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!

TESTIMONY REGARDING HB 1495
KATHLEEN LARA, POLICY DIRECTOR
HOUSE FINANCIAL INSTITUTIONS COMMITTEE HEARING
JANUARY 23, 2019

Thank you Chairman Burton and Members of the Committee. My name is Kathleen Lara and I serve as the Policy Director for Prosperity Indiana.

Our member network of nearly 200 organizations is working in every region of the state to ensure all Hoosiers can enjoy equal economic and social opportunities and live in thriving communities. Our members are working hard to address the deficit of affordable housing and homeownership opportunities, particularly for low-income households. They are focused on empowering individuals and families to build assets so they can climb the economic ladder.

That is why I stand here today to offer our strong support for this bill, HB 1495, a bill that takes on a pervasive practice undercutting those goals and affecting consumers and communities of all sizes and geographies — the lack of strong state policy regarding land contracts for homeownership.

As you have heard, in states that were hardest hit by the foreclosure crisis, particularly those in the Midwest, thousands of homes became vacant and prime investment opportunities for buyers. Significant portions of this housing stock, however, were blighted, abandoned properties with low appraisals and often severe habitability issues.

Subsequently, we started to see an explosion in the number land contract agreements for these homes where would-be homeowners enter into alternative purchase agreements with companies and the title is transferred at the end of the mortgage, rather than the beginning as you would see with traditional mortgages.

Land contracts are not inherently problematic when interests are aligned. In fact, they have been a viable alternative homeownership model utilized by many non-profits, faith-based organizations, home builders with excess supply, and average Hoosiers selling homes to neighbors, family or friends.

The problem lies in the increasingly common predatory model we have seen where interests are not aligned. In this model, sellers regularly churn would-be owners in and out of properties. These borrowers invest thousands in repairs to the homes only to be evicted when the borrower is inevitably unable to keep up with habitability repairs required for code compliance in addition to loan costs and loses all of their equity.

We have seen these land contracts used to exploit a loophole in state code, subverting state landlord-tenant habitability obligations as well as protections afforded to borrowers with traditional mortgages. In short, the seller makes more when the borrower fails.

In HB 1495, we do not aim to prevent anyone from entering into a land contract for homeownership. We do, however, aim to empower consumers by putting into place protections that increase the transparency of these products for borrowers. These are basic disclosures that are far less extensive than what would be required for a traditional mortgage, but provide enough information to help borrowers understand the basic habitability of a property and more clarity regarding the terms of the contract.

We want to foster affordable avenues to housing stability and homeownership, but ones that allow borrowers to be informed and empowered. I want to express our sincere appreciation to Representatives Summers, Clere and Fleming for taking on this important issue. I urge the members of this committee to support HB 1495 and enact common sense protections for Hoosiers.

With work at the Statehouse well underway early in this long budget session, Prosperity Indiana is working to advance key member priorities, as outlined in our in our 2019 State Policy Priorities.

Our network is pushing for ambitious agenda and we hope our members will register to attend our Statehouse Day on Tuesday, January 29, as we urge their lawmakers to take action on critical community development legislation. Prosperity Indiana will set up all legislator meetings for members and provide you with key talking points to make the process as simple as possible.

Please review the key bills and updates highlighted below to help us move these priorities forward!

ASK YOUR REPRESENTATIVE TO CO-AUTHOR/SUPPORTHB 1616 (bill link pending) THAT WOULD CREATE/FUND NEW TAX CREDITS FOCUSED ON EXPANDING AFFORDABLE HOUSING AND HOMEOWNERSHIP, COMPLEMENTING THE EXISTING NEIGHBORHOOD ASSISTANCE PROGRAM AND HB 1234 THAT WOULD CREATE/FUND A STATE LOW INCOME HOUSING TAX CREDIT PROGRAM)
(BOTH SPONSORED BY REPRESENTATIVE JIM PRESSEL)

ASK YOUR SENATOR TO CO-AUTHOR/SUPPORTSB 524 AND SB 422 WHICH WOULD ADDRESS SERIOUS HABITABILITY CONCERNS AND INCREASE TENANT PROTECTIONS TO HELP CURB THE EVICTION CRISIS (SPONSORED BY SENATORS EDDIE MELTON AND MIKE BOHACEK, RESPECTIVELY)

ASK YOUR SENATOR TO CO-AUTHOR/SUPPORT SB 104 AND YOUR REPRESENTATIVE TO SUPPORT HB 1098 TO PUT A 36% CAP ON PAYDAY LOANS AND CUT DOWN ON PREDATORY LENDING THAT TRAPS LOW-INCOME CONSUMERS IN DEBT (SPONSORED BY SENATOR GREG WALKER AND REPRESENTATIVE CAREY HAMILTON, RESPECTIVELY)

**URGENT BILL UPDATE**
We anticipate this bill will be heard in the Senate Insurance and Financial Institutions Committee next Wednesday, January 23, so please help us stop the debt trap in the Hoosier State by signing on in support of the measure. Click here to sign our letter.

Tracker Lists

We are still combing through final bill lists that are still updating as I type to review measures we will advocate for or against on behalf of our members in this legislative session. Stay posted to our policy blog as we will post our bill tracker lists and details by the end of the week!

As the longest government shutdown in U.S. history continues, more than 1,500 units of federally assisted housing supporting low-income seniors, people with disabilities, and families with children throughout Indiana are in jeopardy. As outlined in the chart below, Prosperity Indiana has noted the 1,578 units of Project-Based Rental Assistance (PBRA) contracts that expired in December or stand to expire this month or next as the Department of Housing and Urban Development (HUD) is unable to renew them and is scrambling to fund rental assistance in the short-term without an end in sight to the federal shutdown.

How did we get here?

National advocates had previously received word from HUD that the agency had the budget authority to renew PBRA contracts through January. As a Jan. 6 Washington Post article revealed, however, that was not the case. The article quotes HUD spokesman Jerome Brown as saying that “[HUD] budget and contract staff are ‘scouring for money’ to figure out how to fund the contracts on an interim basis.” The piece outlined how 1,500 landlords received letters from the agency on January 4 in order to try and prevent the eviction of tenants after certain HUD officials had allegedly not realized had expired on Jan. 1. Those letters apparently outlined what activities will take place during the first 30 business days of the shutdown and how to prevent the eviction of thousands of tenants who live in homes covered by the Section 8 Project-Based Rental Assistance program or Section 202 (for the elderly) and Section 811 (for people with disabilities) programs.

According to the National Housing Trust, HUD shared that 1,150 contracts were not renewed in December affecting approximately 70,000-85,000 low-income households. Additionally, HUD has indicated that will be unable to renew 500 contracts that expire in January, affecting another 30,000-40,000 low-income households.  While HUD has expressed it is working within currently obligated funds at its disposal to cover most rental assistance payments, but if the shutdown continues, 550 more contracts are set to expire in February without HUD in a position to renew these contracts or obligate funds. HUD has indicated that Section 202 owners are expected to rely on their reserves, but advocates have concerns that budget reserves are not sufficient to meet the rental payments. HUD has also stated it plans to use funds carried over from prior years to fund these contracts for December and January, but beyond that, the agency may have to figure out a way to fund these contracts on a short-term basis.

In rural housing, the USDA shutdown plan indicates that direct loan programs will not issue any additional funds, including Section 504, 514, and 502.  Further, the guidance noted that banks are unlikely to close on these loans until the government shutdown ends, delaying homeownership. At present, it is not clear if USDA will continue paying rental assistance or vouchers for low- and very low-income tenants.

Click here for the NLIHC breakdown of the shutdown’s impact on major housing programs.

Congressional Call to Action

Prosperity Indiana is urging Congress to pass clean FY19 Transportation Housing and Urban Development and U.S. Department of Agriculture budgets so that thousands of extremely low-income families, seniors and the disabled are not denied critically needed housing assistance. Short-term renewals are destabilizing for private owners of PBRA properties. They limit the owners’ ability to supportive services to their tenants, delay property rehabilitation, and could potentially increase rent burdens on fixed-income populations. The average income of a household receiving PBRA is less than $12,000 and 56 percent of these households have someone who is elderly or someone with a disability, so they can certainly not afford to shoulder this burden imposed by the shutdown. 

Guidance for Owners

HUD has shared that owners experiencing delays in payments can request access to replacement reserves, but should not do so without approval. Those requests should be directed to the Director of the Multifamily Hub or Satellite office, all of whom should be working as essential employees.

Today, Nov. 20, the Indiana General Assembly is convening at the Statehouse for Organization Day, the ceremonial start of the 2019 legislative session. The day allows for legislators to meet with fellow lawmakers to arrange committees, swear in new members and generally, roll out key legislative agendas. When lawmakers officially reconvene in early January, it will be for a long session – when the General Assembly creates a two-year budget.

Prosperity Indiana has already been working with state legislators to advance key member priorities, but on this occasion of Org Day, we present to you our formal 2019 State Policy Priorities. Based on member feedback and engagement, this year's priorities are 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.

These priorities will help ensure Hoosiers can enjoy equal economic and social opportunities and live in thriving communities. Click on the images below to read the full list of priorities and review critical affordable housing data illustrating the need to implement these policies.

Also, please register to join us on Tuesday, January 29 for our Statehouse Day as we connect members with their legislators to share why these priorities are so critical to our network and our communities.

For questions on these priorities or getting engaged more actively in advocacy at the state or federal level, contact our policy director, Kathleen Lara, at klara@prosperityindiana.org.

We will keep you updated and engaged throughout session, but please be aware all hearings and session meetings are publicly available to stream live at www.in.gov/iga.

Thank you to our members who took time to comment on proposed changes to the Community Reinvestment Act (CRA) over the last month! Extensive grassroots advocacy is required to lift up urgently needed reforms and defend tools that address equity in lending, access to credit, and investments in underserved communities.

As we outlined in our Action Alert, Prosperity Indiana has concerns that changes regulators have proposed via an Advanced Notice of Proposed Rulemaking (ANPR) may substantially weaken the law. On behalf of our member network, Prosperity Indiana submitted comments outlining our concerns and offering ideas to strengthen CRA moving forward that can be found here: https://www.regulations.gov/document?D=OCC-2018-0008-0260

For questions, contact Kathleen Lara at klara@prosperityindiana.org.

According to the National Housing Preservation Database, 3,067 public

housing units in Indiana are in need of immediate investment and 4,472 publicly supported rental housing units face an expiring affordability restriction over the next five years.

With 158,322 extremely low-income Hoosier households (those earning at or below 30% of area median income pay already more than half of their income on rent and a 134,998 deficit of rental homes affordable and available to these households, Indiana must expand affordable housing, not lose ground on the already insufficient supply. 

The 2018 Preservation Profile lists these facts as well as an updated number assisted rental homes in Indiana with expiring affordability restrictions by funding stream as well.

That profile shows that a substantial portion of this portfolio, two-in-five or 41,397 assisted units, in our state receive Low-Income Housing Tax Credits (LIHTC). 

A new report, Balancing Priorities: Preservation and Neighborhood Opportunity in the Low-Income Housing Tax 

Credit (LIHTC) Program Beyond Year 30, from the National Low Income Housing Coalition and the Public and Assisted Housing Research Corporation found that by 2030, nearly half a million current LIHTC units, or nearly a quarter of the total stock will reach the end of all federally mandated rent-affordability and income restrictions nationwide.

The report highlights the fact that many of these units will be lost in conversion to market-rate rents, but others will be lost due to physical deterioration unless new capital investment is available for 

rehabilitation. The report also makes the case that scarcity in resources for affordable housing have led to the dilemma of whether to prioritize resources for preserving existing units or focusing on new resources to increase mobility instead of focusing on building a broader housing safety net.

It also lists units with expiring affordability nationwide by neighborhood desirability and opportunity, broken down by educational opportunity, transit access, labor market access and health environment.

For a link to the full Indiana 2018 Preservation Profile, click here.

Action Alert!

We are counting on you to lift your voice to push back against potentially harmful changes to the Community Reinvestment Act (CRA). CRA is a landmark civil rights law to end discrimination that was once common in America’s banking and housing markets.

While some strides have been made, the lack of investment in low-income areas and communities of color remains a persistent concern. Even still, regulators have proposed ideas that may substantially weaken the law via an Advanced Notice of Proposed Rulemaking (ANPR). We need you to speak up to ensure CRA is strengthened, not weakened.

We only have until Nov. 19 to comment on these ideas and urge regulators to consider CRA reforms that more effectively hold banks accountable for equitable investments and help them more flexibly respond to community needs.

In order to simplify the process, we have drafted a letter at the end of this email for our members to use that outlines our concerns and suggestions.

1. Please open a new document, paste the draft letter, just add in your personal and organizational details in the sections in bold as appropriate.
   
2. Where the data by congressional district is referenced, please refer to the table below. If you do not know your district, click here to find it!
   
3. Lastly, follow this link directly (https://www.regulations.gov/docket?D=OCC-2018-0008), click "comment now" to upload your document and then submit it!
   

Thank you for your advocacy. There is power in community voices coming together to protect critical resources and push for urgently needed reforms. For more background on CRA basics, the proposed changes and our concerns related to ANPR, click here to find the PowerPoint presentation from our joint NCRC-Prosperity Indiana webinar.

For questions, contact Kathleen Lara at klara@prosperityindiana.org.

DRAFT LETTER

(Date)

Comment regarding “Reforming the Community Reinvestment Act Regulatory Framework”

RE: Docket ID OCC-2018-0008

(Name of Your Organization) appreciates the opportunity to comment regarding the Office of the Comptroller of the Currency’s (OCC) Advance Notice of Proposed Rulemaking (ANPR) regarding the Community Reinvestment Act (CRA). Since 1996, banks have issued almost $2 trillion in loans and investments in low- and moderate-income communities, ensuring more individuals have the opportunity prosper and become homeowners, more businesses receive loans to grow and thrive, and more community development organizations can expand their work to revitalize neighborhoods. CRA is a critical tool to address equity in lending, access to credit, and investments in underserved communities.

(Your organization’s name) is based in (city or neighborhood), and (describe services and mission). In carrying out this work, it is clear how CRA has motivated banks to provide loans and investments for affordable housing and economic development in areas and/or for projects that would otherwise not receive this critical capital. (Describe here in a few sentences an example of CRA financing that has addressed a critical need and/or is innovative.)

With that in mind, (Name of Your Organization), has strong concerns about how the proposed changes weaken regulators’ and communities’ ability to ensure CRA-related investments are indeed responsive to community needs. The OCC’s proposal significantly diminishes the importance of assessment areas on CRA exams, which are essential in combating lending inequities. Using data collected from the CRA and the Home Mortgage Disclosure Act (HMDA) from 2012 through 2016 to examine loan volumes, the National Community Reinvestment Coalition (NCRC) estimates that if these proposed changes were to be implemented, the losses in mortgage and small business loans in low- and moderate-income (LMI) census tracts would be between 10 and 20 percent. In Indiana, that would mean LMI neighborhoods could lose up to $1.28 billion in home and small business lending over a five-year time period. In the Congressional district in which we operate, the loss would be (insert the appropriate data from the table above).

Specifically, we are concerned that an OCC idea, commonly called the one ratio, would make CRA exams considerably less effective in evaluating how banks are meeting local needs, particularly in hard-to-serve areas that are economically divested in very rural or urban areas. The one ratio would consist of the dollar amount of a bank’s CRA activities (loans, investments, and services to low- and moderate-income borrowers and communities) divided by the bank’s assets. The ratio is supposed to reflect CRA effort compared to a bank’s capacity.

This approach cannot tell an examiner, a bank, or a member of the public how responsive a bank is to its various service areas. Currently, CRA exams evaluate and rate bank performance in assessment areas where banks have branches, and examiners are required to solicit and consider comments from community members about performance in assessment areas. This is central to the intent of CRA because these public comments offer insight on the practical impacts of CRA investments or areas for improvement. The one ratio replaces assessment areas or significantly diminishes the importance of assessment areas and public input on CRA ratings. Regulators must not devalue the public input process or weaken standards; rather, they should increase communication between all stakeholders about ways to more effectively meet community needs.

(Add any details about how your organization has engaged banks and/or CRA examiners in discussions about local needs and proposed financing and/or bank lending. Describe how these discussions may be diminished if assessment areas become less important on CRA exams.)

Additionally, we agree that changes in banking and technology require innovation to increase services to communities in need, but research has shown that low- and moderate-income consumers rely on branches for access to loans and banking services. This is a critical tool to combat reliance on predatory lending operations that are often pervasive in divested communities and disproportionately impact communities of color. If CRA exams dropped branches from consideration, the amount of lending and bank services in low- and moderate-income neighborhoods would decrease significantly. (Add your experience about bank branches in lower income neighborhoods or helping your modest income clients who are unfamiliar with banks get loans via bank branches).

Accordingly, the proposal’s discussion of the need to expand CRA exams to assess bank lending in areas beyond bank branches does so in support of the one ratio concept. Instead, the OCC should establish assessment areas for geographies where banks do not have branches but engage in a significant amount of business to gain a better understanding of service needs and opportunities in those areas.

Regarding the question within the ANPR about whether CRA consideration should be broadened for additional activities and populations, consumer and community development advocates like (Your Organization Name) have significant concerns that this would allow financing of CRA-eligible projects that do not directly serve low- and moderate-income neighborhoods and populations. By awarding points for financing or activities that do not address lack of access to banking or community development needs in lower income neighborhoods, the CRA’s mission of addressing inequality and redlining will be diluted.

In terms of expanding populations served by CRA, CRA exams must evaluate lending and services to people and communities of color. Since racial disparities in lending persist, it is essential that CRA must include lending, investing, and service to people and communities of color in its evaluations. The Joint Center for Housing Studies of Harvard University’s 2018 State of the Nation’s Housing report noted that the homeownership rate between black and white Americans is widening nationally. “Between 1994 and 2016, black homeownership rates increased just 0.3 percent while white rates rose 2.2 percent, widening the black-white gap to 29.2 percent,” according to the report.

(Add your thoughts and experiences related to serving communities of color and addressing racial disparities in lending).

One important way to more effectively address lending disparities would be for regulators to consider whether mortgage servicing companies, credit unions and insurance companies should also be subject to CRA-style exams. We suggest requesting public comment on this approach, which has long been a discussion among community development advocates who recognize we need to broaden CRA applicability to more ably address lending inequality.

To summarize, (Your Organization) agrees that CRA modernization is essential, but only in ways that boost lending and access to banking for underserved communities. We agree that CRA ratings must be reformed, but in ways that foster more inclusive investments, not contract current obligations. We also urge regulators to examine assessment areas that include geographies outside of bank branch networks in which banks make high volumes of loans. In order to continue working towards greater equity in lending, we urge regulators to examine lending and services to people and communities of color. Lastly, (Your Organization) believes the one ratio approach will diminish the importance of branches, assessment areas, and public input and result in a decrease of lending and access to banking in the communities that need it the most.

Investments through CRA are catalytic to divested markets and neighborhoods. These investments and capital infusions are often the first-in dollars, meaning it drives rehabilitations, loans, and developments that then spur broader market interest, resulting in larger scale revitalization and quality of life improvements. We urge the OCC to work with national, state and local consumer and community advocates to enact the kinds of reforms needed to ensure more individuals, businesses and communities can access credit, capital and opportunity.

Thank you for your thoughtful consideration of these comments.

Sincerely,

(Your Name)

Despite budget negotiators working right up to the Sept. 30 fiscal year deadline to pass Fiscal Year (FY) 2019 Transportation-Housing and Urban Development (THUD) and U.S. Department of Agriculture budgets, there was no final agreement on the spending package. Instead, Congress passed a continuing resolution, or short-term spending bill, to continue current FY18 funding levels until Dec. 7. Budget negotiators will now work to finalize FY19 funding levels for those departments in the lame duck session of Congress ahead of the December deadline. We will continue to urge the Indiana delegation in Congress to support the higher levels of funding, primarily contained within the Senate proposals, for housing programs and opposed any harmful policy proposals, known as “riders,” from being attached to that spending package. For more information, visit our previous budget coverage here: https://www.prosperityindiana.org/Policy-News/6676998 and here: https://www.prosperityindiana.org/Policy-News/6574990