Takeaways from CFSI’s Underbanked Forum
By Ethan Geiling on 06/21/2011 @ 03:45 PM
Last week, I attended the Center for Financial Services Innovation’s (CFSI) Underbanked Financial Services Forum. The forum brought together over 600 people interested in serving underbanked consumers. The definition of “underbanked” varies depending on the source, but it usually means a person who does not use a checking or savings account and instead relies on some combination of other products and services to meet their financial needs. It’s hard to summarize everything I learned during the conference. So here are a few key takeaways that come to mind:
Underbanked does not always mean poor.
When many people think of underbanked, they often think of low-income and financially unstable individuals. However, this stereotype is not true. The underbanked cross the income spectrum, with a significant percentage of them making more than $40,000 a year. People are not underbanked because they are poor. They are underbanked because banking products are not meeting their needs.
Technology will play an important role in serving the underbanked.
One of the most impressive aspects of the conference was the Core Underbanked Innovators Challenge. Four companies performed live demonstrations of their new products. One product, Goalmine, pioneered in part by CFED Innovative Idea Champion Rimmy Malhotra, demonstrated how it’s making savings and investment accounts easily accessible to consumers, regardless of income level and investment experience. Consumers can log on to the website and open an investment account with as little as $25 in just a few minutes.
The former CEO of Safaricom, the keynote speaker for the conference, was particularly impressive as well. He spoke about many of Safaricom’s innovative products for the underbanked, including M-PESA, a mobile banking service that allows Kenyans to transfer money via their phones and essentially functions as a mobile wallet. Safaricom and M-PESA have demonstrated how a product can quickly go to scale, reaching millions of people. Bringing great ideas to scale is something we often struggle with here in the United States.
Walmart has made a significant contribution to the underbanked field.
Jane Thompson, president of financial services at Walmart, spoke about Walmart’s experience in the underbanked market. Walmart started serving unbanked and underbanked customers nine years ago. Since then, it has grown to become the largest player in the field. According to Jane’s bio, customers will save more than $500 million on financial services at Walmart this year compared to traditional alternatives, like check cashing outlets. Walmart’s $3 check cashing service has pushed many of the more expensive and predatory check cashers out of the market. Additional services like its prepaid MoneyCard have helped consumers manage their day-to-day finances. Jane challenged the audience to think about how little you can charge the consumer with a financial product, rather than how much money you can make from them.
Grocery stores and other retailers are well positioned to serve the underbanked market.
In one session titled “Bread, Milk, and Financial Services,” speakers from Sears and Blackhawk Network spoke about providing financial services to the underbanked where they shop. The speakers argued that now is a “perfect storm” for retailers to take the lead with financial services. Retailers already interact with underbanked consumers on a regular basis, and they are usually more conveniently located than banks. Retailers don’t need to make a huge profit on financial products, unlike check cashers, banks, and other providers. Their main retail business is their primary source of revenue and profit. Walmart opened the door to financial services in retail, and since then other large players like Sears and Kmart have jumped into the space.
Overall, the conference left me pondering the needs of the underbanked, which vary greatly from consumer to consumer. Bank accounts, even with low or no fees, don’t always meet the needs of the underbanked. How do we meet these consumers where they are? And how do we balance questions of access and quality/regulation, which often seem to be in tension. There are no easy answers. I’m looking forward to next year’s conference to learn how the field’s thinking on these issues has progressed!
Rand Behavioral Finance Forum – Consumer Financial Protection
By Michelle Nguyen on 06/21/2011 @ 01:30 PM
Last month I attended the RAND Behavioral Finance Forum on Consumer Financial Protection– a convening of researchers, policymakers and practitioners to discuss recent findings in behavioral finance and their policy implications for consumer financial protection.
The agenda was jam-packed with fascinating research and discussion – many conversations ran over because there was so much to talk about – and the sessions were led by academics and consumer finance industry leaders. It was a riveting day of research for us fans of behavioral economics, but take comfort that RAND will post video recordings of the forum on their website in the next few weeks. UPDATE: The video recordings can be found here.
A few insights really stood out to me as applicable to our work in asset building and financial access:
- Daniel Bartels’s presentation suggested that feelings of connectedness to your future self impact patience and the ability to make responsible decisions (based on people’s own definition of “responsible”). He stated that being more connected to your future self is correlated with being more likely to recognize intertemporal tradeoffs and the opportunity costs of long-term financial decisions, echoing a previous CFED blog post on the same topic. Consumers restrain their spending the most when they are both cued to think about the tradeoffs (opportunity costs) that will result from spending now rather than later, and feel connected to their future selves. And the good news is that feelings of connectedness can be cued or enhanced through low-cost interventions. This link between connectedness and decision-making could have big results on people’s saving and future planning behavior for a relatively low-cost intervention. For a journal article co-authored by Bartels on the issue, click here.
- Shane Frederick’s presentation about temporal references explored how people process time and their returns on time. Studies show that framing the passage of time as part of a person’s lifetime instead of a number of years can affect how far ahead a person perceives an event to be. For example, framing an event as “when you are 45” instead of “in 20 years” can increase connectedness to future selves, Frederick theorized. It is paradoxical in that people feel that it’s far away, but they picture themselves receiving the reward at age 45 and can be more patient. This could be a particularly crucial insight for program participants saving money over a period of time to build assets. For a journal article co-authored by Frederick on the issue, click here.
- Jonathan Zinman’s presentation described the potential for converting borrowers into savers. First, he stated that the highest, safest return for many households was to pay down their debt. One idea he posed to the consumer finance industry was for a seamless conversion of loan payments to a stream of payments to a savings account, which would harness habit formation and mental accounting. Another idea was for a counselor or financial services company to develop a balance sheet level relationship with a client – he calls this “private banking for main street” - to identify expensive debt, so that people who need to borrow can do it as cheaply as possible.
This research has fascinating implications for our program work in the asset building field, and as researchers continue to learn more about ways to effectively connect people to their future selves and therefore help people meet their own long term goals, we will use their insights to inform our work.
Recording Now Available: Financial Empowerment through Employer Engagement
By Anne Li on 06/20/2011 @ 11:00 AM
The recording from last Wednesday’s webinar, Financial Empowerment through Employer Engagement, is now available. To access the recording, follow these steps:
- Visit this Microsoft LiveMeeting website.
- When prompted, enter your first name and the Recording ID: 4T3P92.
- Do not enter a Recording Key – public access has been granted.
If you have any questions, don’t hesitate to ask us by sending an email.
I’d like to once again thank our presenters – Leigh Phillips, Cathy Beyda, Eugénie FitzGerald and Ida Rademacher – for what I’ll think you find was a fantastic conversation about how the employer payroll process is a key point for delivering financial services to low- and moderate-income individuals. I’d also like to thank all of you who attended – your participation made the webinar a great success!
In Case You Missed It – June 20 Edition
By Sean Luechtefeld on 06/20/2011 @ 10:45 AM
In case you missed it, here’s your recap of last week’s top posts from in and around the assets & opportunity blogosphere.
Save Now, or Forever Remain Behind
An interesting piece from the New America Foundation’s Asset Building Program highlights how not only is the racial wealth gap huge and increasing, but that it also starts very young. Seems to me like another argument for why saving from birth is essential for entry into the economic mainstream. Check out the blog post here.
Women and Children? Nah.
Kathryn Baer’s Poverty & Policy blog explains (with some snark, which I appreciate) how House Republicans have proposed cutting the WIC program in the name of fiscal health. Seems like the fiscal health of the US shouldn’t be funded on the backs of the nine million or so low-income pregnant women, women with infants and children, and the children themselves. For more, read here.
The American Dream? Is That Even Still a Thing?
Isaiah Poole at the Campaign for America’s Future has a thought-provoking blog post about the American Dream and whether or not we really want to reclaim something that has been, by definition, exclusionary. He argues that in order for the American Dream to exist, and for it to be inclusive, a strong grassroots movement has some heavy footwork ahead. Read more here.
Have a link you’d like to share with our readers? Send us an email!
National CAPACD Conference Next Week
By Sean Luechtefeld on 06/16/2011 @ 01:15 PM
Next week, the National Coalition for Asian Pacific American Community Development (CAPACD) will host their 12th Annual Convention at the National Housing Center in Washington, DC. Three of our senior staff – President Andrea Levere, Vice President for External Relations Kim Pate and Federal Policy Director Carol Wayman – will speak at the event.
The conference will convene Asian and Pacific Islander community leaders from around the country and will be a fantastic learning and networking opportunity. The conference theme of ‘Building the Future: Investing in Social Capital and Community-Based Leadership’ reflects “the ongoing and urgent need to build the human and social infrastructure that will help make America prosper.”
The conference will take place next Monday – Wednesday, June 20-22, and it’s not too late to sign up! For more information or to register, visit the National CAPACD website today!
Alabama Creates a State IDA Program
By Ethan Geiling on 06/15/2011 @ 12:00 PM
On June 9, Alabama Governor Bentley signed into law SB 295, which created a state Individual Development Account (IDA) program. The bill is a huge victory for state asset building advocates, who have been advocating for IDAs for many years. Alabama first introduced legislation to create an IDA program in 1998. Alabama lawmakers introduced bills in multiple sessions for years after that, but none of these bills passed.
Although the state did not appropriate money for the program, the legislation creates the infrastructure for the state to fund an IDA program, laying the groundwork for a state appropriation in a future legislative session. The program will be run by the Alabama Department of Human Resources, which may look for other sources of funding until there is a state appropriation.
Alabama is the only state within the past two years to create a new IDA program. Prior to that, North Dakota created a program in 2009. Georgia almost created an IDA program during the 2011 legislative session, but the Governor vetoed the bill at the last minute. There are 19 states with state funding for IDAs in Fiscal Year 2011.
Innovator Abell Makes a Move
By Anne Li on 06/14/2011 @ 11:00 AM
Hilary Abell, executive director of WAGES – Women's Action to Gain Economic Security, announced that her last day there would be May 31. WAGES is a 15-year old, Oakland, California-based nonprofit that builds worker-owned green businesses that create healthy, dignified jobs and build assets for low-income women. Until her departure from WAGES, Abell had been a CFED as Innovator-in-Residence, working on a strategy for WAGES' model to achieve national influence and impact.
"Under her leadership, WAGES has grown steadily, successfully launching two of our four worker-owned green housecleaning businesses, as well as laying the groundwork for start-up of the fifth this year and continued growth into the future," say Loren Rodgers and Maria Soria, WAGES board representatives.
"These years at WAGES have been the most gratifying of my career," says Abell in her announcement. "I have cherished the opportunity to work directly with our members these eight years and to learn from their professionalism, their strength and resilience, their growth and their pride. WAGES socias have inspired others across the country to pursue the cooperative dream, and I know they will continue to do so."
Abell is planning to take a short sabbatical before finding new ways to pursue her commitment to women's entrepreneurship and cooperative worker ownership. We extend our very best wishes to her and to WAGES.
In Case You Missed It – June 13 Edition
By Sean Luechtefeld on 06/13/2011 @ 12:45 PM
In case you missed it, here’s your recap of last week’s top posts from in and around the assets & opportunity blogosphere.
Really (Really) Thorough Research
NPR’s Planet Money blog features a weekly podcast every Friday. Last week’s podcast highlighted research that split low-income children in to two groups, sent one group to preschool for free and then followed the children. For 40 years. The results? Those who went to preschool were much more likely to have a job and much less likely spend time in jail. Read more here.
Thought We Had Moved Beyond Racial Differences?
A blog post from Secretary of Labor Hilda Solis at the DOL blog reports that unemployment among black Americans remains above 16%, nearly double the 9.1% national average. Read about this and other chilling statistics regarding how communities of color are being hit by this recession in the blog post. (And, special thanks to the folks at the Center for Community Change for posting Secretary Solis’s story to their blog).
We Can Do Better Than Britain
Britain cut their child poverty rate in half over the past 16 years. Seriously. If they can, we can. At least, that’s the case Nancy Folbre is making in her most recent post on the New York Times’ Economix blog. Read her thoughts on how we can reduce child poverty here.
Have a link you’d like to share with our readers? Send us an email!
Upcoming Rural Dynamics Seminars
By Sean Luechtefeld on 06/09/2011 @ 03:30 PM
This morning, I received an email from our partners at Rural Dynamics advertising their upcoming seminar series. If you’re in Montana, these low-cost events would be a great way to learn about some interesting topics and network with asset-building professionals in the region.
The first seminar will cover social media and website development, topics that are especially helpful for those organizations looking to integrate new technology into their initiatives. Rural Dynamics is also offering a seminar in financial advising and one on managing your finances online. If you’re a practitioner advising your clients on these services, or an individual looking to learn about these topics, then these seminars are the perfect opportunity for you.
To learn more, visit Rural Dynamics’ Seminar page.
By Sean Luechtefeld on 06/07/2011 @ 05:00 PM
Last month, FIELD, a project of the Aspen Institute, released this video, making the case for why microenterprise matters, especially in a domestic context. The four-minute video is a great overview of why microenterprise matters and is great for audiences who are interested in an introduction to the field. You should check it out here.
Of course, perhaps we’re biased – the video features CFED’s Policy Analyst, Katherine Lucas-Smith, commenting on the importance of collecting rich data in making the case to policymakers that supporting microenterprise is a worthwhile venture.
So, check out the video – we hope you’ll find it a helpful resource!
In Case You Missed It – June 6 Edition
By Sean Luechtefeld on 06/06/2011 @ 03:30 PM
EDITOR’S NOTE: Today’s post is the first in a new series that we’ll be featuring about once a week. We’ll compile some of the best posts from around the assets & opportunity blogosphere and share them with our readers in an effort to help keep you connected.
Our friends at the Stanford Social Innovation Review posted an article last week about a new book, Giving Well, which examines the ethical issues interwoven throughout the philanthropic sector. Definitely check out the article and, if you’re so inclined, you can buy the book from the website here.
Finally, Reid Cramer at the New America Foundation highlights new research that explores the ten-year impacts of IDAs in Tulsa, Okla. Read Cramer’s commentary and learn more about the new research findings here.
Do you have links you’d like to share with our readers? Email us!
REMINDER: June 15 Employer Engagement Webinar
By Sean Luechtefeld on 06/03/2011 @ 11:15 AM
Don’t forget to register for the June 15 employer engagement webinar, co-sponsored by innovation@cfed and the San Francisco Office of Financial Empowerment. The webinar, titled Financial Empowerment through Employer Engagement: Opportunities, Challenges and Next Steps, will take place on Wednesday, June 15, from 3:00 to 4:30 Eastern Daylight Time.
Featured speakers for this event will include Leigh Phillips, Manager for the San Francisco Office of Financial Empowerment; Eugénie FitzGerald, Project Consultant for the San Francisco Office of Financial Empowerment and CFED Innovator-in-Residence; and Cathy Beyda, Attorney and Chairperson for the American Payroll Association’s Government Affairs Task Force on Payroll Cards and the Association’s Paycard User Group. The event will be moderated by Ida Rademacher, Vice President for Policy and Research at CFED.
The event is free, but registration is required. Click here to register today!
Bill to reform the asset limit test of the Supplemental Security Income program proposed
By Kristin Lawton on 06/03/2011 @ 10:38 AM
Reform would enable people with disabilities to open bank accounts, work and save towards financial self-reliance
Today, a bill that would enable and encourage low-income people with disabilities to work, save and build wealth, and open bank accounts was introduced in the U.S. House of Representatives.
People with disabilities face significant challenges to building wealth and achieving financial self-reliance. Nearly 50 million Americans have a disability and close to 60% of these are asset poor, meaning they have insufficient assets to survive at the poverty level for three months. This population of people is often dependent on public assistance; however, the asset limits of these programs pose serious obstacles for low-income families trying to become self-reliant.
This is particularly true for recipients of the Supplemental Security Income (SSI) program, where eligibility is limited to those who have no more than $2,000 in assets for an individual and $3,000 for a couple. If they have an emergency—a family member dies, a car breaks down, a roof needs repair—they are allowed little in savings to fall back on, leaving them vulnerable to predatory lenders and deeper poverty, and requiring them to ultimately rely on greater government assistance. These outdated rules pose as a serious obstacle to becoming financial self-reliant.
The SSI Savers Act of 2011 (H.R. 2103), introduced by Congressman Tom Petri (R-WI) and Congresswoman Tsongas (D-MA), will reform the asset limit test of the Supplemental Security Income program. H.R. 2103 would help people with disabilities on SSI by reducing disincentives and allowing recipients to build a financial cushion while retaining their benefits.
The SSI Savers Act of 2011 proposes the following:
- Increase asset limits from $2,000 (single) and $3,000 (married) to $5,000 and $7,500 respectively, and indexes those limits to inflation.
- For recipients younger than 65, the bill excludes retirement accounts, education savings, and individual development accounts from counting against the limit.
- For recipients 65 and older, it allows retirement accounts up to $50,000 (single) / $75,000 (married) to reduce SSI benefits accordingly instead of creating an immediate cut off.
Take action by asking your legislators to become cosponsors of the SSI Savers Act of 2011 (H.R. 2103).
Entrepreneurship and Complementarity
By Steve Crawford, Senior Fellow on 06/02/2011 @ 01:00 PM
Last time I talked about the unappreciated complementarity between high-potential and small business entrepreneurship, noting that the “creative destruction” generated by the former makes the adaptability of the latter all the more critical to the achievement of shared prosperity. Since that posting, I have had an opportunity to read the just-released Kauffman Thoughtbook 2011. As with the previous four volumes, it contains dozens of informative and thoughtful articles. One that stands out for its relevance to the complementarity point is the piece by the distinguished economist, William Baumol.
Although Baumol emphasizes the importance of innovative entrepreneurs for long-term growth, he adds that during recessions, “it is those replicative entrepreneurs who open retail shops or other businesses of the standard variety that are most effective in creating new jobs and thereby aid in the economic recovery.” He goes on to say: “Of course, these replicative entrepreneurs do not act alone. Success in their business efforts requires the help of others – especially those who provide them with loans and those who educate them in the relevant regulations governing their businesses, among others.”
This and my next post will examine two exceptionally promising programs for providing such assistance. The first focuses on a plan for expanding the Self-Employment Assistance Program (SEAP), a federal program for facilitating self-employment by individuals collecting unemployment insurance. The second examines CFED’s Self-Employment Tax Initiative (SETI), a scalable approach to assisting the owners of existing small businesses, especially those with adjusted gross incomes of less than $50,000.
The U.S. Department of Labor’s Self-Employment Assistance Program allows unemployed workers who are eligible for Unemployment Insurance (UI) to collect self-employment allowances equal to UI benefits while starting their own business instead of searching for an existing job, as long as they obtain the prescribed entrepreneurial training. Established in 1993 after carefully evaluated pilots, it is a classic example of a promising initiative that has not begun to achieve its potential for reasons of program design and implementation.
The most authoritative analysis of the SEAP pilots and program is Steve Wandner’s in Chapter 8 of his book, Solving the Reemployment Puzzle: From Research to Policy (Upjohn Institute, 2010). Wandner is a former senior economist at the U.S. Department of Labor (DOL) who had major responsibility for the SEAP pilots. For our purposes, his key points are:
- The random-assignment demonstrations in MA and WA showed that the piloted programs, which varied slightly, “increased business starts among project participants, reduced the length of their unemployment, and increased their total time in employment, which includes self-employment plus wage and salary jobs. In addition, the Massachusetts demonstration also had a substantial positive impact on participants’ earnings.” Moreover, both program models proved to be cost-effective for project participants, society as a whole, and in the case of MA, for the government.
- Current participation in the SEAP is tiny and falling. The law authorizes but does not require states to offer the assistance, and only seven states -- DE, ME, MD, NJ, NY, OR and PA-- currently participate. Even in these states, few unemployed workers are being served, the total amounting to only 1,469 in 2008. That represents far less than 1 percent of UI recipients in those states and less than one tenth of one percent for the country as a whole. By contrast, the rates for similar programs in Europe are 2.26% in France, 4.9% in Italy, 4.74% in Hungary, 2.72% in Sweden, 3.94% in Spain and 12.88% in Germany.
- The reasons for the low participation rate in the U.S. are that the SEAP program is burdensome for states to establish, expensive for states to operate (because they must find funds for the required entrepreneurial training), and a bureaucratic step-child. UI administrators are ambivalent about the program, and the performance measures for workforce one-stop centers discourage positive action when referrals do come from UI. Occasionally, a committed state manager is able to expand participation by obtaining training support from SBA’s Small Business Development Centers or other sources and by aggressively publicizing the program to UI recipients, but those success stories have ended when the manager moved on.
Senator Ron Wyden (D-OR), a sponsor of the original legislation, has drafted a new bill that addresses many of the problems with the existing act. This bill would “federalize” the program temporarily, enabling rapid implementation. The challenge now is to enlist co-sponsors for it.
No one claims that self-employment is a silver bullet, but according to Wandner, a properly designed program would yield jobs for 1-2 percent of the unemployed covered by UI. The cost would be about $3,350 per job, which is an incredible bargain by current standards for job creation. Given the long-term unemployment disaster that the country is now experiencing, there is no excuse for not following Baumol’s advice and getting serious about self-employment assistance.
Personal Finance in Schools
By Stephanie Halligan on 06/01/2011 @ 02:00 PM
According to a new Visa Inc. survey, 82% of Americans surveyed believe that a course in personal finance should be a high school graduation requirement. In particular, 85% of parents surveyed said that they want to see personal finance as a graduation requirement. Yet despite this demand for classroom-based financial education, only four states have this requirement in place: Missouri, Tennessee, Utah and Virginia.
The increasing complexity of our financial system makes financial knowledge and skills even more critical to a student’s future success. Financial literacy advocates continue to promote classroom-based personal finance, but with so many competing academic priorities, schools have been reluctant to add this requirement.
So given this tension, how do we encourage financial education in schools? Even without an explicit graduation requirement, there are several community partnership strategies that can help promote financial literacy in the classroom:
- Connect with your state’s Jump$tart State Coalition to find out how you can promote financial literacy in your schools and community. Jump$tart’s state coalition network operates grassroots volunteer efforts dedicated to improving financial education access for pre-kindergarten through college-age youth.
- Partner with a local bank or credit union and a school to start a “Bank at School” program. This is an opportunity for students to learn first-hand the basics of banking and the importance of savings by opening and depositing to accounts at their school “branch.” To learn more about Bank at School programs, visit the Delaware Bank At School website.
- Refer students to an Individual Development Account (IDA) program serving youth. We know from practical experience that financial education – when provided in tandem with a savings account – gives children and young adults a tangible opportunity to develop and test their financial decisions. IDAs provide an excellent hands-on opportunity to develop good financial habits while actively saving toward a specific goal, like post secondary education. To learn more about IDAs or to find an IDA program in your area, visit CFED’s IDA program webpage.
Please visit CFED’s Children’s Savings and Financial Education webpage for more information on the connection between children savings initiatives and financial education.
Bringing it All Home: Manufactured Housing and the Future of Affordable Housing
By Lauren Williams on 05/31/2011 @ 04:30 PM
Co-sponsored by NeighborWorks® America and with generous support from the Ford Foundation, this exclusive, invitation-only event brought together a small but distinguished audience of 85 key federal agency officials, industry representatives, legislative staff, leading national affordable housing nonprofits and more. For materials from the event, click here.
Manufactured housing represents the largest source of affordable housing in this country, yet it has historically been left out of many federal—and local—affordable housing discussions and solutions. The loss of this, often unsubsidized, housing stock could lead to increased demand for more publicly subsidized housing. So, assuring the preservation of existing manufactured housing, promoting resident ownership of communities, encouraging the development of new, high-quality manufactured housing, and making sure that families have access to fair financing products to purchase affordable manufactured homes is in the long term best interest of the financially-strapped public sector. Bringing it All Home sought to close the knowledge gap and raise awareness among key policymakers on the importance of fully integrating manufactured housing into federal affordable housing strategies.
At this event, we lifted up several I’M HOME partners as innovators in this field to an audience featuring representatives from an array of federal agencies—HUD, USDA, FHFA, FDIC, EPA, CFPB and DOE—as well as other potential partners interested in this work—national nonprofits, local practitioners, and more. The panelists discussed possible federal regulatory solutions to the challenges faced by I’M HOME partners developing creative ways to serve the housing needs of low- to moderate-income Americans.
Even today, mentions of manufactured housing often evoke images of travel trailers when in fact, technological innovations and demand for affordable homeownership have moved the factory-built housing industry to produce homes that are permanent, affordable, energy efficient, appreciating and indistinguishable from site-built homes. Next StepTM has paired up with Clayton Homes to design a national nonprofit distribution system delivering affordable, high-quality, energy efficient, factory-built housing to nonprofit affordable housing developers across the country. For Next StepTM and their industry partners, availability of safe and fair manufactured home financing options is critical. During this session, certain federal policy needs rose to the top:
- We must build new partnerships to push forward federal legislation that would fund the replacement of outdated, energy inefficient manufactured homes with new, high-quality Next StepTM homes.
- We must emphasize the importance of advocating for the retention of funding programs like RD 502 Direct that are under threat of elimination.
- We must work with federal agencies to improve and synchronize programs—like FHA Title I and Title II—that already serve owners and buyers of manufactured homes.
Enhancing Economic Security through Resident Ownership
ROC USA® is a technical assistance provider network that helps manufactured home community residents organize and finance the purchase of their communities. ROC USA® sees scaling resident community ownership as the starting point in sustainable community preservation and revitalization, which is a priority for several federal affordable housing programs as well. Support from the following existing federal programs will be critical in making sure the resources are available to take manufactured home community preservation to scale:
- Improved guidance promoting the use of HUD programs like Title I and Title II in resident-owned communities.
- Adjustments to the 207 M Mortgage Insurance for Manufactured Home Parks could be made so that it serves the needs of limited-equity cooperative communities.
- USDA could improve its 504 product and expand RD 502 Direct to be eligible for new homes placed in resident-owned cooperatives, and the Rural Cooperative Development Grant program should be maintained.
The affordable housing team within Policy Development and Research at HUD, led by Assistant Secretary Raphael Bostic, is looking to lead the integration of manufactured housing into policies that guide sustainable systems, home preservation, and the future of factory-built housing. This promising commitment will help lay a piece of the groundwork for a new federal outlook on manufactured housing, one that must be met with innovative approaches to manufactured home financing that provide homebuyers with fair, secure opportunities for building wealth.
Promising Local Approaches to Single-Family Finance
I’M HOME partners including MaineHousing and New Hampshire Community Loan Fund operate innovative high-impact financing programs for home purchase and replacement, refinance, resale, improvement, cooperative community purchase, and weatherization. Both organizations have found ways to access federal funding streams to support their programs and during this discussion, they identified some key ways that federal agencies can make key programs work better, maximize potential for innovation, and maximize capital availability within the constraints of today’s economy.
- Maintaining RD 502 Direct financing is critical for the low-income families they serve.
- The DOE Federal Weatherization Program should allow for replacement of outdated mobile homes as an eligible activity.
- The absence of mortgage insurance for the loans they provide presents a challenge, and federal programs might be able to fill that gap.
Mike Feinberg from FHFA and Mike Price from USDA, recommended ways that practitioners can work with federal programs to advance innovations at scale as well.
With both the challenges and the potential for manufactured housing so high, closing the knowledge gap among policymakers and creating a policy, regulatory, and financing environment that supports market transformation is crucial to realizing the full potential of this important source of affordable housing. Realizing a scalable market-based private sector system for delivering affordable housing that provides asset-building capability to low and moderate income families is truly an impressive (and ambitious) objective. Events like this one move us one step closer to that goal.
For more information, contact the I’M HOME team at firstname.lastname@example.org.
Changing the Tax Code to Reduce the Deficit
By Kristin Lawton on 05/31/2011 @ 11:46 AM
In yesterday’s Washington Post article, Study: Closing tax breaks for retirement would do little to help budget, reporter Lori Montgomery looked at a new study that argues against cutting tax incentives for retirement plans, such as 401(k) accounts, to help reduce the deficit. Montgomery notes that the study suggests “the accounts would have to be closed, or contributions sharply limited to realize much in the way of budget savings – a move that could undermined some of the nation’s most popular retirement tools.”
While this study seems to look at only tax preferences for retirement plans, it’s important to remember, as the story notes, that there are a range of deductions, credits and preferential rates in the federal tax code that should be scrutinized as Congress tackles the country’s deficit and debt. A study released last fall by CFED and The Annie E. Casey Foundation found that the United States spent nearly $400 billion in fiscal year 2009 to help people save money and build wealth, but the vast majority of that money went to the nation’s richest taxpayers. By simply capping some of these deductions, it would be possible to shave $1 trillion off the deficit in the next decade. Given the seriousness of the deficit and debt problem, we must consider changes in the tax code -- even if there is a dispute over exactly how much could be saved through such changes.
Recommended Reading - Study: Closing tax breaks for retirement would do little to help budget
Slideshow: Bringing it All Home: Manufactured Housing and the Future of Affordable Housing
By Chris Campbell on 05/27/2011 @ 09:43 AM
On Friday, May 20, Bringing it All Home: Manufactured Housing and the Future of Affordable Housing convened in Washington, DC. Co-sponsored by NeighborWorks America® with generous additional support from the Ford Foundation, this event brought together a small but distinguished audience of 85 key federal agency officials, industry representatives, legislative staff, leading national affordable housing nonprofits and more. This convening raised the visibility of our nonprofit partners’ use of manufactured housing in scalable strategies that promote long-term economic security for low- and moderate-income individuals and how federal affordable housing programs and subsidies can further these efforts. View photos from the event below. For archived presentations and convening materials, click here.
IDA Action in the States
By Ethan Geiling on 05/26/2011 @ 05:30 PM
In 2010, nine states reduced or eliminated funding for Individual Development Accounts (IDAs). Eight of these states reduced funding and one state, Massachusetts, eliminated funding.
However, after taking a hit in 2010, IDA programs are seeing more positive action in 2011 at the state level. A bill was sent to the Georgia Governor to create a state IDA program administered by the Georgia Council on Developmental Disabilities. Unfortunately, the Governor vetoed the bill. Alabama, Texas, and Mississippi have all introduced bills this session to create state IDA programs. Massachusetts filed an amendment which would have restored state IDA funding at $500,000. Unfortunately, the line item was not adopted in the House budget.
CFED Receives Living Cities Grant
By Sean Luechtefeld on 05/25/2011 @ 11:30 AM
Today we are excited to announce that Living Cities has awarded CFED a grant of $185,000 to support resource guides for advocates, practitioners, program administrators and decision-makers both inside and outside government. The funds from this grant will be used to develop resources that can help local public sector leaders and advocates integrate asset-building strategies, tools and products into the mainstream of human service delivery systems, and we’re especially glad to call Living Cities a partner in this work.
In the coming months, Living Cities’ support will be used to produce integration guides and briefs that will provide in-depth examinations of how specific systems, structures and social programs can integrate a range of asset-building approaches into their work, and in doing so, become important scaling platforms for reaching large numbers of low-income families. This support will also be used to create a “stroke-of-the-pen” Changes Guide for policymakers in the form of three briefs – one each for local, state and federal policymakers. These will feature "easy" policy changes that would facilitate local asset-building and financial empowerment.
Eventually, we’ll disseminate the Resource Guides and Briefs through:
- A new Assets & Opportunity web portal that provides easy access to the broad range of advocacy and implementation tools and resources CFED produces
- Asset building educational sessions sponsored by CFED
- Ongoing federal policymaker education and integration into our strategic communications with federal agencies
We will also share the guides and briefs with national allies, particularly those that reach state and local target audiences.
To say CFED is very grateful to Living Cities for its support is an understatement, and we hope that you will join us in thanking them for their dedicated partnership.
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