600/Year
■ $3,600 or Greater/Year
Fuel efficiency Is based on 20.3 mpg.
become increasingly impo11ant considerations.
■
Tl11s article was written by Jared Yarsevicl1. researcl1
assistant in the Atlanta Fed·s community affairs d1v1s1011.
Source: Center for Neighborhood Technology, Chicago, IL.
18FRASER
Digitized for
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Federal Reserve Bank of St. Louis
VO LUME 19, NU MBER 1
USDA Program Opens Doors
for Rural Homebuyers
ACCESS TO AFFOR DABLE FINANCING HAS
LONG BEEN A BARRIER FOR LOWER-INCOME
RURAL HOMEBUYERS. MANY LACK THE SAVINGS
REQUIRED FOR A CONVENTIONAL MORTGAGE, AND
THERE ARE FEW OPTIONS FOR DOWN PAYMENT
ASSISTANCE IN RURAL COMMUNITIES.
In addition, poor credit scores and li 111i1 cd access
lo C'l'('ci it co un seli ng and ho mebuy('!' C'ducatio n preve nl
so me rural homcb uyers f'rom purchasing a ho111e.
Affordab le fina nci ng opt ions have dec lined nation a ll y O\'Cr the las t two yea r s as banks li gh tened thei r
credit sta ndards in response to tlw fo r eclos urr crisi s.
For tho se who lac k sign i f'icant cas h rcservl'S or have'
impaired credit , f'ew options arc avai lab l e. I l oweYe r ,
Tammy C,1lliert and lier daughter helcl an open l1ousP to tell friends and
ne1gl1l10,, about USDA l10111eownersl11p programs 111 Mrcldle Tennessee.
i n rural co mmunit ies throughout I he Fed's Six th D i st ri cl and nat ionw i cle , ho rn eown('!'s h ip c an sl ill be a
Th ough the near ly $7 bi lli on in loans guaranl ('<'d by the
rea l ity f o r l owcr-in collle holll eb uycrs tha n ks to the
USDA in 2008 pal es i n compar ison to$ 102 bi ll ion guaran -
t ·.s.
teed by 1hr Federal Housi ng Acllllinistration ( FII A) . the
Department of' Agricu lture ( l 'SDA)'s Rura l Oe\·elop-
llle nt Cua ran l eed Rura l I lo usi ng Loa n Program .
volun H' of' loans or iginated I hro ugh the Guaran i eccl Loa n
Progra lll nationally has more than doubled since 2006.
USDA program grows, especially in the Sixth District
In I he Fed's Si x th District , thr program's growth has
l nlPrc's t i n the USDA Ci ua r antec'd Loan Program
oul pa('ed its expansion in I he nat ion as a whole. Florida ,
has inl c nsi fied since 2006. Th e Age ncy's pr im ary too l
Ten 1wsscc, Mi ssissippi and Loui sia na all ran k among the
for encouraging h om eo wn ership i n r ura l areas, the
top 10 stal es f'or Guaranteed Loan production. According
Ru ral Deve lopme nt Sec tio n 502 I l o meowne rsh ip Loa n
l o th e Direc tors o f I l ousi ng Program s l'or Rura l Devel op-
p r ogralll , offers bo th direc t loans and the Guarantee d
ment in Tennessee and Florida , loan production has already
Loan Program. The direct loan program has been qu ite
doubled i n fisc al yea r 2008 co111pared wil h the same ti Ille
effect ivc f'o r serv in g t he lowest inco m e ho meb uyers in
peri od in 2008, an indication I hal the C: uaranleecl Loan Pro-
rural com muniti es, but the Guaranterd Loan Progralll
gram is sl ill gain ing ground. The program's recent ach·ance
has S('(' n the biggest inncase in fundin g over th e past
seellls largely attributable lo the disappearance of' colllpeti -
se\·eral yea rs.
t ion from all crnalive mortgage financing companies.
Digitized for FEDERAL
FRASER RESERVE BANK OF ATLANTA
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Federal Reserve Bank of St. Louis
19
Guaranteed Rural Housing Loan Program Production in the Sixth District: 2006-2008
Florida
Georgia
Alabama
Louisiana
Mississippi
Tennessee
Total Sixth District States
us
2006
2007
2008
%Change
$ 80 ,670 ,263
$ 45 ,494,229
$74,548,946
$ 105,462 ,629
$ 65 ,187 ,145
$ 80,670 ,263
$500,089 ,834
$3, 074 ,685,563
$11 1,608,148
$54,866,239
$67,608,249
$ 181 ,892 ,640
$ 149,648,624
$140,688,133
$706,312 ,033
$3 ,663 ,597 ,113
$290,670,4 18
$ 151 ,987,521
$142 ,754,996
$443 ,731 ,326
$291 ,822 ,167
$234,602 ,458
$ 1,555 ,568,886
$6 ,979 ,700,876
260 %
234 %
91 %
321 %
348 %
82 %
211 %
127 %
2006-2008
Source: USDA Rural Development 2008 Progress Report
How the Guaranteed Loan Program works
of th e count y med i an. They mu st also purchase a home
Wh en the subprimc 111 arket was in fu ll swing, mortgage
in a qua lified rura l ar ea- general ly a town or community
progra ms offered by gO\'C'rnm enl agencies li ke USDA or
w i th no m or e tha n 20,000 resi dent s. In ter esti ngly, how-
FII A were considered l oo burdenso111e because of loan pro-
ever, some commun i t i es near urban center s qualify. Por
cessing r equirements. Now, however, lenders and brokers
example, so me exurban area s, such as th ose in ce nt ral
are flocking t o these affordable opt ions. Th e Gua rante ed
F lorida tha t saw th e most dram atic grow th durin g th e
Loan Progra111 offers th e last "No Money Down" mortgage
r ecent housin g boom , arc eligib le for Guaranteed L oan
available in ru ra l commu nities, where tight cred it st:an -
Progra m fin anci ng.
darcls, loss of financ ing products for cr edit-i mpaired bor-
Qualifi ed pri vate lenders under write t he mortgages
rowers and the absence of 100-pcrccnt fin ancing products
throu gh th e Guaranteed Loan Program. To ass ist t he
arc thwartin g many pot ential homcbuyers.
lenders and ensu r e co nsiste nt un derw ritin g, US DA has
Recen t n10,·cs by Congress to ban the practice of sel IC'rfi nance cl clo wn payment an d clos ing cost assistance left
soft ware program t hat is avai lable at no cos t to t he lender.
those l ackin g cash r eserves w ith st ill fewe r options. Th e
T his streamlined syst em makes it easier for both lenders
Guaranteed Loan Program has not been a ffected by th ese
and th e USDA to oper at e th e loa n progra m effi ciently.
r es t ri ctio n s, howeve r, so sell er s can help cove r clo si ng
Tennessee was a pilot st at e for GUS, and c urre ntly it is
cos ts for hom ebuyers using this program . I lomebu ye rs
used to process 80 perc0nt o f the state's Guaranteed L oan
usi ng the Guara nt eed Loan Progra m ca n a lso rol l th e
Progra m loan reques ts. As a res ult of the successful t est-
2 percent guarantee fee charged by the USDA into th eir
run , GUS is now being i mplemented in other st at es as well.
loan amount , so they can actual ly fina nce up to 102 percent of the appraised house va lue.
Th e fact th at Private Mortgage Insurance (PMI) is not
To fur th er sa feg uarcl th e und erwr itin g process, al I
loan applica t ions , in clu ding appraisal s, a re r ev i ew ed
for app rova l by the Ru ral Deve lopme nt Stat c Hous in g
r equired m akes the Guaranteed L oan prog ram e,·en more
Progra ms office. Consistency in underw riting standard s
affordable. Con ventional lenders including PI I A typicall y
ancl rc,,i ew arc key for ens uring the Guaran t eed Loan
requi re homebuyers to pay monthly mortgage i nsurance if
Program's performa nce.
more t han 80 percent o f th e ho use price is fin anced. Si nce
A guarant ee covers up to 90 percen t of th e app rm·ecl
homebuyers using t he Guaranteed Loan Program ar c not
loan , ·alu e, and USDA loans are eligibl e for sa le to the
r eq uired to purchase PM l , t h eir mo nth ly housi ng pay-
secondcU'Y market. The secondary 1mu·ket for these loans is
ment s ar e significa ntl y lower .
El igibi lity gui clelincs for the Guaranteed Loan Program
require bor rowers to have an income less than 115 percent
20
developed the Guarant eed Under w r iting System , "GUS," a
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
sti ll stro ng clu e to the low risk associated with this product
ancl the USDA's strong track reco rd with th e Gua ranteed
Loan Program.
VOLUME 19 , NUMBER 1
Mitigating the risks of 100 percent financing
(;i n'n t hC' well-doc ument C'cl p ro blC'm s assoc iat C'cl w it h
ho usin g pri ces h a\'e no t ye t st ab il ize d and co uld st ill
dC'eli ne. l lomebuyt'l's in th ese comnrnn itiC'S who acquire
subpri mt' mort gage produc ts and 100 pNCC'nt fin ancing,
a 100 pNcent mort gage still run th e ri sk of fi nding t hey
w hy doe's t he llSDA contin ue t o o ffN no- money- cl o w n
owe mt)rC' th an th e val ue o f t hC' home, thu s fo r fC' iting
mor tgage' fin ancing, particu larly l o lowC'r-income borrow-
t hC' wea l! h-buil ding and tax bcnC'fit s of homC'ownersh ip.
ers and those who appear to pose a high<'r CTC'ciit risk•) In
I lomebuyC'rs and lender s wil l hm·e to consider ca refully
response' to tht'se concern s. the l 'S DA usC's sc\·C'ral stratc-
the mar k('( condit ions and t he pot en ti al ri sks assoc iated
giC's to mit igat C' the pcrcei\'C'd r isk s o f ciC' f'au lt by Guara n-
w ith a 100 percent mortgage prod uc t in ce rt ain m arket s.
teC' cl Loan Progra m bor ro wers.
First, t lw Guaranteed Loa n Progra m has hi stor ica lly
fol lo wt' cl const'r val ive, sound unclt' rw ri t ing stand ards.
For C'Xa mplC', th e ra ti o of housin g cos t l o income can no t
Current and future prospects for
the Guaranteed Loan Program
Th e c;uara nt eC' d L o an Prog r a m i s attr ac t i ng so m e
excC'C'ci :W pC'ITC'nt and the tota l ci C'bt rati o ca nnot exceed
nC'w pa r t n er s in ad d i ti o n t o con tinuin g t o SC' n ·c it s
41 pC'rc·t'nt. Th C'se rat ios ar e mort' stringC'nt th an those set
co r C' mi ss io n o f ex pan d in g ho m eo wn er ship in ru ra l
in many o f tilt' pro ducts that led to t hC' mort gage cri sis. In
co m mun iti es. Fo r in st ance, in ce nt r a l Fl o ri d a, bui lcl -
add it ion. int er t'st rates fo r t he Gua rani C'Cd Loa n must be
C'r s and rea lt ors ha\·e st a r te d usi ng th e l ' SDA program
fi xC'cl for t hC' t'nt ire :30-year term of the note. T hi s measure
l o m ar kC' t excess housi ng im·ento r y in o\·erbuil t ex ur-
C' i i mi nat C's t h e ri sk s assoc iat C' cl w it h i ntc r cs t -on ly or
ban com mun iti es. Rece nt changes in th e l 'S DA in co m e
aclju stab lc- r at c loa n s.
qua l ifi ca ti on gui de l in es ar e C'Xpa nclin g the p r ogra m 's
SC'concl , th C' use o f t he guara nt t'e cl undNwritin g sys-
reac h to inelu dr hi gher-i nco m e fa milies w ho might be
t C' m and c· C'n t ra li ze d loan rev iew also app C'a r to lower
li kC' ly t o p urch ase h om es in lh esC' c om mun it irs. So m e
de li nqu ency ral C's and dim i n ish lh C' O\'t' ral l ri sk o f th e
spec u late th at th e ava i l ab ilit y of llSDA mo rt gages in
Guarantl'NI Loa n Progra m . In :2008, accordin g t o th e
tilC'SC' ar C'as may accel er ate th C' i r reco\·er y fro m th e
l "S DA , th C' dC' l inqu ency r ate fo r th C' (;u ara nl C' C'd Lo an
rC' ccnt housing downtu rn.
prog ram w as 11.4 per ce nt and 1.-1 pl'l'CC' nt o f th e lo an s
T ho ugh mo re ci C' bat e i s likC'iy ab o ut w he ther th C'
\\·C'nt into fo reelosure. \\' h ile the clC'linquC'ncy and foreclo-
l 'S DA prog ra m shoul d co nti nur to p r o\·icll' such fl rx-
sure' rat C's for th is program \1·t'rt' highC'r th an the rates for
ib lC' fin anc in g. Tr nn esser·s Ru ra l fkH• l opmC' nt H ou s-
pr imt' mor tgage's (6.6 percent dclinquC'ncy and 1.5 per cent
in g Progra m Direc t or, Don Il arri s, dors n·t an ti c ipat e
foreclosure), th e l 'SDA program ])C'rformC'd significantly
sign ifi ca nt c hanges t o t he co r e prog r am. l l r p oi nts t o
bC' tt C'r than subprime loans (:35. 1 ])C'ITC'nt delinq uency and
l hC' Gu a ra nt C'C'd Loa n Prog r am's p ro \·C' n trac k reco rd ,
l).8 pC'rcent forcelosure), according to LC'nd C'r Processing
i t s st ro ng IC' nclin g pa r tn er s and it s succ·rss i n fulfi lli ng
SC'1YicC's Inc. Applied Ana lyti cs cl ata for th C' sa mC' period.
t hC' goa l o f p ro\·icli ng a fford abl e finan c ing opt io n s fo r
Finally. lenders pa rticipa tin g in tlw c; uara nteed Loa n
homrb uycr s in rura l communi ties. ·' For somC' fami li es.
Progra m recC' i\·e ob liga t or y training and ongoing assi s-
t llC' no-money-do wn co mpon C' nt o fth C' Guara nt eed Loan
t ance fro m l "SDA.
Program is tlw differ ence th at all ow s th C'm t o success-
\\' hilc l 'SDA's undcn \Tit ing critC'ria shou ld help mitigate
full y purc hasr a hom e," accor ding t o :\lr. ll arri s. "T he
th e ri sk o f default assoc iat ed with th e Guaranteed L oa n
Guara nt C'c d Loa n Progra m is an C'Xa mpl e o ft lw type of
Progra m , quest ions per sist about o ffering a 100 percen t
p rogram 1hat should be con sidC'rc cl by lc nclcr s wh o want
mort gage' produc t i n cer ta in ar eas. In mos t rural com -
to promo t e respo nsible a fford able housi ng oppor tu ni -
mun itil'S, wh er e hou sing pr ices ar c rC'i a ti vc ly st ab le,
tiC' s i n their ru ra l commun il i<'s."
100 pC' 1TC'nt mortgage fin ancing can makC' it possible for
lowt'r-income indh·iduals to build wea lth t h rough hom-
■
This art1clP was written by Jessica LeVeen Farr. senior regional commun,•y
developme, t mar3r,er n the Atlanta Ferr, Na~~ville Brancl
emn w r ship i f t here is eYen slight appreciat ion in their
homC' \·alu e. ll ow e\'er i n m any comm un iti es, includin g
so m e
110\\"
C'ii g i b le fo r t he Guara nt eNI Loa n Progra m ,
RESERVE BANK OF ATLANTA
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Federal Reserve Bank of St. Louis
21
The Rough Road to Rebuilding:
Interview with Milton Bailey, President
of Louisiana Housing Finance Agency
Milton Bailey's "road home" since taking over the presidency of the Lo uisiana Housing Finance
Agency (LHFA) in 2006 has not been an easy one. He came to Lou isiana from Washington, D.C.,
where he served as the executive director of th e District of Columbia Ho using Fin ance Age ncy
from 1994 to 1999 and again from 2001 until 2006. He assumed the reins of LH FA a little
before the first anniversary of Hurricanes Katrina and Rita. In 2005, these storms destroyed more
than 200,000 homes and instantly exacerbated Louisiana's pre-existing housing crisis. Then , in
2008, Hurricanes Gustav and Ike arrived , damaging an additional 150.000 to 300,000 homes.
Nancy Montoya , senior regional community development manager for the Federal Reserve Bank
Milton Bailey
of Atlanta, spoke with Mr. Bailey to get his perspective on housing recovery for Louisiana, the
current state of the housing market, and other pressing issues.
MONTOYA: What conditions an ' a ff<'c-l ing thC' retention and
BAILEY: Yes , th N<' arc . RPm embC' r that in th e hi stori ca l
cl e\·elopment o f a fford able housing locally and nati onally•)
contPxt "\\'or kforc-e housing" was rPally p ub lic housing for
Louisiana's inclust1y. Aside from co q)OratC' hous ing, there
BAILEY: I'll begin at hom e and I IH' n exp and nati onally.
w as no C' ffort to reall y n eate a differpnt kind o f housing
Th ere's so m e ach·erse effec t in th <' cap ita l ma rk et : o b\·i-
otlw r I han publ ic housing f'or persons and famil ies of lesser
ously, there's less liquidi ty fo r ck\·elopers and less ac·cpss
mP,UlS. I lousing was ne\·er put on p,u- 11·ith economic de\·el-
to n eclit fo r homebuyprs to develop and p urchase' housing.
opnll'nt and businC'SS att rn c-lion and rC'tC'ntion. So the bright
Till' lack of pquit y fo r cl evC' lopNs, lack of creel ii for horn<'-
side is I hat th e am ount
huyers, th e o\·erC'x tension o f th e c·onsumer's debt capacit y,
has occurred rC'cently is going to ch ange that dynamic m ·C'r
or developnw nl
and advocacy th at
and high cl ef'aul t rate's for mullif'amily and sin glC' famil y
lint <'. Once afford able unil s are managed in a manner th at
housing all factor into a bleak out look. .\1oney is not flo\\'ing
allows those fac ilities to operate as pub lic assets instead of
th rough tlw market as \\·ell as it should and is certainly not
publ ic liabilitiPs, \1·e 1\·ill then sec a change in att itude as to
tri ckling clo wn to thC' encl usC'r . . .. To that I would acid that
tlw placement o f those' assets within stabl e com munities.
high incid ence's of 'J l i\ lB Yism , th e ":"\at In .\1y Baek Yard"
al I it ucle tow ard afforcl ablC' housing, has created challeng<'s.
MONTOYA: A r<' lessons lea rned in otlwr part s of th e country llC'ing app liPd in Loui sia na•)
MONTOYA: A r <' th er e any b ri ght sp o t s in how we 'r e
addressin g I h is iss ue' as a c ommunil y or as a ffordahl P
BAILEY: I s<'e hop e int he c'c-o nomi c- int egr al ion o flow-
hou sing devel opC' rs ?
incom <' c ommuniti es I h ro ugh the t oo ls ancl in centives
Digitized for
22FRASER
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Federal Reserve Bank of St. Louis
VOLUME 19 , NUMBER 1
to t rans ition r en t ers int o homeo\1·ners, \\"('a lth-builclin g
MONTOYA: Wh at else c-ou lcl
oppo r tunit i<'S, ancl "g r een" a nd e1ll'r gy-sm·ing elemen t s.
Low lneo111e I lousi ng Tax C' rPdit industry·?
\I"('
lw impro\·ing upon in the
T ill' im port at ion or best practices across the spectru 111
or housing and eco nomic dP\'l'iopmC'nt' as WPII as tlw
BAILEY: Well, 111ost thin gs we're doing well. We're probably
support nw<'hanisms to Pnsu1-e that th ose im-est men ts
doing mon' \1·ell than not. I low('H'r, FanniP and Freddie's
a r<' sustailwd, are ll"hat's making it ll"Ork. You\·<' seen tax
lost foe-us on \1·hat they werl' neatpd to do has ta kPn a
nedits fo r energy efflciency, ll"hich means g r ea t er effi-
lot of equ it y out of the ganlC', which is about IO pl'l'cl'nt o r
c-i<'ncy i n holl" one manages his or her honw as compa r ed
tlw t•quity 111arket. T hat ·s a sizeabil' chunk of Pqu it y drain.
to~-) years ago. Creating li\·ahle and sustainable cm·iron -
T lwir slO\\"llPSs to get back into the gamP has hamstrung
ments is a must .... For an indiddual to really take pride
us considPral>ly. So c-reating a fund that will n'place
int heir com munity, they han' to luwc a ho111p to take pride
Fan nil' and FrPddi<'S t radit ional --10 pt'rc-Pnt markpt sha rp
in. Quality o r cons I ru cti on is f"orP111ost, especi ally when
wou ld be h ig h ly desirable. The ot lwr issue is how to
it 111inimizes I he differences bPt W<'<'n market m l l' and
boost a !l pl'rcent ta x credit to Pnco ura gP high-inconw
alTordabl(, housing.
l'Orp orat ions to im·est in \1·orkfon·e housing. I say that
lwcausc. if you usP Louisiana as an Pxample . \1·hile \\"<'
MONTOYA: \\' hat has been t lw impact o r t Ill' "g rpen build-
an• oil-rich, a lot of those profits are' not bC'ing <'ha111ll'IPd
ing 111on'mPnl" on a fTord ablP housi ng·1
hack int o I hP product ion or affordabil' housing in fm·or o f
lhP oil companies inwsting in hight'r yielding historic- tax
BAILEY: Initially. aft er the storm . gn'E'n PIPnwnts increased
nedits. I \\·ould also go so far Io say that we IH'('d to take
t lw cost or bu i Id i ng housing. \\' hen you han• a disaster
a ha r d look at CRA [the Community RPinwstnwnt Act[
many pcopll' are going to bt• without inco111<' ror extended
w it Ii a \'il' W I owards fln e-1uni ng so mp or t hp reg ul ator y
pNiods o r t inll'. So, if you'n, alrPady dea lin g rrom a n
l'il'llH'nts that ensure that in \'l'sto rs an' im·esl ing in hous-
income basP that is depn'sSPd , tlwn adding thl' green
ing dp\·elop111ent morl' so than was im·estl'd l>Pfi>rl'. I think
Plem0nt to r<'de\·eloping a!Tordabll' housing 111eans that
that we·n, lwa<kd in the right dirPction rPganling capital
you arc. in e!Tcc-t , pricing rents out of llw afford able rangl'
rna rlwt rPf'orms, although tlw de\·il is in tlw dPta ils. llopl'-
or I 110 pcop ll' th at you'r e trying to se r\'e . I th in k it's ve r y
ru lly I hose rpf"orm s will pn'\'t• 11t t lw ty pl' or <'conomic col-
i111portant that ... we pro\·id(• inccnti\·ps to manufactur-
laps<' that
ing facilitiPs and concerns that procluc-0 the i11\"entory
regu latory mPchanisms an' going to work tot lw lwnefit or
or ··grePn PIPment s" so ... t hosp assets wi II alrPady bP
people \\·ho don·t hm·c the n'sourn's to \1·patlwr tlw storm
in pl ace and in suffl c- icnt quantit y so as to hm·e a ·'de
on I hPi r ow11.
minimu s·· PITect on rent s.
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Federal Reserve Bank of St. Louis
\I"('
han' today. \Vp'll han' to wait and SP<' ho\1·
■
Mississippi
GROWING AGREENER MISSISSIPPI
A new statewide competition
laun ched by
Th e Mi ssissippi Horne Co rporalion ( M fl C) will reward
builders and devel opers who cr eate t he best affordable
gre en housi ng. "G row i ng a Gre ener Mi ssiss ippi ," w h ich
will offer $100,000 in pri ze mon ey fo r the t op designs,
aims t o make gr een hou sing more w ide ly ava ilable and
incr ease dem and for en ergy-sav in g feat. u r<'S.
"Gr een housing is afford able housing," said Bill Sones,
MISSISSIPPI
Chairman of M HC's Board o f' Direct or s. " It dec reases ut i lity and mai nt enance costs through increased efficiency,
thereby helping homeowners save money. Thi s comp eti -
During construction , compel ing homes will be inspected
t ion w ill res ul t in green homes for Mi ssissippian s and
by an NAIIB Cerlified Verifi er, who w ill ensure green mea-
reward cont es t ants for addi ng , ·alu e to th e homes th ey
sures are implemented properly. Homebuyers w i ll al so be
build," he continued.
taught how to use the energy-efficient features of the home.
Th e comp etition will award $50,0 00 fo r first pl ace,
" Wi t h a ny gr ee n hom e, edu catio n i s esse nti al," said
$30,000 fo r second p lac0 and $20 ,000 for I hird pl ace. A n
American Society of Horne Inspectors-certified Gary N.
independent panel of fi ve judges will determi ne the w inners.
Smith , w ith SafeI-Iome In spection s. "A bu il der can in sta ll
H om es bui lt for t h e Gro win g a Gr ee ner M i ssi ssi ppi
ener gy-effici ent equipment, appliances and des ign t ech-
cont est mu st m ee t th e Natio nal A ssoc iat ion of Hom e
niques, I can inspect and verify t he co nstru cti on, bu t if
Builder s ( NAI-IB) guid elin es for gr ee n hom e bu ildin g at
homeow ner education is no t in cluded in th e proce ss , th e
th e "b ron ze" level or above . NAI-I B guide l i nes focu s o n
home wi l l not perform to it s full pote nti al," he added.
ener gy-e ffi cient appl ian ces, architec t ure, and bu ildi ng
Th e M i ss iss ippi Hom e Co r porat i o n wa s c r eated by
meth ods, as we ll as em ·i ro nm entally fr iendly bui ld in g
t he State in 1989 t o ser ve as the St ate's I-lousing Finance
materi al s.
Agency. In th at capacity, Ml IC administ ers th e Mortgage
"Th e NA I-I B model uses two compli men tary principles
Revenu e Bond program and th e H ous i ng Tax Credit
to determ ine what m akes a home green: efficiency and
progra m , am o ng ot hers. M II C's mi ss io n is t o enh an ce
env i ronmental impact,'' explained David Smith, chairman
Miss iss ipp i's long-t erm eco nom ic ,·i abil ity by financing
of th e Jac kson Home Builder s Associ ation Green Build-
safe, decent , a ffordab le housin g and he lpi ng wo rkin g
ing Com mittee. "NAI-1B green homes use energy-efficient
famili es build
desi gn and building practi ces to lower uti l ity costs whil e
usi n g more renewabl e and du rabl e bui ld in g m aterial s,"
w e a lth . ■
T11is article was written by Nancy Montoya. senior regional community
development manager of the Federal Reserve Bank of Atlanta.
he expl ain ed.
To qualify fo r the competition , homes must either sel I
for l ess th an $175,000 or be eligible fo r the Miss issippi 's
For more information:
To partIcIpate 111 t11e Growing a Greener M1ss1ss1ppi competition contact
MHC at 800 544 6960 or visit the website at www.msl1c.com.
Housing Tax Credit program .
Digitized for
24FRASER
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
VOLUME 19 , NUMBER 1
Georgia
NEW LIFE FOR FORECLOSED PROPERTIES
RehabiliLation of foreclosed
or aba ndoned prop-
nlC'n t orga ni zatio ns- Enterpr ise Co mmunit y !'art ners,
ert y by loca l government s, nonprofits or housing provi ders
I l ousing Partn ersh ip Network , Local I niti ati v<'s Suppo rt
is an important step on the road to neighborhood recovery
Coo peratio n, Ncig hborWorks Ame ri ca, National Counc il
in areas hard-hit by foreclosure. Fina ncial instituti ons play
o f La Raza and t lw Na ti ona l l ' rban League. T h<' organiza-
a significa nt role in thi s process, and a new organi zat ion,
tion faci lit ates tllC' t ransfer of foreclosed and abandoned
the l\'ationa l Community Stabili zation Trust , is designed t o
properties from financial institutions nationwide to local
smooth the way.
ho using orga ni zat ions. The goa l is to promote' produc t i\'e
re use of propc'rty ancl foster neighborhood sta bili ty.
Working directly with financial institutions
Th e :\'CST pro\·ides two ty pes of se1Ticrs: First. it acts
Collaborations among nonprofits, financial institutions
as a centra l point of contact \1·ith the financia l institu-
ancl ci\ic-minded \'Olunteers can lwlp bring neighborhoods
1ion th at ho lds t lw property. It establishes a st rc'amlinrcl
back to life. Th e lnitiatiH' for Affordab le I lousi ng is a pri-
process fo r iclent if'y ing, insIwct ing and rrnluat ing offers
n1te nonprofit agency in Atlanta, Georgia. foun ded in Hl90
from the se ll <'r. And it makes it possibl e for prospPC·ti\·e
by t \\·o churches with long histories of social im·oh·ement
~o\·ernment and nonprofit buyc' rs to acquire tlw property
in the local c·omm unity. Executin' Direct or Lisa \\'i se is
bd'orr it goes to market.
partnering with the Chase/ Washin gton Mutual/El\1C Real
Estate O\\'ned Gift ing and Discounted Sales Program to
Second, it assis t s with the sho rt- and intC'rnwdiate t erm financing needs of pa rti cipants through an afford-
refurbish three properti es in an area of De Ka lb County
ab le, re\'oh·in g line of cre dit. This all ows fo r better
I1C'a\'ily aflcct eel by foreclosure's.
lc\·erage of Neig hbo rh ood Stabili za ti on Program fu nd s,
A group of\'olun teers from tlw Federal l{esc' 1Ye Ban k
o r At Ian ta re habbed one of t he prope rt ies, m1cl vo lu ntee rs
as well as pro\'ides more fle x ible finan c in g for stabi li za tio n act i\' il ie s.
T he :\!CST is work ing in 100 com munities in :Fi st ates. In
from JP l\lorgan Chase, Emory l 'ni\·ersity and Agnes Scot t
College are completing work on the remaining two.
" Th e total r eha b cost fo r th e three propN I ies isn't
places where NCST is not operating, loca l recowry c,ffort s
arc' forgi ng th eir ow n par tnersh ips with lenders and se r-
<'xpectecl Io exceed $ 15,000," says Bever ly Dabney, firs t
v icers tha t hold HEO properti es, much li ke the l nitiati\'e
\·ice prrsident and senior community affairs rel ati onship
for Afforda ble' I lousing in Georgia has clone.
manager of Washington '\lutual ( \\'a'\lu)/.JP '\!organ Chase.
Like sim il ar programs at ot her financial inst it ut ions, the
Tl11s 1 t
e., is .1r I
developn e, t
b, S1by SI 1de, s1
O di ,1 Pf
of
ilP F C
JI Res, '
regIonJ
Bank Jf
■
1
ti Ill[
Chase/ \\'aJ\ lu/ E:J\IC program \\'orks with nonpro fit s and gO\·ernment ent ities to donate or sell rea l estate' ow ned ( REO)
properties to help areas \\·ith high foreelosure rates.
The National Community Stabilization Trust eases the way
The :-Jatio nal Commu nity Stabilization Trust ( 1CST )
For more information:
ted S,
l C' ') 5
ogr
er J ,es non l,
• or 81 >blt, JI l Chase's REO listing http
•g 1
I ,1ges It
l ~ op ties d ding JSI" WaMu 's REO listing V, ....,,
11al'1up1oput.e com National Community Stabilization Trust http
~1
iw
/,\',II Stdt' IZdf 01 tr
•
,
l.CJl'l
is a collaboration o f fi\·e leading community cle\·rlop-
FEDERAL RESERVE BANK OF ATLANTA
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Federal Reserve Bank of St. Louis
25
FEDERAL RESERVE BANK OF ATLANTA
COMMUNITY AFFAIRS DEPARTMENT
1000 PEACHTREE STREET, N.E.
ATLANTA , GEORGIA 30309 -4470
CHANGE SERVICE REQUESTED
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PAID
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STAFF
VICE PRESIDENT AND COMMUNITY AFFAIRS OFFICER
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ASSISTANT VICE PRESIDENT
Tocl cl Gree ne
COMMUNITY AFFAIRS DIRECTOR
Way ne Sm ith
EDITOR
Karen Leo ne cl e Nie
PRODUCTION MANAGER
ll arr iet te Gri ssom
STAFF WRITERS
.Jess ica Dil l
.Jessica Le\ 'een Farr
Nancy :\ l ontoya
Sibyl Staci e
.J ared Yarse\'ich
CONTRIBUTING WRITERS
Susan Adams
Dan lm mergluc k
J a n Yo u I ie
DESIGN
Odi e Swa negan
Free subscription and addition al cop ies are availab le upon request by mail at th e
Community Affairs Department address above , or e-mail us at Partners@atl.frb.org,
or call 404/ 498-7287; FAX 404/ 498-7342. The views expressed are not necessarily
those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. Material
may be reprinted or abstracted provided that Partners is credited and provided
with a copy of the publication .
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F SC
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