Nevada Assets and Opportunity Summit February 28th
By Veronica Weis on 02/14/2013 @ 10:30 AM
The Financial Stability Partnership of Northern Nevada will host an event beginning with a day of speakers and workshops that will focus on how to improve the financial stability of Nevadans. Topics covered include the increased use of savings, financial education for youth, innovative financial products, credit repair, consumer protection and financial counseling. The event will kick off with a keynote address from the Nevada State Treasurer, Kate Marshall. During the event, CFED will release the new Assets and Opportunity Scorecard for Nevada and offer recommendations for policy changes to improve financial stability. The summit will conclude at the State Capitol on March 1 with presentations on public policy options that will support increased financial stability for Nevadans. It expected that over two hundred nonprofit practitioners, experts, policy makers, and industry leaders from across the state will attend.
About the Financial Stability Partnership of Northern Nevada (FSPNN): The FSPNN has been raising public awareness and supporting the work of community groups who are providing financial education and asset building. The FSPNN is a community collaborative that has, since 2008, steadily gained structure, funding and capacity to provide access to financial education to individuals in northern Nevada. The FSPNN consists of several distinct elements: Free Tax Preparation and VITA sites (Volunteer Income Tax Assistance), Youth Financial Education, Adult Financial Education and Bank on Nevada. This program helps maximize income, asset building and preservation, savings, establishing credit, debt reduction, public awareness, workforce development, home ownership, access to public and private benefits and entrepreneurship. The FSPNN is administrated by the United Way of Northern Nevada and the Sierra.
Recommended Resource: DATA.gov
By Sean Luechtefeld on 02/13/2013 @ 10:00 AM
Back in 2009, the federal government launched DATA.gov, a website aimed at providing easy access to quality data generated by the Executive Branch. Their goal, according to the site, “is to improve access to Federal data and expand creative use of those data beyond the walls of government by encouraging innovative ideas.” I’ve been consulting DATA.gov a lot lately, so I wanted to share it with our readers.
For starters, DATA.gov has datasets on topics you could only imagine, and often, it’s fun to just peruse the most recent additions. For example, did you know that in 2008, the United States harvested fewer tomatoes than ever before? These and literally millions of other fun facts are available for your browsing.
More importantly, however, DATA.gov contains a wealth of information useful to the asset-building field. While we already have a vast array of data, the datasets provided by the government offer two benefits. First, they tend to be more historically robust, so you can compare metrics year-on-year and identify longer-term trends. Second, these datasets allow you to make comparisons between the data that is already available.
As one example, let’s look to Nevada. In the 2013 Assets & Opportunity Scorecard, we revealed that Nevada performed 51st in the nation overall, reflecting the dire need for programs to expand economic opportunity in the state. If you compare their asset poverty numbers with the annual income data on DATA.gov’s Small Area Income and Poverty Estimates (SAIPE), you see that Nevada actually performs better than a lot of states when it comes to what their residents earn. Meanwhile, West Virginia, which has the lowest median income, ranks 23rd overall in the 2013 Scorecard. Taken together, these comparisons point to the critical importance of examining asset poverty (and liquid asset poverty) to assess the financial health of residents in a given state. Whereas income data alone paint a small picture of financial security, a more comprehensive picture is painted when you draw from the multiple datasets available.
In short, take a minute to browse around DATA.gov. You might just find some good supplements to products like the Scorecard that can help justify your argument for a more aggressive approach to building assets for low- and moderate-income families.
Live Blog: 2013 State of the Union
By Sean Luechtefeld on 02/12/2013 @ 09:00 PM
Below is the play-by-play from tonight's address. How do you think the President did? What do you think about his new proposals? What do you expect from Senator Rubio's response? Use the comments below to keep the conversation going.
Sean Luechtefeld (10:17 PM): "It is up to us to be the authors of the next great chapter in United States history." What a great way to conclude the address!
Sean Luechtefeld (10:07 PM): How we vote, when it comes to the actual process, is often overlooked in favor of how we vote when it comes to partisanship. But, the first step to empowering others is to deploy the constitutional rights that empower you. Election reform couldn't come at a more appropriate time.
Kristin Lawton (10:01 PM via Twitter): The #assetbuilding twitter list just lit up with the #poverty discussion. Follow them here: bit.ly/YVPqrZ #SOTU
Kim Pate (9:58 PM): As we draw down troops in Afghanistan, we need to think about what's next for the women and men who have given their lives so we can live ours more securely. Our returning troops need access to asset-building strategies given the breadth of studies that show that our armed forces are often subject to some of the most pernicious predatory lending around. Furthermore, financial coaching and appropriate financial products can significantly improve the financial stability of this essential sector of our society.
Kasey Wiedrich (9:56 PM): We've got no shortage of data. Here's some info on low-wage jobs, and here's some on the minimum wage. Have questions? I'm happy to answer them below!
David Rothstein, Policy Matters Ohio (9:53 PM via Facebook): Universal Pre-K is the no-brainer of the decade!
Jeremie Greer (9:51 PM): No one who works full time should have to exist in poverty. Let's tie the minimum wage to the cost of living so it can actually be a wage you can live on." Well said, if not obvious. Raising the minimum wage would free income to save more and climb the economic ladder.
Kim Pate (9:50 PM): Part of establishing a pathway to citizenship through real immigration reform is making citizenship loans affordable and available like those that have been piloted by Casa de Maryland in partnership with the Citi Foundation. More excellent examples of innovative thinking.
Kasey Wiedrich (9:48 PM): Looking for data on early childhood education? Check out measures from the 2013 Assets & Opportunity Scorecard here and here.
Sean Luechtefeld (9:46 PM): A scorecard? We've already got you covered, Mr. President!
Jeremie Greer (9:44 PM): While these proposals are essential, they're not comprehensive. A critical piece to the financial security puzzle is affordable housing. Where is the funding and infrastructure for manufactured housing, which is often the most affordable option for many?
Sean Luechtefeld (9:43 PM): Universal pre-school? Great. Universal kids accounts that help benefit children from pre-school through college? Even better. More here.
Kristin Lawton (9:41 PM): Kim's right; innovations like turning energy savings into assets are exactly the innovations President Obama is talking about. Of course, these projects are already underway. As one example, Henry Red Cloud on the Pine Ridge Reservation in South Dakota is harnessing clean solar energy while helping people start their own businesses and move out of poverty.
Kim Pate (9:38 PM): Speaking of energy, let's not forget that energy efficiency can lead important savings that translate into asset building when people are given concrete steps for how to convert those savings into paying for a downpayment on a home, going to college or Starting a business.
Sean Luechtefeld (9:34 PM): And we're back! Sorry for the little hiccup; our website seems to be a little under the weather.
Kim Pate (9:26 PM): So glad the President mentioned progress. One area of progress CFED would like to see would be much more support from our government for the self-employed owners small business who make up the backbone of our economy.
Sean Luechtefeld (9:13 PM): Google Analytics is a fun tool for live blogging, since it allows you to see how many people are on the site and where they're logged in from. Special welcome to our one Canadian reader who joins us from north of the border!
Sean Luechtefeld (9:11 PM): Who wants to take the over/under on how long it takes President Obama to shake all those hands?
Kristin Lawton (9:09 PM via Twitter): What are you hoping Obama mentions in #SOTU? Our list: #householdfinancialsecurity, #CSAs, #Microbiz, #homeownership #healthcare
Jeremie Greer (9:05 PM): I'm a big fan of Arne Duncan's leadership of the Department of Education. He has pledged to open 10,000 child savings accounts through the federal GEAR UP program. Read more about it here.
Kim Pate (9:02 PM): Not surprisingly, First Lady Michelle Obama is greeted with a warm, bipartisan welcome. Her guest of honor tonight is Apple CEO Tim Cook. Fun Fact: 1 in 3 CFEDers uses either an Apple iPhone or iPad.
Sean Luechtefeld (8:59 PM): Team CFED is signing online. So far, we're joined by Kim Pate (Chief External Relations Officer), Jeremie Greer (Director of Government Affairs) and Kristin Lawton (Director of Communications). Have a question for one of them? Use the comments below and we'll do our best to respond.
Kristin Lawton (8:55 PM): Sen. Marco Rubio (R-FL) will deliver the official response to tonight's address. Sen. Rubio has been a champion of Children's Savings Accounts.
Sean Luechtefeld (8:52 PM): It's always fun to watch the pomp and circumstance of members' entrances into the chamber. Gabrielle Giffords is there...always such an inspiration!
Join us Tomorrow as we Live Blog the 2013 #SOTU
By Sean Luechtefeld on 02/11/2013 @ 03:00 PM
Tomorrow night, join CFED’s staff of experts as we live blog President Obama’s 2013 State of the Union address. With the economy remaining a central focus in the American mind, there are sure to be a number of important implications from tomorrow’s address for the work we all do to create pathways to financial security for low- and moderate-income American families. The address is scheduled for 9 pm EST/6 pm PST, so be sure to grab your laptop or tablet and jump in on the conversation.
To join us, simply visit The Inclusive Economy. Before the event begins, you’ll see a post telling you to standby as we wait for President Obama to begin his address. If you click on the title of that post, you’ll be taken to the permalink, which you can refresh often to see the latest additions to the conversation. From there, you can use the comments function to add your thoughts or pose questions to our staff of experts. You can also join the conversation using Twitter; just make sure you’re following @cfednews. If we like your Tweet, we’ll include it in the conversation!
We hope you’ll be able to join us, and that you’ll tell your colleagues to do the same. If you have any questions, don’t hesitate to send me an email. See you tomorrow!
Is Your 401(k) Obsolete?
By Anne Kim on 02/11/2013 @ 11:45 AM
EDITOR'S NOTE: This post originally appeared on Washington Monthly's Ten Miles Square blog. Read it here.
New research by the firm HelloWallet finds that more than a quarter of Americans who have an employer-sponsored retirement plan are raiding these accounts for other uses.
According to HelloWallet’s report, Americans are withdrawing more than $70 billion a year from their retirement savings—and often paying big penalties to do so. On top of regular income taxes, early withdrawals are subject to a 10 percent additional tax penalty, which depending on the bracket, could eat up nearly half of a person’s withdrawal.
For many people, employer-sponsored retirement plans are the only mechanism “forcing” them to save. Yet the retirement-only focus of the current system isn’t versatile enough to meet people’s real needs—especially to cope with emergencies such as a job loss or a horrifically expensive car repair.
The depth and breadth of this ”leakage” from Americans’ retirement accounts means it’s time to rethink the kinds of savings accounts that all Americans should own. In particular, new ways to encourage emergency savings could help ensure that 401(k)s don’t continue to be an expensive, last-resort piggybank for so many Americans.
According to new data from CFED, 44 percent of American households don’t have the cash to survive three months at the federal poverty level if they suffer a loss of income. Among 401(k) accountholders who lack this cash cushion, HelloWallet found that nearly 1 in 3 have “breached” their retirement savings, versus just 3 percent of accountholders who have enough emergency savings put away.
While it’s easy to dismiss emergency savings as something every American “should” do—the same way people “should” get more exercise and skip the buffalo wings on Super Bowl Sunday—the reality is that too many Americans either don’t make enough money to save or lack the tools and capability to manage their resources optimally.
According to the FDIC, nearly 30 percent of Americans don’t own a savings account, while nearly a quarter of households rely on check cashers, pawn shops or other high-cost financial services that eat up people’s money and provide no avenues to save.
These issues are part of a much larger failure of our economic system to encourage savings, especially among those with lower incomes who need it most. Indeed, the predatory nature of so much of the financial marketplace in recent years—from payday loans to subprime mortgages to hidden credit card and 401(k) fees—has had the effect of stripping many Americans of much of the modest financial assets they’ve managed to accumulate.
Reversing these predatory practices is the mandate of the new Consumer Financial Protection Bureau (CFPB), created by the Dodd Frank financial reform law. The CFPB should be allowed to do its job, despite the efforts of some lawmakers who are fighting hard to weaken the agency. We also should be having a national conversation about big reforms, such as “stakeholder accounts” that can help all Americans become better lifetime savers.
But in the absence of political and budgetary appetite for large-scale solutions, policymakers should at least consider some incremental solutions in the short term. For example, here are a few small ideas to help stem the use (and abuse) of retirement savings and to tackle the emergency savings problem:
Encourage employer-linked emergency savings. Especially now that automatic enrollment in employer-sponsored retirement accounts is increasingly the norm, the workplace is one place where employees can count on being encouraged to save.
One idea, championed by David John of the Heritage Foundation, is to follow the lead of the United Kingdom, where “corporate platforms” allow employer-provided contributions to be used for both retirement and non-retirement purposes and where employees can have one-stop-shop access to all of their accounts.
The possibilities under this approach could include “auto-saving” into an emergency savings account or even an employer-sponsored plan to encourage investments in U.S. savings bonds (which are surprisingly liquid and even ideal for workers without traditional savings accounts).
Broaden access to disability and accident insurance. According to the Employee Benefits Research Institute, barely half of workers in medium and large businesses have accident or sickness insurance, while only a quarter of workers in small businesses have any form of short-term disability insurance at all.
While insurance isn’t a perfect substitute for savings, it can be a critical means of income “support” for someone who is sick or has an accident and is consequently unable to work. More employers should be encouraged to offer it, and more workers should be encouraged to participate.
Tweak the tax code. The tax code currently takes an all-or-nothing view toward savings, with retirement savings being the only savings to enjoy tax benefits. Why not, as the Urban Institute’s Gene Steuerle suggests, “scale” the benefit so that people get bigger breaks (or smaller penalties) the longer the money stays in a savings account? For example, someone who left their money untouched for 20 years would pay fewer penalties than someone who raided their savings after a few years.
Another idea, proposed by the New America Foundation, would be to build on the current Saver’s Credit, which currently provides a small federal tax credit for retirement savings by low-income workers. This proposal would dramatically expand the benefit by providing a refundable “match” and allowing it to apply to savings in shorter-term vehicles such as one-year certificates of deposit or U.S. savings bonds. This match would both beef up the emergency savings available for the workers who need it most and incentivize more savings as well.
A potential upcoming debate on tax reform might be the best chance for Congress to rethink how to encourage more savings and help Americans become more secure. If Congress can’t get the federal budget in order, it should at least help American households get on sounder footing.
CFED Awarded $125,000 Grant from Capital One for Innovative Asset-Building and Microenterprise Services Initiative
By Kristin Lawton on 02/08/2013 @ 11:16 AM
Funding will be used to advance the financial security and upward mobility of low-income entrepreneurs.
CFED announced a $125,000 grant today from Capital One Financial Corporation to support work to identify new scalable opportunities to help disadvantaged entrepreneurs achieve upward economic mobility. The grant will facilitate a partnership between CFED and several microenterprise organizations, including Accion Texas, Inc., the California Association for Micro Enterprise Opportunity (CAMEO), the Enterprise Development Group (EDG) in the Washington, DC metro area, and others. Through these partnerships, CFED will promote emerging practices that service providers can implement to ensure that their clients have access to the financial products and skills they need, and are actively using them to make their businesses stable and sustainable.
“Accion Texas, CAMEO, and EDG, all high-performing, innovative leaders in serving low-income entrepreneurs, will be able to elevate their promising practices and cross-pollinate ideas that can help clients achieve financial security and upward economic mobility,” said Andrea Levere, CFED president. “Capital One’s leadership and support is making it possible to extend the project’s impact beyond our four active partners and reach the wider field of microenterprise practitioners, policymakers and financial institutions.”
The Capital One grant will fund a number of the project’s core activities and products in 2013 including:
- In-depth interviews with key staff at the four partner organizations to learn about their clients’ specific financial capability and product needs, and the operational opportunities and obstacles that affect capacity to deliver new solutions.
- Small group convenings to share our findings and identify ways to replicate effective innovations.
- The development of public education materials, such as an Emerging Practices Guide, a Policy Analysis Report, and several Field Innovation Briefs to be disseminated to policymakers, practitioners, financial institutions and other key stakeholders to make them aware of field developments and opportunities to support promising approaches.
“CFED is a leading national intermediary with decades of experience that combines expertise in both microenterprise and asset building to create synergies in support of microenterprises and the self-employed,” said Daniel Delehanty, senior director, Community Development Banking at Capital One. “Through Capital One’s Investing for Good program, we continue to work with organizations like CFED to help microentrepreneurs grow their businesses through capacity building and integration of innovative financial capability training and support that ultimately helps to create more jobs and stimulate local economies.”
About Capital One
Capital One Financial Corporation, headquartered in McLean, Virginia, is a Fortune 500 company with more than 900 branch locations primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia, and the District of Columbia. Its subsidiaries, Capital One, N.A. and Capital One Bank (USA), N. A., offer a broad spectrum of financial products and services to consumers, small businesses and commercial clients. We apply the same principles of innovation, collaboration and empowerment in our commitment to our communities across the country that we do in our business. We recognize that helping to build strong and healthy communities - good places to work, good places to do business and good places to raise families - benefits us all and we are proud to support this and other community initiatives.
"One Misstep Away from Financial Disaster"
By Hannah Emple on 02/07/2013 @ 09:00 AM
EDITOR'S NOTE: This post originally appeared on The Ladder and can be read here.
Today is a big day for the asset building community. Our friends at CFED have released their newly updated 2013 Assets and Opportunity Scorecard which evaluates household financial security across the U.S. and grades states on how well or poorly they support asset development and promote opportunity.
As has been true in recent years, the key finding is that huge swaths of the population are living in a precarious state of "asset poverty." As our Justin King told the Huffington Post: “These are households and individuals that are living paycheck-to-paycheck. And without savings, you’re one misstep away from financial disaster.” As Jillian Berman for HuffPo explains, people are "coping with stagnating wages and rising prices. This group is also navigating a banking system that subsidizes wealth-building programs -- like homeownership and retirement accounts -- that are geared towards the wealthy but don't offer the same boost to poor and middle-class savers." That gap exacerbates disparities in financial security over time - people with assets are able to leverage what they already have to support long term goals, while the rest are left scrambling to meet basic needs, unable to effectively plan and save for the future.
NPR also produced a strong piece using the Scorecard as a launching point, click here to read or listen, then navigate over to the Scorecard to explore the data yourself. CFED is also hosting a webinar today at 1pm to introduce the Scorecard findings. Use the scorecard to get information about how people in your state are faring and be sure to check out the action on Twitter with the hashtag #CFEDScorecard.
Recordkeeping Fundamentals: NEW! Online Module for Self-Employed Taxpayers
By Lauren Williams on 02/05/2013 @ 02:30 PM
EDITOR'S NOTE: This post originally appeared on the National Community Tax Coalition's blog and can be read here.
Few entrepreneurs go into business because they love keeping detailed records of their business finances. Many, instead, launch a business in pursuit of self-fulfillment, independence, personal satisfaction and even necessity. Still, sound recordkeeping is essential for tracking business performance, making critical adjustments to improve performance and for tax purposes. Even the most talented entrepreneurial makers and doers often need some guidance when it comes to keeping accurate, timely and organized records.
The tax filing season is a built-in, structured opportunity for self-employed individuals to get organized and learn good recordkeeping habits. Preparing for tax time, though a hassle in the short-term, can reward entrepreneurs over the long-term in ways that eclipse the brief stress and complexity brought on by getting and staying organized. Not only does early and thorough preparation for tax filing help entrepreneurs acquire and maintain better control of their business finances, a study on the behavioral triggers that incent business owners to keep better records showed a significant correlation between preparedness and clients’ tax refunds: the more prepared a client was, the higher their tax refund.
CFED and the NCTC have partnered to develop “The Fundamentals of Recordkeeping,” a brief online NCTC University course that takes self-employed individuals from start to finish through the recordkeeping process. The material guides the client from the basics of determining their self-employed classification, to the rationale behind keeping good records, the types of necessary supporting documents, the details of tracking expenses, depreciation, business use of home and more, testing their comprehension through quick quizzes along the way.
VITA programs and other community-based tax assistance programs are powerful intermediaries that can help microbusinesses get a handle on their finances at tax time and introduce them to a host of products and services that support small business development and asset building. We encourage programs to inform their volunteers and clients that this course is available and to keep an eye out for flyers and handouts they can provide to their clients.
Upcoming Event: Can America Save Itself?
By Anne Kim on 02/04/2013 @ 04:00 PM
Can America Save Itself?
Tax Reform, Savings and Financial Security
A Breakfast Policy Forum Sponsored by CFED
February 26, 2013, 8:30 - 10 am
121 Cannon House Office Building
Breakfast available at 8:15 am
- Rep. Richard Neal (D-MA)
- Rep. Jim Gerlach (R-PA)
- Jonathan Mintz, Commissioner, New York City Department of Consumer Affairs
- Andrea Levere, President, CFED (Moderator)
- Reid Cramer, Director, Asset Building Program, New America Foundation
- Pamela Everhart, Senior Vice President, Benefit Policy Development & Thought Leadership, Fidelity Investments
- David John, Senior Research Fellow in Retirement Security & Financial Institutions, The Heritage Foundation
- Lisa Mensah, Executive Director, Aspen Institute Initiative on Financial Security
- Bob Friedman, Founder, CFED (Moderator)
A potential push on tax reform offers Congress a chance to solve one of the biggest threats to Americans’ financial security: the lack of household savings. Nearly half of American households lack the cash savings to weather a sudden financial crisis, such as an accident or a job loss.
At this breakfast event, some of the nation’s top experts on savings and financial security offer their ideas on the current critical role of tax policy in savings and what tax policy can do to help all Americans build bigger nest eggs for their futures. Click here to RSVP via email.
Follow the conversation during the event on Twitter using #CFEDforum!
Recording of 2013 Scorecard Release Webinar
By Ethan Geiling on 01/31/2013 @ 09:00 AM
Yesterday, CFED released the 2013 Assets & Opportunity Scorecard, revealing that despite strong signs of economic recovery, millions of Americans are still living on the brink of financial disaster. The percentage of households in liquid asset poverty edged slightly upwards this year to 43.9%.
During the national release webinar, experts from CFED and the Assets & Opportunity Network discussed the state of financial security and opportunity in America.
Andrea Levere, president of CFED, introduced the webinar by explaining how the Scorecard has helped to to broaden the perspective of policymakers and opinion leaders to focus on helping people improve their long-term chances of economic mobility through savings and building assets in ways that complement essential safety-net programs.
Jennifer Brooks, Director of State & Local Policy at CFED, discussed the main findings from the Scorecard. For the second year in a row, nearly half (44%) of households—equivalent to 132.1 million people—lack the savings to cover basic expenses for three months if unemployment, a medical emergency or other crisis leads to a loss of stable income.
Kasey Wiedrich, Senior Applied Research Program Manager at CFED, presented key data measures in the Scorecard, including liquid asset poverty, employers offering health insurance, affordability of homes, and student loan default rate.
Jennifer Brooks talked about strength of state policies across the country and variation in the extent to which states have adopted these policies. New York has the strongest policies, while Mississippi has the weakest.
Stephanie Bowman, Executive Director of the Washington Asset Building Coalition, discussed her Coalition’s efforts to build a constituency to influence state policy.
David Rothstein, a member of the Assets & Opportunity Network Steering Committee, also weighed in, explaining how the Network is building a constituency to support financial security and opportunity policies.
Finally, Jeremie Greer, Director of Government Affairs at CFED, gave a sense of the climate in Washington and what’s on the “to do” list for Congress and the Administration this year.
Join the #CFEDscorecard Conversation
By Veronica Weis on 01/29/2013 @ 10:30 AM
Tomorrow is the release of the 2013 Assets & Opportunity Scorecard and we couldn't be more excited! The updated Scorecard website will go live at midnight tonight with the latest data, reports and more. For those interested in a live summary of the findings from our CFED experts, it's not too late to register for the release webinar from 1:00-2:00 PM EST. Still want to follow the conversation but can't join us for the webinar? We'll be live tweeting all day, blogging the highlights and updating our Storify page.
Follow us on Twitter
Our organization's account, @CFEDNews, will be busy updating the Twitterverse with news of the Scorecard release. From 1:00-2:00 PM EST, we'll be live tweeting the webinar. If you have a question or comment to contribute, please send us a tweet and include the hashtags #CFEDscorecard and #assetpoverty.
Like us on Facebook
You can also follow along on our Facebook page. We plan to post graphics and other surprises. If you have any questions or comments, don't hesitate to post on our wall or send in a direct message.
Read our blog
The Inclusive Economy will also feature highlights from the report tomorrow so be sure to drop by here for more Scorecard news.
Discover our Storify
This year, we've created a Scorecard release Storify page to compile the best of social media. It's already up and running to capture buzz before the release tomorrow. Be sure to check it out and let us know what you think!
Infographic: How EITC Helps Working Families
By Katie Wright, Guest Contributor on 01/28/2013 @ 11:30 AM
EDITOR'S NOTE: This infographic originally appeared on the Center for American Progress (CAP) website. Katie Wright - a former CFED Fellow - is a Research Associate with CAP's Half in Ten Campaign.
Many low- and moderate-income families will claim the earned income tax credit this tax season—and all Americans will reap the benefits. In the recent fiscal showdown deal, Congress voted to continue the 2009 expansions of the earned income tax credit, which also acknowledged the increased costs to families raising three or more children and corrected the “marriage penalty,” by which some married couples risked losing a portion of their earned income tax credit for the five years following their union.
Not only does the earned income tax credit keep millions of working families from slipping into poverty each year, it also leads to positive outcomes for family health and student education. Earned income tax credit dollars benefit our economy, and most families who receive the credit end up paying billions of dollars more in net federal income tax than they receive in the earned income tax credit over time. With the 2012 tax season kicking off next week and today being Earned Income Tax Credit Awareness Day, now is the time to get the facts on one of the most important tax credits helping to ensure that work pays for working families.
One Step Toward Improved Manufactured Home Appraisals
By Jennifer Hopkins on 01/25/2013 @ 11:00 AM
EDITOR'S NOTE: This post originally appeared on the Community Loan Fund blog and can be read here.
We believe in manufactured homes and their owners.
The New Hampshire Community Loan Fund offers real mortgage loans for manufactured homes, Welcome Home Loans, because access to real, fixed-rate mortgages helps homeowners with low or moderate incomes achieve financial security.
We have appraisals done for every Welcome Home Loan we make. It’s how we know homebuyers are paying a fair price. But appraisers and manufactured housing professionals, like retailers, retailers and other lenders, have told us they’re frustrated by the existing process for appraising manufactured housing.
Appraisers face challenges that don't come up with site-built homes, such as rules on selecting comparable sales and difficulties in locating information about sale prices, title, foundation and energy use.
Manufactured housing professionals, in turn, believe that the appraisal process does not always result in fair valuation of manufactured housing, which provides homes for millions of Americans across the income spectrum.
CFED, spearhead of the I’M HOME: Innovations in Manufactured Homes initiative, attempts to address some of these issues in a new report that examines appraisals of manufactured homes. Real Home, Real Value: Challenges, Issues and Recommendations Concerning Real Property Appraisals of Manufactured Homes is an in-depth study based on interviews with appraisers, finance professionals and manufactured-housing practitioners.
The report by Robin LeBaron, Deputy Director of the Fair Mortgage Collaborative, details the issues affecting manufactured-home real property appraisals and leads to a good set of recommendations for improving the process.
Those recommendations include setting the value of a manufactured home based on its characteristics and condition, rather than just its age, along with updating appraisal standards to the current state of manufactured home quality.
I hope the report sparks progress in this key piece of the puzzle to advance the field of financing for manufactured homes.
Kudos to Anne Li, CFED’s program director for innovation and Robin LeBaron, the report’s author, for advancing this important message.
Jennifer Hopkins is the Single-Family Housing Program Manager at the Community Loan Fund.
CFED Applauds Reappointment of Richard Cordray to Head the CFPB
By Kristin Lawton on 01/24/2013 @ 04:23 PM
Washington, D.C. — With Richard Cordray as Director, the CFPB has provided essential protections that can change the financial lives of all consumers, with particular focus on the underserved and vulnerable citizens of this country. CFED applauds President Obama for his renomination of Cordray to a full term as director.
CFED is eager to continue working with the CFPB to protect consumers, enhance the financial capability of those struggling to get ahead in a challenging economy and fully participate in the financial mainstream so they can buy homes, attend college, start and grow businesses and achieve financial self-reliance.
Richard Cordray is an excellent choice to lead CFPB. His years of public service have led him to develop deep expertise in consumer protection. As the Attorney General of Ohio, Cordray was a national leader in fighting foreclosure scams. He has won praise from consumer advocates and bankers alike and will provide a much needed "financial cop on the beat" to protect consumers, grow our economy and avoid another financial collapse.
CFED empowers low- and moderate-income households to build and preserve assets by advancing policies and programs that help them achieve the American Dream, including buying a home, pursuing higher education, starting a business and saving for the future. As a leading source for data about household financial security and policy solutions, CFED understands what families need to succeed. We promote programs on the ground and invest in social enterprises that create pathways to financial security and opportunity for millions of people. Established in 1979 as the Corporation for Enterprise Development, CFED works nationally and internationally through its offices in Washington, DC; Durham, North Carolina; and San Francisco, California.
Home Loans Matter
By Rick Minard on 01/23/2013 @ 02:30 PM
EDITOR'S NOTE: This post originally appeared on the Community Loan Fund blog and can be read here.
We knew that our Welcome Home Loans made a huge difference in the lives of people trying to buy a home. Now we know that they also make a huge difference to people trying to sell their homes.
Because the New Hampshire Community Loan Fund provides fair, fixed-rate mortgages for manufactured homes in resident-owned communities (ROCs), home sellers in those communities have found buyers with more money to invest in their homes. Home prices in ROCs reflect this, selling for about 3.5 percent more per square foot than homes in investor-owned communities in our recent case study. Even through the recession, sellers of homes in ROCs kept more of the value of their homes than sellers in investor-owned communities.
Home Loans Matter: Buyers and Sellers of Manufactured Homes Benefit from Financing – A Case Study summarizes our analysis of transactions in Rochester, N.H., over the last 11 years.
The data shows:
- Most mortgage lenders stopped providing mortgages for manufactured homes in parks during and after the housing crisis. The Community Loan Fund stayed in the field throughout the crisis, though it lent only to owners and buyers of homes in ROCs.
- The difficulty of obtaining a mortgage in investor-owned communities appears to have reduced the volume of transactions in those parks and depressed the sale price of those homes that did sell. The number of homes financed by mortgages in these communities fell by 77 percent during the period.
- These impacts were less pronounced in ROCs, probably because there was more “liquidity” in these markets. Liquidity is the ease with which one can exchange an asset for its true value. Mortgage financing, by providing cash to buyers, helps keep markets “liquid” and facilitates the exchange of homes at market values.
- The number of transactions financed with mortgages in ROCs increased by 50 percent during the period.
- Homes in ROCs, although older than homes in investor-owned communities, have, since 2006, sold for 3.5 percent more money per square foot than have homes in investor-owned communities.
- The continuous availability of fixed-rate mortgages for homes in ROCs may have kept that market functioning with relatively stable prices and relatively strong sales volume. We cautiously ascribe a causal relationship between the availability of mortgages and the robust performance of the market for homes in ROCs.
Our research focused only on Rochester. Please let me know whether you have seen similar – or different – patterns in other housing markets in New Hampshire.
Rick Minard is the Community Loan Fund's Vice President for Policy and Programs.
Next Week: National Release of the 2013 Assets & Opportunity Scorecard
By Sean Luechtefeld on 01/23/2013 @ 10:00 AM
Wednesday, January 30 - 1 pm EST / Noon CST / 11 am MST / 10 am PST
Register today for the webinar release of the 2013 Assets & Opportunity Scorecard to find out how your state fares in helping its residents achieve financial security. The 2013 Assets & Opportunity Scorecard is a comprehensive look at how Americans are faring in terms of financial security and opportunity.
Key highlights from this year's Scorecard release include:
- State-by-state trends in asset poverty.
- Data on 69 outcome measures across five issue areas, including Financial Assets & Income, Businesses & Jobs, Housing & Homeownership, Health Care and Education.
- Data on more than 30 policy measures that states can adopt to help families succeed.
- Responses by the Assets & Opportunity Network on their work to improve outcomes for families.
Speakers on the release webinar include:
- Andrea Levere, President, CFED
- Jennifer Brooks, Director, State & Local Policy, CFED
- Kasey Wiedrich, Senior Program Manager, Applied Research, CFED
The Assets & Opportunity Scorecard is an important resource that advocates can use to help frame their 2013 agendas. Participation in the release webinar is free, but advanced registration is required. Click here to sign up.
Other Upcoming Events
- EITC Briefing on Capitol Hill (hosted by the National Community Tax Coalition)
Tomorrow, January 24 | 10 - 11 am EST
385 Russell Senate Office Building, Washington, DC
- Finding 'Ready Savers': Innovative Recruitment Strategies to Increase Program Completion
Friday, January 25 | 3:30 - 4:30 pm EST
This Thursday: EITC Briefing on Capitol Hill
By Sean Luechtefeld on 01/22/2013 @ 08:30 AM
The announcement below is an advertisement for the EITC briefing that our friends at the National Community Tax Coalition are hosting in recognition of Friday's Earned Income Tax Credit Awareness Day. If you're in Washington, we hope you'll consider attending Thursday's briefing.
CFED & Bank of the West Announce Saver to Homeowner Story Fund
By Jimmy Crowell on 01/18/2013 @ 03:00 PM
Submit a success story that inspires savers to achieve their goals
Do you have an IDA saver who has recently purchased a home in California or Tucson, and who has a compelling story to share? CFED, with support from Bank of the West, is looking for stories and photos of recent homebuyers in California and Tucson, Arizona, to advance homeownership. In exchange, CFED and Bank of the West will provide your program with $2,000 in matching funds and $1,000 in administrative support for financial education (for a total of $3,000) for each story that is accepted.
IDA programs interested in applying must submit a homeowner’s story, photo and signed waiver for each eligible saver, and must comply with the terms on the Saver to Homeowner Story Fund website.
How to Submit Your Success Stories
To submit an entry, please visit the Saver to Homeowner Story Fund website for the terms of the program and required documentation. IDA practitioners may submit multiple entries, though we cannot guarantee that all entries will be accepted.
DEADLINE: February 28, 2013
This opportunity expires on February 28, 2013 and all submissions must be received by this date. Stories must feature savers who reside within the targeted areas in California and Arizona. CFED and Bank of the West may, at their discretion, offer additional opportunities to submit entries at a later date. If you have any questions, please visit the Saver to Homeowner Story Fund website.
CFED would like to thank Bank of the West for sponsoring the Saver to Homeowner Story Fund and for their continued support of IDA programs across the country.
New 'Ability to Repay' Rules Highlight Need for Affordable Housing
By Anne Kim on 01/17/2013 @ 10:00 AM
EDITOR'S NOTE: This post originally appeared on Real Clear Policy and can be read here.
This week, the Consumer Financial Protection Bureau (CFPB) released long-awaited new mortgage rules aimed at protecting consumers from abusive loans.
The new rules, when they take effect next January, will effectively shut down some of the worst practices leading up to the 2007-2008 housing crash: “interest-only” loans, predatory fees, and “teaser rates” that trapped people into mortgages they couldn’t afford once the low initial rates expired. Mortgages with these features are now excluded from what the CFPB defines as “qualified mortgages” shielded from consumer lawsuits.
Most significantly, the new rules will also require lenders to ensure that borrowers can pay back their loans. Among the new requirements, a borrower’s monthly debt payments (including the mortgage) can’t exceed 43 percent of pre-tax income.
Without doubt, the mortgage lending landscape will now be much safer for homebuyers, who once faced a confusing and potentially toxic array of “exotic” products. These rules will also provide much needed certainty to the mortgage finance industry, which has had a rocky few years.
Nevertheless, the “ability to repay” rule may have the unintended effect of shutting some Americans out of the housing market, unless policymakers address an issue they’ve the past few years: the need for affordable housing.
Despite the crash, many Americans are still stretching budgets to the breaking point for housing, especially in high-priced areas. As generous as the 43 percent debt-to-income standard is meant to be, the dearth of affordable homeownership options could make this requirement unexpectedly burdensome.
According to Harvard’s Joint Center for Housing Studies, 9.5 million homeowners spent more than half their income on housing in 2010, while another 13.3 million homeowners spent at least 30 percent of their income on housing. The number of these “cost-burdened” homeowners, say the Harvard researchers, has grown by more than 6 million since 2001. In high-cost states such as California and Hawaii, CFED finds more than half of homeowners are cost-burdened.
Moreover, many Americans are struggling with other debts—student loans and credit card balances—that limit how much house they can afford. In 2010, the average borrower held a credit card balance of $10,852, while the average student loan debt for graduates was $25,250.
While the CFPB is allowing some exceptions to its “ability to repay” rule, the solution isn’t to permit anything-goes underwriting again—that’s what got us into trouble in the first place.
Rather, the answer is to make homeownership more affordable, so that fewer homebuyers, particularly moderate-income buyers, bump up against the debt-burden threshold.
Two ideas could be the starting point for making responsible homeownership more attainable:
1. Help homeowners save for down payment.
Down payment requirements are a major hurdle to affordability, particularly for first-time buyers.
According to mortgage services provider Ellie Mae, Inc., borrowers coughed up an average 21 percent down payment on mortgages completed in November 2012. On a home worth the median price of $186,100 in the third quarter of 2012, that’s $39,081 down —a potentially insurmountable amount for a young prospective homebuyer. While future regulations could relax standards, credit is likely to stay tight in the short term, and the days of “zero-down” are deservedly long over.
One option is expanding special matched savings accounts, known as “individual development accounts,” to help lower and moderate-income Americans save. Small-scale experiments with these accounts have proven successful nationwide in helping even the poorest Americans save.
Another idea might be allowing employers to create and match down payment savings accounts in the same way they match retirement contributions to a 401(k).
Helping homeowners save for down payment would not only help meet stricter lending requirements, it would reduce the amount people need to borrow and start homeowners off with a needed cushion of equity. Moreover, research by CFED and the Urban Institute found that low-income Americans who used individual development accounts to buy a home were up to three times less likely to face foreclosure during the housing crisis.
2. Expand affordable homeownership options.
One overlooked option for affordable housing is manufactured housing. Over the last several decades, manufactured homes have made huge strides in quality, durability and energy-efficiency. It’s time to set the “trailer” stereotypes aside.
Already, manufactured housing is one of the nation’s largest sources of unsubsidized affordable housing. In 2009, manufactured housing accounted for 43 percent of new home sales under $150,000. 17 million Americans live in manufactured homes.
Unfortunately, the current mortgage finance system largely excludes manufactured housing. Manufactured home loans are typically personal property loans, not mortgages, and lack most of a mortgage’s protections.
Changing laws to treat manufactured homes as real property would both protect consumers and make manufactured housing a viable homeownership option for more Americans.
The CFPB’s new rules take a big step toward making homeownership “safer” for consumers. The next priority for policymakers should be to make homeownership more affordable as well.
Impressed by Child Savings in Jackson, MS
By Michael Chasnow on 01/16/2013 @ 10:00 AM
The 1:1 Fund promotes educational opportunity for low-income students by raising matched funds for children’s savings incentive programs that encourage saving and build assets. Last week, when I was in Jackson, Mississippi, visiting one of the 1:1 Fund’s local children’s savings partner programs, the power of these initiatives became overwhelmingly evident to me.
Last Wednesday, I spent the afternoon traveling to two of the three early childhood development centers in Jackson, where about 230 preschoolers have Children’s Savings Accounts (CSAs). At one of the centers, I spent about an hour in a classroom with 15 four-year-olds. We asked the kids if they had bank accounts, and over half excitedly raised their hands while exclaiming, “Yes I do!” Then we asked how many of the students wanted to go to college, and again, more than half enthusiastically shot up their hands. The field trips that these kids have taken to Hope Credit Union to deposit money into their accounts have made a significant difference, and now hundreds of kids are saving for their futures and thinking about college as a real, attainable goal.
Moreover, at a higher level, this program is increasing parent engagement and leading to real savings for college. In this opt-in college savings program, 100% of eligible Jackson, MS, preschoolers have their own CSA. Teachers and site directors know about the CSA program and encourage parent involvement, and it’s working: over 50% of families had put dollars into their child’s CSA accounts in 2012, with some families saving in the $200-300 range. One-hundred percent participation in an opt-in program with over 50% having made deposits is an incredible milestone for these types of programs.
Moreover, the Deputy Director for the City of Jackson, Mr. Louis Armstrong, had the following to say about the local child savings program:
“The child savings program has really helped our parents think about their kids’ future. Ever since it started here in Jackson, parent participation at our early childhood development center schools has really increased; parent involvement in their child’s education has never been higher."
Mr. Armstrong puts it better than I ever could – increased parent engagement in their child’s education and tangible savings for their child’s future is a powerful combination.
You can subscribe to updates about the 1:1 Fund by visiting www.1to1fund.org.
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