Confessions of a liberal: I loved it, I swooned, I cheered out loud last week when Massachusetts Democratic Sen. Elizabeth Warren took a verbal flail to Trump’s HUD secretary, Dr. Ben Carson, at a hearing of the Senate Banking, Housing and Urban Affairs Committee.
But confessions of an old man: I don’t even want to think this, let alone say it out loud, but a torturing voice of doubt whispers in my ear that Carson could have a point.
Warren took on Carson over segregation, and she’s absolutely right about that: “We have gone backwards since the civil rights era,” she said. “It is HUD's job to help end housing discrimination. That's what the law said. You said you would enforce these laws. You haven't, and I think that's the scandal that should get you fired.”
Liberal OO-RAH for that! Even being appointed by Trump in the first place is grounds for firing in my book. The thing that I hate, however, is that I cannot convince myself Carson is wrong about everything. And that’s what I want. I want him to be wrong about EVERYTHING!
But that very irritating voice of doubt whispers that there may be at least a thin thread of truth in what he says about homeownership, and, even worse, I am worried that we may be seeing some proof of it right under our noses, here in Dallas. (Excuse me, I have to go shoot myself now.)
At a housing forum a year ago in Washington, Carson said, “Our Founding Fathers linked property with happiness and life itself. It is the essence of freedom, a stake in the city and the political system. They saw that homeownership was as vital as commerce, trade and community.”
OK, first off, a bit of qualification on that: I did a quick senility check on myself last week by word-searching the Declaration of Independence and the Constitution of the United States to make sure I’m still right, and I am: The term homeownership does not appear. The term property shows up in the Bill of Rights a couple of times having to do with due process and eminent domain.
Thomas Jefferson was a big champion of small land ownership, but he meant farms. The scary thing, anyway, is the unabashed hostility for government housing that we are hearing from the far-right grotesques, some of them painting all people who live in subsidized housing as lazy scammers.
More than half of the people who receive housing assistance from HUD are disabled or elderly. Meanwhile, through the mortgage interest income tax deduction, the federal government hands out way more housing welfare to the relatively affluent than to the poor — more than twice the boodle in 2015, $70 billion versus $29.9 billion, according to a study by Apartment List.
So have I stalled as long as I possibly can on what it is Carson could be right about? Yeah, I guess I have. You already know about that expensive desk he bought, right? OK, I know, cheap shot, cheap shot. I’ll get on with it.
Last year in Dallas, we witnessed a big donnybrook over affordable housing after the City Council passed a much tougher building code for low-rent landlords. Some of the biggest low-rent landlords in the city said they couldn’t make money under the new code.
Faced with ruinous fines for violating the new code, one major landlord, a company called HMK, announced it was getting out of the low-rent business, meaning it would be shutting down hundreds of rental houses, bulldozing them and redeveloping the land to other purposes. Sorry, this is a long story, I know.
When HMK made that announcement, the families who were its tenants panicked, and the mayor and other city officials took out after HMK with a much meaner whip than anything Elizabeth Warren ever picked up. The Khraish family, which owns HMK — and was only trying not to wind up in violation of the new law — was called slumlord, villain and every other name in the book.
Under that excoriating pressure, Khraish Khraish, the managing partner, relented. He said rather than evict his tenants, he would sell his houses to them, and he did, by the dozens.
His critics called it a scam because he financed the mortgages. Khraish said nobody else would extend a mortgage to his tenants because they had no credit.
The critics said he was selling houses that he couldn’t legally rent, because the houses didn’t meet the new building code. Khraish said nothing. But the challenge was plain to see.
He wasn’t throwing any families out on the street. If the city was so proud of its new building code that it wanted to come along and toss the families out of their newly purchased noncompliant homes in front of the TV cameras, the city was welcome to do so. It’s been a half year since then. The city hasn’t tossed anybody out.
I spoke recently with John Carney, the attorney who crafted the sale-to-tenant strategy for Khraish. He told me he has replicated the strategy for two other major low-rent landlords, who also are selling hundreds of houses to their former tenants.
I asked Carney how the mortgages are doing. He says the payment-on-time percentages are in the high 90s. I expressed some skepticism because the universal wisdom I have heard all my life is that very poor people don’t make their payments.
He corrected me in two ways. First of all, he said, these are poor people, but most of them, especially the immigrants, are working people. They have jobs.
In the second place, he said, the landlords know these people. Most of the time, landlords are selling to people who have been their tenants for a long time. The deals are structured so that the mortgage payments are the same or less than the rent was. If the tenants always paid their rent on time, they will always make their mortgage payments on time, absent catastrophe.
In other words, the Khraish experiment is demonstrating that very poor people can be homeowners, if you know them well, if you give them a break and a chance, a hand of trust rather than a handout.
But there’s a caveat. In middle-class and affluent terms and perception, the houses we are talking about remain crappy houses. They are small. They sometimes look bad. They don’t meet the new code. Rich people would call them shacks.
Carney claims that pride of ownership encourages many new owners to work on their houses in ways they never would have when they were renters. That sounds like a nice idea. I haven’t gone out to do any reporting or test it. Poor, working-class people don’t have much spare time, in my experience, so, best intentions notwithstanding, the do-it-yourself thesis could be true or untrue over the long haul.
This much is definitely true: People of very modest means may be making their mortgage payments to HMK and other former landlords on time, and in that sense, this new arrangement may be stable for them. But the houses those people are living in are not houses that government or even the better-known nonprofits could ever build, provide or sanction because they are too crappy.
In fact, in the city’s recently unveiled new housing policy, we see what it would cost for the public sector to provide the amount of affordable, non-crappy, code-compliant housing that this city badly needs: upward of half a billion dollars. In a city that can’t even fix its potholes, what are the chances of that happening?
On the one hand, the HMK model, which Carney says he is rolling out to other major landlords, can never be a panacea, either. It has too many thorny caveats.
Although the landlords making these sales are not applying the same credit-worthiness standards to their prospective buyers that banks would insist on for conventional mortgages, they are still looking for credit-worthiness. It’s just a different kind of credit-worthiness — a tougher kind.
Carney draws a parallel with the tote-the-note used-car business. Will some people go hungry to make that payment and hold on to that car? Yes. Some will. They’re the ones you sell to. And you sell them a crappy car.
So you sell somebody a crappy house. The point, from that person’s perspective, is that the crappy car and the crappy house are better than no house and no car. The house and car provide poor people a chance, a shot, a little bit of stability and an opportunity to do better sometime. It’s not easy being poor.
Even at that, the selection process to decide who gets to buy the beat-up car and the beat-up house necessarily excludes thousands of single mothers, elderly people, handicapped people and other human beings who badly need shelter and help. That help will have to come to them as some form of charity, public or private, unless we want them to go die outdoors.
But, wait. We already know that charity, public, private or both, can’t be a panacea, either, because we can’t afford it. Well, we think we can’t. Maybe if we gave up our daydreams of going to war simultaneously with North Korea and Iran … ah, well, that’s another conversation, isn’t it?
Right now, nobody’s got the panacea because there probably isn’t one. The answers to our challenges are likely to come in many and diverse forms.
But here’s the one that kills me. One of those answers could come from Ben Carson, and it could be homeownership and self-sufficiency, however crappy, however tough. OK, now, really do excuse me, because I really do have to go shoot myself.
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