From the author of
Our Lot: How Real Estate Came to Own Us
How the homes we live in turned into the monsters that ate our economy and the
United States became a nation obsessed with real estate.
I’ll be doing readings, talks and other events in conjunction with Our Lot’s arrival in stores on June 23. Here are dates already confirmed – others to be added later, so check back for updates. Please contact me if you’re interested in having me speak to your group, class or other gathering.
Book release party and reading at BookCourt, 7 p.m.
163 Court Street
Talk at Demos Forum, with Beryl Satter, noon
220 Fifth Avenue, 5th Floor
RSVP Jinny Khanduja, 212.389.1399 or email@example.com
Reading at Politics and Prose, 7 p.m.
5015 Connecticut Avenue NW
I’ve just made a small but important change to my bio that deserves a callout here, not just because my new job is something you ought to know about but also because it bookends the five years of my life I’ve devoted to writing about the real estate bubble and bust. I’m now editor of The New York World, a new accountability journalism project at Columbia Journalism School that not accidentally is named after the mighty newspaper founded by Joseph Pulitzer. I’m working with a full-time staff of six butt-kicking graduates of Columbia master’s programs to cover the inner workings of city and state government. We’ve just had our first big story, breaking the news that the high-paid CEO of a homeless housing and services agency founded by Gov. Mario Cuomo has resigned just as a task force appointed by the governor has begun to probe excessive compensation at state-funded nonprofits. That executive, Laurence Belinsky, is married to a cousin of Andrew Cuomo and his sister Maria, who chairs the board of the organization, HELP USA.
The New York World’s website will be live soon, at thenewyorkworld.com. In the meantime, follow us at @thenyworld.
I’ll never stop paying attention to housing – hell, I’m covering New York City – but I won’t be writing about it regularly. Pulling away from a huge story that is by no means over is hard. The good news is that some very good journalists continue to chronicle the painful recovery (to the extent there is one) from the housing and financial crises. The bad is that the cleansing power of exposure – story after story revealing securities fraud or predatory lending – isn’t enough to get homeowners or the economy out of their hole.
Hello world. I’m resurfacing after an intense few months of work with some extraordinary students at Hunter College, who hopefully are not regretting that they signed up for the Jack Newfield journalism workshop. They’re now finishing up their projects investigating the budget crisis in New York City public housing, which is affecting residents and communities in profound ways. I won’t divulge too much here because each of the projects breaks important stories, but you’ll be seeing their work soon. While they toil on their final edits, I want to thank everyone who has knocked themselves out this semester to create great stories: Sarah Grile, Walis Johnson, Kelly Spivey, Flonia Telgrafi, Rosalyn Temple, Tennessee Watson, and Jay Weichun.
I also want to thank Jack Newfield, even though I never met him. Newfield was the closest thing New York City had to a conscience in my lifetime, until his ended in 2004. At The Village Voice and then the News, Post and Sun Newfield mapped power and its abuses in New York City, and along the way mentored another generation of great muckrakers, including Wayne Barrett, Tom Robbins and Joe Conason. After his death, Newfield’s widow, Janie Eisenberg, collaborated with Newfield’s friends and colleagues to create the workshop at Hunter, Newfield’s alma mater, so future students could have the opportunity to report deeply on the city they live in under the tutelage of active journalists. I feel incredibly honored to carry the baton for a few miles.
Big props to American Banker and Amherst Securities for this in-depth look at the double-dealing practices of Carrington Mortgage, which is both an investor and a servicer in some of the stinkiest subprime mortgage-backed securities.
The story, by Jeff Horwitz, explains why so many Carrington-serviced foreclosures involving mortgages from the big subprime lenders have long been sitting empty in urban neighborhoods: Carrington is allegedly booking these loans as “performing,” and not selling the vacant homes, in order to help itself to substantial proceeds from its pools that it would not receive if foreclosures proceeded and home sales were booked at their substantially depreciated real-market values.
Even more important, going forward:
Carrington’s performance suggests that forcing securitizers to retain exposure to their own deals may not reliably guarantee quality origination and aligned incentives among investor classes, and shows how hard it is for investors to figure out how pools of collateral are being managed. It also demonstrates how the basic structure of a securitization — that the claims of some classes of investors outrank others — can be turned on its head.
As the headline “A Servicer’s Alleged Conflict Raises Doubts About ‘Skin in the Game’ Reforms” suggests, Carrington’s maneuvers raise questions about the value of Dodd-Frank’s 5% risk-retention requirement, which is supposed to give financial institutions that issue mortgage-backed securities some skin in the game and therefore discourage the marketing of mortgages destined to fail. The major banks all now do their own mortgage servicing and are in a position to pull exactly the same kind of games that Carrington did, selling bad loans, milking the failing loan pools profitably, and then literally leaving communities to deal with the wreckage.
In other words, “risk retention” as outlined in Dodd-Frank is a mirage. It can easily turn into risk-projection — onto borrowers, communities and investors.
(Special thank you to Twitter for crashing so I actually had to go to the trouble of writing a blog post.)
In The American Prospect today, I write about the Obama administration’s long-awaited agenda for housing finance reform, which proposes scenarios for winding down Fannie Mae and Freddie Mac in favor of a private sector–driven mortgage marketplace. The administration’s analysis of what needs fixing, and how, is dead right, and the solutions elegantly crafted, yet I can’t help but wonder what they’ll look like when Congress gets through with them. Quoting myself:
Whether homeownership remains a broadly realized institution or becomes a privilege for a relative few depends largely on how far the Obama administration can push Congress to demand broad and fair access to credit for all corners of the country.
“We will work with Congress to ensure that all communities and families — including those in rural and economically distressed areas, as well as those that are low- and moderate-income — have the access to capital needed for sustainable homeownership and a range of rental options,” the Treasury pledges. That’s not just a great idea; it’s an essential one. In fact, this is a restatement of the Community Reinvestment Act. When CRA became law in 1977, it required federal banking regulators to make sure that any federally regulated bank was “meeting the credit needs of its entire community, including low- and moderate-income neighborhoods, consistent with the safe and sound operation of such institution.” Now, the administration wants to apply that principle for the first time to the Wall Street issuers of mortgage-backed securities.
I’m skeptical that Congress will play along. And without a CRA for the post-meltdown era, it’s hard to see how the new housing finance market will be a fair and equitable one.
Mark your calendars: On Tuesday, January 25th, I’ll be joining Michael W. Hudson, author of The Monster, and Columbia Journalism Review’s Dean Starkman for a conversation about the financial crisis sponsored by the Nation Institute and hosted by the Arthur L. Carter Journalism Institute at NYU (where I also teach).
When: Jan 25th, 5:30-7:30
Where: 20 Cooper Square, 7th floor, New York City (6 train to Astor Place)
Who: Michael W. Hudson, Alyssa Katz, Dean Starkman
If you’re in or near New York City that day, I hope to see you there!
Join me and author Michael W. Hudson (The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America–and Spawned a Global Crisis) on November 2 for our presentation “Duped! A forensic investigation into the art of scams, skulduggery and salesmanship,” part of the Adult Education lecture series at Brooklyn, New York’s, Union Hall. Curated by Carrie McLaren and Charles Star, Adult Ed brings nerds like me and Mike together with actual, funny comedians for monthly evenings of laughter and erudition. November’s theme is “Money.”
Mike is going to be recreating “The Track,” a sales routine subprime lenders used to bamboozle borrowers into taking out loans they couldn’t afford. I’m going to show how generations of middle-class strivers got caught in the swamps of Florida real estate speculation. Yes, November 2 is election night. I believe I mentioned comedians? If you need them, they’ll be there at Union Hall.
Yeah, you read it right. All in all, not a bad experience, and I was glad to script the Chyron as Fox’s guest expert with bullet points like “Support rental housing” and “Keep a strong govt mortgage market backstop.”
NPR’s All Things Considered just interviewed me on what it means to be a renter in the United States – namely, freewheeling and flexible but also often unstable and deprived of financial benefits that government policies grant to homeowners.
I admit it: I’ve fallen down the Twitter-hole. Why communicate in full sentences out into the ether when I can telepathically connect to devoted courtiers? (Oh yes, we have a lot of fun over there.) We writers like to get paid by the word, y’know.
OK, I’ll begrudge you a few free words today, on the occasion of two articles you ought to read – one mine, one quoting me, and both grappling with the question I raise in the epilogue of Our Lot: how to move real estate markets so they build environmentally sustainable and human-scale places to live, instead of the destructive sprawl that is synonymous with the real estate bubble and the direct product of the government policies that for more than 70 years have favored outward suburban growth.
I tackle this in The American Prospect, in a look at the Obama administration’s new Sustainable Communities Initiative, which brings together the U.S. Department of Housing and Urban Development, Department of Transportation and Environmental Protection Agency to coordinate…well, their terminology is necessarily much more careful than mine. But ultimately they are looking to create a regulatory and planning environment that cultivates walkable, transit-oriented communities. (You can see their principles here.) As I suggest in the article, these efforts are puny compared with the hundreds of billions shoveled into interstate highways in the Eisenhower era. But they are also meaningful and real, all the more so now that the Senate Banking Committee has passed the Livable Communities Act, which would authorize spending for regional planning projects around the country and especially efforts to coordinate transit, housing and workplace development.
If you’re not reading him already, you should also make sure to tune in to Jonathan Hiskes at Grist, who is doing sharp, important work on this subject (as well as on the fight over PACE financing for home energy-efficiency retrofits). He has just posted a story on location-efficient mortgages, quoting me and grappling with the question of whether giving homebuyers who live near mass transit more purchasing power (that is, debt) is a constructive response to sprawl, given all we know about the consequences of high housing leverage. I’m not so worried that borrowers won’t be able to pay back their mortgages – the assumption here is that their diminished dependency on cars will make their household budgets less burdened. It’s that leverage on a wide scale leads directly to real estate price inflation, and that defeats any benefit of location-efficient mortgages while also making housing less affordable.
By the way, I’m @alykatzz. You know where to find me.