Today, Prosperity Indiana submitted a letter on behalf of our network in response to the proposal to rescind the commonsense ability-to-repay requirements of the Consumer Financial Protection Bureau (the Bureau)’s 2017 payday and vehicle title loan rule (“Ability-to-Repay Rule” or “Rule”). Payday lending is associated with greater risk of delinquency on rent payments and other bills, delayed medical care, overdraft fees, loss of bank accounts, and bankruptcy. It can also inflict severe psychological harm, including distress resulting from aggressive debt collection practices

Prosperity Indiana's letter cited polling from Indiana, conducted by Bellwether Consulting on behalf of numerous consumer coalition partners. As the letter outlines, the poll found "87 percent of respondents saying payday loans are a financial burden versus a financial relief; 94 percent said they are expensive versus inexpensive; and 84 percent said they are harmful versus helpful. Of critical importance to the CFPB’s proposed rule, 78 percent support requiring payday loan lenders to determine a borrower’s ability to pay back a loan without defaulting on other expenses."

Our letter noted that "in Indiana, advocates for consumers and strong 

communities will continue to push for a statewide cap on payday loans. Prosperity Indiana will continue to expand the non-profit Community Loan Center program, offering consumers a low-cost payday alternative through employer partnerships. We will continue to strive for greater equity in lending and work to remedy the fact that many regulated banks have divested in communities of color while payday lenders are found to be 2.4 times more concentrated in African American and Latino communities."

The letter concluded by urging Director Kraninger to stand by the CFPB's mission: "In Indiana, we are working hard to empower consumers and support communities to reach that goal, but payday lending is undermining our efforts. The CFPB should be fulfilling its mission to protect consumers from unfair and deceptive practices and move forward with implementing the payday rule and maintaining the ability to repay standard. We urge you to reconsider this proposal and stand by consumers."

Prosperity Indiana also joined numerous consumer coalition partners in sending this letter as well: https://www.regulations.gov/document?D=CFPB-2019-0006-25771

Today, Prosperity Indiana submitted feedback (linked here) to the Office of Community and Rural Affairs (OCRA) and the Indiana Housing and Community Development Authority (IHCDA) in response to requests for public comment on the draft of Indiana’s 2019 Annual Action Plan.

The Annual Action Plan is part of consolidated planning process, which serves as the framework to identify housing and community development priorities that align and focus funding from the CPD formula block grant programs: Community Development Block Grant (CDBG) Program, HOME Investment Partnerships (HOME) Program, Housing Trust Fund (HTF), Emergency Solutions Grants (ESG) Program, and Housing Opportunities for Persons With AIDS (HOPWA) Program. The Consolidated Plan is carried out through Annual Action Plans, which provide a concise summary of the actions, activities, and the specific federal and non-federal resources that will be used each year to address the priority needs and specific goals identified by the Consolidated Plan. 

As part of the annual process of reviewing progress made toward goals stated in the 5-year Consolidated Plan and a description of allocation priorities, OCRA and IHCDA conduct public hearings, issue an online survey and solicit written public comments. Prosperity Indiana plans to engage our members throughout the year as both agencies work on program design and the next five-year Consolidated Plan.  We urge our members to participate in these meetings to help shape state priorities for allocating federal housing and community development dollars. If you have any questions about this process or our feedback, please contact Prosperity Indiana’s Policy Director, Kathleen Lara, at klara@prosperityindiana.org.

We invite you to click on the link below to watch our Spring Policy Update from April 24, as Prosperity Indiana’s Policy Director Kathleen Lara updated members on the status of state and federal priorities critical to our network! This webinar covered the latest news from the Indiana General Assembly to Capitol Hill related to our efforts expand affordable housing, protect consumers, and strengthen Hoosier communities.

Prosperity Indiana Policy Update.mp4

This year, Prosperity Indiana saw some important policy wins, but legislators also failed to enact bills that would have propelled community development in our state. Here's everything you need to know about how we spent the last four months as your voice in the Statehouse and the work ahead to help more Hoosiers achieve housing and economic security!

(Note you can enjoy a more dynamic review of session work and priorities by checking out a recording of our April 24 Policy Update webinar, covering updates regarding state, federal, and administrative priorities)

Setting the Stage

This year was a long-session for legislators, meaning they needed to pass a statewide budget and adjourn by April 29. In contrast to the chaotic end of last year’s session, the General Assembly actually adjourned late last Wednesday, April 24.

House and Senate Leaders started this year’s session with an agenda focused on passing a balanced budget, making changes to existing workforce development programs, increasing funding for the Department of Child Services, funding for schools, teacher pay and school safety.

Governor Holcomb outlined his priorities under the banner of his Next Level Agenda, urging legislators to take action to increase teacher pay, pass an inclusive bias-crimes bill, expand broadband services in rural Indiana, expanding the Next Level Jobs initiative, and make improvements to the Department of Child Services.

Progress to Bring About Prosperity

Based on member feedback and engagement, Prosperity Indiana started session with an ambitious agenda focused on expanded tax credit resources for affordable housing and community development, working to enhance tenant protections for renters and expanding consumer protections to help more low-income households build assets! Thankfully, more than 30 members attended our Statehouse Day on January 29 to help build support for our state agenda, despite the polar vortex reigning subzero temperatures down on our state!

Consumer Protections

Bill: SB 104/HB 1098 Sen. Greg Walker (R- Columbus) and Rep. Carey Hamilton (D- Indianapolis) introduced a primary priority for Prosperity Indiana—putting a stop to the payday debt trap in Indiana by instituting a 36 percent cap Click here for our one pager with more details

Outcome: This session saw an important success in that SB 104 not only received a comprehensive hearing, but received enough votes to advance out of the Senate Financial Institutions Committee. Unfortunately, on the week SB 104 passed out of committee, the Senate Energy and Commerce Committee voted to advance a bill (SB 613) that had a strip-and-insert amendment that dramatically expanded high-cost subprime loans and allowed for auto title lending. While SB 104 failed in a floor vote in the Senate, SB 613, passed and moved over to the House for consideration. Despite intense advocacy efforts from Prosperity Indiana and a coalition of more than 100 faith-based, veterans and social service organizations, the bill was approved in the committee. Fortunately, our collective advocacy efforts were successful in ensuring it did not have the votes to be approved on the House floor! Click here for more details on the bill.

Bill: 1495: Rep. Vanessa Summers (D-Indianapolis), Ed Clere (R- New Albany), and Rita Fleming (D- Jeffersonville) Prosperity Indiana joined partners the Fair Housing Center of Central Indiana and the Indiana Institute for Working Families to support this bill that aimed to provide greater transparency and modest guardrails to land contracts for homeownership. As this article in the Indiana Lawyer describes, land contracts can be a viable alternative homeownership model, but without any clarity in state law in how to treat them, we have seen large scale sellers churning borrowers in and out of properties who lose all of their investments along the way. HB 1495 would have required the disclosure of basic information about the property and loan terms, such as the annual percentage rate of the contract, existing liens on the property, whether or not seller or buyer will be paying real estate taxes. It also would have required an FHA appraisal to allow borrowers to know some critical information about the property. For our coverage of this bill on our blog, see this post: https://www.prosperityindiana.org/Policy-News/7291254

Outcome: While the bill passed the House handily, the bill passed the Senate by only one vote on the guarantee it would be sent to Conference Committee to work out differences between House- and Senate-passed versions. Ultimately, on the final day of session, the House approved the Conference Report, but it did not get enough votes in the Senate to advance to the Governor’s desk.

Affordable Housing Tax Credits

Bill: HB 1616: Rep. Jim Pressel (R- Rolling Prarie) would have created/funded two new tax credits focused on expanding affordable housing and homeownership for low-income Hoosiers, complementing the existing Neighborhood Assistance Program. Click here for our one pager with more details.

Bill: HB 1234: Rep. Jim Pressel (R- Rolling Prarie) also introduced HB 1234, a bill that would have created/funded a state Affordable Housing Tax Credit program. Click here for our one pager with more details HB 1234.

Outcomes: Unfortunately, with the state budget constraints, the House Ways and Means Committee did not opt not advance funding for programs beyond those identified in leadership priorities. Prosperity Indiana will continue conversations with House leaders about the scale of affordable housing needs across our state to lay the groundwork for increased funding in the 2021 budget session.

Renter Protections

Prosperity Indiana worked to introduce two critical bills aimed at addressing serious habitability concerns and increase tenant protections to help curb the eviction crisis in our state.

Bill: SB 422: Sen. Mike Bohacek (R-Michiana Shores) indtroduced a bill to allow a renter to be able to get out of a lease if a unit was not habitable upon move-in and to update our notice to quit statute, that allows a 10-day window for a tenant to cure if they fall behind on rent, so that it would apply to all leases instead of just oral/informal leases. Click here for our one pager with more details.

Outcome: This bill received a hearing that allowed Prosperity Indiana to outline the scale of the eviction crisis in our state, but the Chairman introduced an amendment that blunted the effectiveness of the bill, so the language that was voted out of committee did not improve landlord-tenant law in a way that made it worthwhile to advance.

Bill: SB 524: Sen. Eddie Melton (D-Gary) introduced SB 524, as comprehsenive statement on the numerous updates to our state’s landlord-tenant laws that are needed to bring about greater housing stability. The bill included provisions to allow for rent withholding, expand legal aid in eviction court, seal eviction records in cases where the court does not enter a judgement, limit security deposits and increase the timeframe for notice of rent increases. Click here for our one pager with more details. 

utcome: this was an ambitious bill that ultimately did not receive a hearing, but it is critical to our state to implement some of these changes and Prosperity Indiana will continue legislator outreach on the need and scale of the eviction crisis in our state to advance these goals over the summer and fall before the next legislative session

Successes of Interest to our Network Beyond Top PI Priorities

HB 1628 passed and expands the On My Way Pre-K  to be offered statewide while the funding levels would remain about the same at $22 million per year. Importantly, the bill removed barriers to enrollment in the program. Sen. Melton was successful in amending the bill to permit parents or guardians to qualify if they receive Social Security Disability Insurance or Supplemental Security Income benefits to help reduce barriers to enrollment.

HB 1141 passed and addresses the traffic and license reinstatement fees, providing a temporary amnesty program where fees can be reduced by 50 percent so fewer drivers are forced to choose between driving illegally or losing their jobs, childcare, and education.

SB 111 passed and provides $100,000 in annual grant opportunities for community- and faith-based substance abuse programs. The bill also provides $50,000 annually to the community- and faith-based substance abuse transportation assistance grant program.

Legislation Dominating Headlines:

HB 1001, the budget bill for the year, passed with the following spending outcomes: $753 million in increased school funding, this includes $539 million in added tuition support, and $140 million for school districts to spend based on their priorities (with discussion focused on the need to increase teacher pay), and $74 million more for statewide grant programs, including school safety funding.

HB 1002- is a workforce bill that passed and would expand the eligibility for high school students interested in applying for new state workforce grants that will help pay for students to receive credentials in certain fields. The bill also prioritizes funding for workforce programs deemed to be high achieving and provide more resources for schools to partner with employers on work-based learning opportunities.

Bias Crimes- The Governor was active in advocating for an inclusive Hate Crimes bill, alongside Prosperity Indiana members and partners, and while SB 198 did pass. The language omitted gender identity from the list of protected classes, falling short of goal of human service and civil rights organizations that have fought for an inclusive hate crimes bill for years.

Gaming – HB 1015- A comprehensive gambling bill was passed to legalize sports betting, both at bricks-and-mortar facilities and on mobile devices statewide. It also includes payments to four cities in the state that anticipate revenue loss due to new casinos and likely authorizes a new casino in Terre Haute.

Today, the Senate passed HB 1495, sending the bill to conference committee where legislators will negotiate bill changes between Senate- and the House-passed versions.  As this article in the Indiana Lawyer describes, this bill aims to provide greater transparency and modest guardrails to land contracts for homeownership.  While not new, these contracts have exploded in number, particularly in Indiana where communities were hit hard by the foreclosure crisis.

Communities with thousands of vacant homes circulating on tax sales have been purchased as investment properties, but many have also been purchased by speculators, acquiring numerous homes with low values and severe habitability issues to sell to aspiring homeowners on contract at inflated prices.  In these transactions, borrowers enter into agreements with sellers who transfer the title at the end of the mortgage, rather than the beginning as you would in traditional mortgages.

While this can be a viable alternative homeownership model, without any clarity in state law in how to treat them, we have unfortunately seen large scale sellers churning borrowers in and out of properties who lose all of their investments along the way. Regularly, these borrowers invest thousands in repairs only to be evicted when they are underwater, unable to keep up with repairs, balloon payments, fees, etc. and they lose all of their equity invested in these properties.

That is because land contracts shift all the burdens and obligations of homeownership to the buyers with none of the rights or protections of homeownership. This transaction has fallen into a no man’s land of policy, with court opinions differing on whether or not it’s a rental contract which would have some habitability standards or a true lending contract.

HB 1495 does not in any way attempt to prevent people from offering or signing these homeownership arrangements, only to provide needed clarity for all parties. In recognition that some individuals offer these contracts informally and not as their primary business, the provisions only apply to those who are regularly engaged in the business of selling land contracts and have four or more outstanding land contracts at a given time.

It does not require a standardized contract, but instead would have the Attorney General publish the necessary contract components or the contract can be considered voidable. 

Disclosures required: 

This bill would require disclosure of basic information about the property and loan terms, such as the annual percentage rate of the contract, existing liens on the property, whether or not seller or buyer will be paying real estate taxes, for instance that provide clarity for the borrower and the seller.

Appraisal: 

Rather than calling for a full inspection that would be required for a traditional mortgage, the bill would have these contracts include an appraisal within the previous year to allow borrowers to know some critical information about the property without the full inspection process.

Terms: 

Since this bill does not provide for an extensive inspection process, there will be a three-day cooling off period where the buyer or the seller may deliver to the other party a written notice of cancellation to account for misrepresentation of the property

The legislation is authored by Representative Vanessa Summers, co-authored by Representatives Clere, Fleming, Woody Burton and sponsored by Senators Bohacek, J.D. Ford, and Breaux.

Stay tuned to this blog for updates on bill negotiations and advocacy steps you can take in support of this measure!

For more information, contact Kathleen Lara, at klara@prosperityindiana.org.

Thank you so very much for speaking up in support of Hoosier consumers and communities! Your voices were heard and SB 613 has died.

Due in large part to your outreach, testimony, meetings, calls and emails, lawmakers stood with a broad coalition of veterans, faith leaders, community and social service organizations by choosing not to call SB 613 to the floor on the third reading deadline, killing the bill. 

Please join us in thanking legislators who opposed this measure throughout session. We look forward to working with lawmakers to discuss reforms to high-cost loan products that exploit Hoosiers facing housing and financial hardship, as well as ways to foster sustainable alternatives.

As a reminder, SB 613:

• Would have kept the current payday loan product and allowed the same lenders to make 6-9 month installment loans of up to $1500 to even lower-income borrowers at 167% APR, taking access to bank accounts directly to collect monthly payments. 
• Would have authorized a brand a new “Chapter 8” product at 72% interest plus the pre-paid finance charge, for $3000 up to 36 months with no limits on how many times the loan could be renewed or how many loans someone can have, a model we have seen is problematic in other states.
• And it would have increased costs across the board for conventional loans, like car loans, by increasing the max interest rate from 25% to 36% for loans of ANY SIZE and doubling the pre-paid finance charge allowed (from $50 to $100).

A recent report update from the National Low Income Housing Coalition illustrates the critical need for affordable housing in Indiana. NLIHC researchers found that there is a 134,485-unit shortage of affordable, available rental housing for the 212,377 extremely low-income (ELI) renter Hoosier households. Households that are severely cost=burdened and are spending more than half of their income on housing are bearing the brunt of this crisis, and are more likely than other renters to forgo healthy foods and healthcare in an effort to pay for rent.

Additionally, they are more likely to experience evictions. Indiana currently has one of the highest eviction rates in the nation. To view the entire Indiana state profile, click here.

On March 13, U.S. Senator Elizabeth Warren (D-Massachusetts) reintroduced the American Housing and Economic Mobility Act. This comprehensive legislation aims to address our nation's affordable housing crisis by producing more than 3 million new housing units, a 10 percent rent reduction, and the generation of 1.5 million new jobs. It also aims to promote home ownership and reverse discriminatory housing policies such as redlining and restrictive zoning.

In addition to the aforementioned goals, the American Housing and Economic Mobility Act aims to protect low-income seniors, people with disabilities, families with children, and persons without housing by:

• Creating a new $10 billion grant program that enables communities to build infrastructure, parks, roads, or schools if they reform land use rules that make new affordable housing projects needlessly expensive;
• Providing down payment grants to first-time homebuyers living in low-income, formerly redlined, or officially segregated areas in an effort to close the racial wealth gap;
• Strengthening the Community Reinvestment Act (CRA) to cover more financial institutions (excludes credit unions in the re-introduced bill) in an effort to promote investment activities in poor-and-middle-class communities;
• Supporting families whose wealth sustained substantial damage due to the 2008 financial crisis and still have negative equity on their mortgages;
• And making it easier to use housing vouchers in areas with good schools and jobs for residents.

To learn more about the American Housing Economic Mobility Act, click on the following links to read letters of support discussing the potential impact of the bill on families and communities: 

• Read Letter of Support from the U.S. Conference of Mayors
• Read Letter of Support from Massachusetts Mayors
• Read Letter of Support from Civil Rights Groups
• Read Letter of Support from the National Rural Housing Coalition
•  Read Letter of Support from Credit Union National Association

President Trump released his 2020 budget request today and unfortunately, as in his FY18 and FY19 requests, the proposal again calls for dramatic cuts to housing programs that aid low-income households. Those cuts disproportionately affect seniors, those with disabilities, families with children, and veterans.

Overall, the administration proposes to cut HUD by an astounding $9.6 billion or 18% below 2019 enacted levels, imposing deep cuts to affordable housing and community development programs. In addition to the cuts, the proposal revisits policy suggestions previously proposed by Secretary Carson to implement rental increases on the lowest-income households and work requirements that have not been shown to increase family or self-sufficiency.

The budget also incorporates draft legislation, known as the “Making Affordable Housing Work Act,” proposed by the administration last year that would increase rents on most non-elderly, non-disabled families receiving HUD assistance by requiring that they pay 35% of their gross incomes, compared to 30% of their adjusted incomes. Due to that calculation, the very poorest elderly and disabled families would also see their rents triple as it eliminates income deductions for medical or childcare expenses. The proposal allows housing providers to broadly impose work requirements, without any resources to help people gain the skills they need for livable wage jobs.

Data shows 46 percent of Indiana renters are cost-burdened and 86 households experience evictions every day in our state. This is not the time for draconian cuts that will undermine essential housing and community development programs like the national Housing Trust Fund, the HOME Investments Partnership program, and public housing capital repairs. We are actively communicating with our Indiana Congressional Delegation, urging them to not only reject this proposal’s cuts, but significantly expand the investments in affordable homes that Hoosier families and communities need to prosper.

See the table below for specifics on the proposed budget:

HUD	USDA Rural Housing
Community Development Block Grants/HOME: The budget proposes eliminating the Community Development Block Grant (CDBG) program and the HOME Investment Partnerships program entirely. The bill also would eliminate Choice Neighborhoods grants, the Section 4 Capacity Building program, and the Self-Help Homeownership Opportunity Program.	Multifamily Preservation and Revitalization demonstration, Section 502 Direct Homeownership Loans, Section 514/516 Farm Worker Housing Loans and Grants, Section 523 Mutual and Self-Help Housing, and Section 504 Rural Housing Assistance grants: The proposal aims to eliminate most rural housing grants and direct-loan programs at the U.S. Department of Agriculture (USDA), eliminating funding for the Multifamily Preservation and Revitalization demonstration, Section 502 Direct Homeownership Loans, Section 514/516 Farm Worker Housing Loans and Grants, Section 523 Mutual and Self-Help Housing, and Section 504 Rural Housing Assistance grants and loans
National Housing Trust Fund: The budget proposes eliminating the national Housing Trust Fund (HTF), the first new housing resource in a generation exclusively targeted to help build and preserve housing affordable to people with the lowest incomes, including those experiencing homelessness.	Section 521: Essentially, the only funding for housing under USDA that remains in the proposal is the Section 521 Rural Rental Assistance, which would be funded at $1.407 billion and the guaranteed loan programs that use fees to offset any federal costs and do not tend to serve the lowest-income households
Tenant-Based Rental Assistance: The proposal would cut funding for tenant-based rental assistance (TBRA) as his request for $22.244 is not sufficient to renew contract obligations, which would result in the loss of thousands of vouchers.
Project-Based Rental Housing: While the proposal offers a $274 million increase from FY19, this is also not sufficient to renew all existing project-based rental assistance (PBRA) contracts
Public Housing: The Public Housing Capital Fund takes a huge hit under this plan as it would eliminate this funding altogether (previously funded at $2.775 billion in FY19) and nearly cuts in half the the Operating Fund from $4.65 billion in FY19 to $2.86 billion, or 38%. Instead, the Administration's proposal requests $100 million for the Rental Assistance Demonstration (RAD) to convert more public housing into housing vouchers and PBRA.
Homelessness: The proposal calls for $34 million in cuts to the HUD Homeless Assistance Grants.
Fair Housing: The budget would cut the Fair Housing Initiatives Program (FHIP) by $3 million.
Homelessness: The proposal calls for $34 million in cuts to the HUD Homeless Assistance Grants.
Fair Housing: The budget would cut the Fair Housing Initiatives Program (FHIP) by $3 million.
202: The budget cuts $34 million from the Section 202 Housing for the Elderly program
811: the proposal cuts $27 million from the Section 811 Housing for People with Disabilities
HOPWA: The proposal would cut $63 million in funding for the Housing Opportunities for People with AIDS (HOPWA) program

On March 11, Prosperity Indiana and the Indiana Assets & Opportunity Network were joined by dozens of military and veterans’ groups, faith-based organizations and churches, social service providers, community organizations, concerned citizens, and more at the Statehouse for a Reject Senate Bill 613 press conference. 

Advocates stood in unity to discuss the devastating consequences SB 613 would have for consumers and communities. They implored House leaders to reject this piece of harmful legislation. If passed, SB 613 would rewrite the definition of criminal loansharking and open the door for high-cost lending in Indiana by permitting larger, longer-term loan products outside of the current 72 percent cap. It would also increase the allowable cost on various consumer loans, including auto and installment loans.

Prosperity Indiana and its members were represented by Mark Lindenlaub, Executive Director of Thrive Alliance in Columbus. He voiced concern regarding the increased workload social service agencies would encounter from families seeking relief from predatory loans should SB 613 pass, stating that, “adding larger, longer-term and higher-rate loans to vulnerable families will only make their lives, and our work, more difficult.”

Iraq War veteran Steven Bramer, Jr., a former payday borrower, shared his experience of getting caught in the vicious payday lending cycle. “I got myself in a horribly expensive cycle,” he shared before adding, “I protected you at one point. Now, it’s time for you to protect me.”

Click here to view a recorded live stream of the press conference and please contact your House Representative to urge him/her to oppose this bill!