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Fewer foreclosures a win for (almost) all of us



Posted Feb. 27, 2016 at 4:27 PM
Updated Feb 27, 2016 at 4:30 PM


Article source: http://www.gastongazette.com/article/20160227/NEWS/160229091

Why losing a home means losing everything


(Rachel Orr/The Washington Post; iStock)

First, the kitchen sink stopped up. And when that happened, Doreen’s family began washing dishes in the bathtub. Then food scraps clogged the tub, too, which meant that everyone had to bathe with water boiled in the kitchen that they flushed down the toilet. Then the toilet quit working, too.

Doreen, one of the impoverished Milwaukee tenants in sociologist Matthew Desmond’s new book “Evicted: Poverty and Profit in the American City,” enters an unwinnable war over the plumbing. Sherrena, her landlord, won’t fix it. A couple months go by. Doreen calls a plumber herself and deducts the cost from her rent. Then Sherrena threatens to evict her, because now she’s behind on what she owes. The two strong-willed women lock in conflict, one trying to protect her family, the other her profit margin.

The deteriorating scene in Doreen’s cramped apartment — later the pots pile up, and the roaches come, and the cooking stops, and the kids’ grades fall and the depression sets in — builds up to the central insight of Desmond’s research: Eviction isn’t just a condition of poverty; it’s a cause of it. When stable housing is elusive, everything else falls apart. Tenants preoccupied by eviction lag at work and lose their jobs. Or they have to move farther from work and lose their jobs. Or they miss the welfare appointment reminder that was mailed to an address where they no longer live, and they lose their welfare, too.

Then they really can’t pay the rent. And so they’re evicted again.

Desmond’s research on this grim spiral has already garnered the Harvard associate professor a MacArthur “genius” award. And it has the potential to fundamentally shift how we think about the role of housing in creating and perpetuating poverty. But Doreen and Sherrena’s plumbing impasse also gets at another sharp insight that Desmond digs into in the book’s final pages: Poverty is a relationship, he writes, involving the poor and rich alike.

There is no slum without the slumlord. No eviction without the sheriff’s deputies who carry it out. No extractive market without the government policies that protect a landlord’s right to maximum profit on a decaying apartment (in Milwaukee, it’s legal to rent out a property that violates “basic habitability requirements,” so long as you’re up front about it).

Poverty and power are intertwined in ways that leave the poor victim to exploitation — “now there’s a word,” Desmond writes, “that has been scrubbed out of the poverty debate.”

“We have this conversation about inequality today, but it’s mostly about the middle class and the rich, and it’s as if the poor — their lives aren’t bound up with the rest of us,” Desmond says in an interview. “I think housing disabuses you of that. You have to understand the role the landlords are playing in shaping neighborhoods, how they potentially expand or reduce inequality, how their profits are a direct result of some tenant’s poverty. It’s hard to argue otherwise when you see it up close.”

His book, which comes out March 1, follows eight families in Milwaukee, including white tenants in the worst trailer park in town and black renters in the city’s North Side ghetto. They’re all bound by grinding poverty and the private rental market. Like the majority of poor Americans, none of them benefit from public housing or housing subsidies. In fact, if any of them ever got to the top of the long waiting list for Milwaukee’s public housing, their eviction records would disqualify them.

It becomes clear over time — Desmond lived alongside these families in 2008 and 2009, in addition to conducting extensive survey research and records requests — that eviction isn’t a one-off consequence that follows a life crisis like a lost job or sudden medical bill. Eviction is the crisis itself, begetting its own dire consequences.

“I viewed eviction in the way that I think a lot of Americans view eviction,” Desmond says of his thinking when he started this research. “Eviction is kind of like the period at the end of the sentence: You lose your job, and you get evicted.” That story’s not wrong, he says. ”But it’s half the story.”

The families in the book (Desmond has changed their names) get trapped in a nightmare where everything revolves around the procurement of housing. Hunting for it is a full-time job, which makes having an actual job that much harder. The cost of storing possessions after eviction makes it near-impossible to scrap together money for the next deposit. So families choose between housing their stuff and housing themselves. Mothers take their children out of school to help search, because having a home is more important than getting an education, when you have to pick between those, too.

Small unseen expenses, like new shoes for a funeral, cost families their fragile shelter. Calling a building inspector gets them evicted. In one of Desmond’s most damning discoveries, women who phone the police to report domestic violence wind up getting evicted, too. That’s because Milwaukee has a “nuisance” ordinance that allows the police to penalize landlords when their tenants call 911 too often. The system encourages landlords to resolve the problem by evicting the “nuisances.”

Near the bottom of this spiral, families compromise on lower and lower-quality housing, which the rental market readily serves up. Writes Desmond:

Some landlords neglected to screen tenants for the same reason payday lenders offered unsecured, high-interest loans to families with unpaid debt or lousy credit; for the same reason that the subprime industry gave mortgages to people who could not afford them; for the same reason Rent-A-Center allowed you to take home a new Hisense air conditioner or Klaussner “Lazarus” reclining sofa without running a credit check. There was a business model at the bottom of every market.

Doreen’s building, as it turns out, is among Sherrena’s most profitable. The landlord is a shrewd businesswoman. She sees opportunity in the foreclosure crisis, buying up “other peoples’ failures” and converting them into lucrative rentals. She knows that a two-bedroom in Milwaukee’s segregated inner-city rents for about as much as a two-bedroom in a nicer part of town. But properties in nicer neighborhoods cost more to buy, so the financial returns on rent in the ghetto are far better.

Sherrena knows she’ll get a big payout every February, when desperate families behind on their rent turn over their Earned Income Tax Credits to her (take note, Paul Ryan: “In many cases,” Desmond writes, “this annual benefit is as much a boost to landlords as to low-income working families”). She knows that it’s often cheaper to evict a family than to pay for the repairs they demand. She knows that when a building is finally run into the ground, she can stop paying the property taxes and surrender it to the city.

Desmond’s solution to all of this isn’t a new one: We should expand housing vouchers to cover every family living below a certain income threshold. Today, only about one in four poor families who qualify ever receives housing assistance in the U.S., because we simply don’t fund enough of it. And we could expand aid to all of these families for less than what we spend on the home mortgage interest deduction that amounts to housing assistance for the wealthy.

Desmond’s case for this idea, though, is the strongest yet. “It’s just really clear to me that we can’t fix poverty without fixing housing,” he says. A universal voucher program, he argues, would be a jobs program, a public health intervention, a community investment and an education platform all tied into one. Frame it that way, and it might be the most effective thing we could throw at poverty. It’s the thing anyone talking about poverty — including Hillary Clinton, Bernie Sanders and Paul Ryan — should be talking about.

What’s more, a universal voucher program could potentially snuff out exploitation in the private rental market. It would give the poor market power to turn down unlivable housing. And it would force landlords to meet minimum housing standards. Today, many landlords avoid renting to voucher holders because they know the program comes with serious inspections — and because they know there are always more renters without vouchers or options.

“I don’t want to sound Pollyannish about this,” Desmond says. “I understand that poverty is never just poverty. It’s often this collection of maladies, this compounded adversity. I’m not naïve about the problem. But I think that stable, steady housing is one of the surest footholds we could have on the road to financial stability.”

It’s not hard to imagine that Doreen’s life might take a different path — picture the roaches retreating and the children’s grades rising and a sense of order and worth returned to the home — if the matriarch weren’t caught between a clogged toilet and a homeless shelter. Under Desmond’s solution, giving her family that foothold would also mean scaling back Sherrena’s profit. But isn’t that a tradeoff we’re willing to make?

Article source: https://www.washingtonpost.com/news/wonk/wp/2016/02/29/how-the-housing-market-exploits-the-poor-and-keeps-them-in-poverty/

Bank of America Corp Takes a Shot at the Power (BAC)


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Hilary Kramer

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Big news: Bank of America (BAC) is creating a program to issue mortgage loans to folks with as little as 3% down without insurance from the Federal Housing Administration (FHA). Official plans will be announced on Monday, but the gist of program is that it is supposed to help low- and moderate-income borrowers get home loans without having to pay the monthly insurance premiums required for low-down-payment (under 20%) loans by the FHA.

bacThe goal is to make mortgage loans cheaper for borrowers who do not have the cash readily available to put down a full down payment. By not requiring mortgage insurance, Bank of America will cut the FHA out of the lending process. Instead, the loans will be backed in partnership with mortgage-finance giant Freddie Mac and the nonprofit Self-Help Ventures Fund.

In order to be eligible for the new loans, borrowers must have a credit score above 660 and an income that is less that the area’s median, and the home must be the borrower’s primary residence.

Here’s how it will work: After Bank of America makes a mortgage loan, it will sell it off to Self-Help. From there, Self-Help will sell it to Freddie Mac. If the mortgage defaults, Self-Help will be the first to feel the losses. If the nonprofit isn’t able to recover the full amount of the loan, then Freddie Mac will start to take a loss as well. Either way, there is no FHA-backed insurance involved.

In addition to financial relief, Self-Help will also provide counseling to those struggling to pay back their loans. It believes that this will help more people avoid foreclosure, which is why the nonprofit is also in talks with other lenders to unveil similar programs.

Bank of America Attempts to Struggle Free of the FHA

Bank of America’s new mortgage lending program is a shot across the bow from an industry that’s ready to fight back against what it sees as a massive abuse of power. In fact, many of the big banks have been moving away from the FHA over the last few years as they’re worried about the risk of being hit with future penalties for minor errors.

The FHA has recently won big settlements from banks for these errors, including $800 million from Bank of America, $1.2 billion from Wells Fargo (WFC) and $614 million from JPMorgan Chase (JPM). And nonbank lender Quicken Loans is currently undergoing a similar battle.

While nonbank lenders (like Quicken Loans) have tried to take the place of the FHA in the mortgage lending process, it has made it that much more difficult for low-income borrowers to get the loans they need. In the end, the FHA’s major fines have slowed lending to a crawl, and even Quicken Loans has threatened to stop issuing mortgages altogether.

Yes, this new program is a high risk for the private organizations, but it’s the way I believe markets are supposed to work. I only worry about the extent of taxpayer exposure to this via government-owned entities. Right now, both Fannie Mae and Freddie Mac are gutted for almost all the cash they net, which makes them an amazing piggy bank for the Federal government.

Still, I like the notion that the private sector is stepping up after the private mortgage insured (PMI) market crashed following the market collapse and government intervention.

Hilary Kramer is the editor of GameChangersBreakout Stocks Under $10High Octane TraderAbsolute Capital Return and Value Authority. She is an accomplished investment specialist and market strategist with more than 25 years of experience in portfolio management, equity research, trading, and risk management. She has extensive expertise in global financial management, asset allocation, investment banking and private equity ventures, and is regularly sought after to provide her analysis on Bloomberg, CNBC, Fox Business Network and other media.

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Article source: http://investorplace.com/2016/02/bank-of-america-fha-mortgage/

Bankruptcy filing at 3 Sutton halts foreclosure sale — for now

3 Sutton Place

Rendering of 3 Sutton Place in Midtown (credit: Foster + Partners) (inset, from left: Joseph Beninati and Richard Kalikow)

Joseph Beninati’s Bauhouse Group temporarily staved off a foreclosure auction of its 3 Sutton Place development site that was scheduled for Monday, after the entity that took out a loan on the property filed for bankruptcy last week.

BH Sutton Mezz LLC filed for Chapter 11 Friday, after a Manhattan judge denied Bauhouse’s request for a preliminary injunction that would have stopped Gamma Real Estate from putting the development site up for sale at foreclosure auction.

Gamma lent roughly $147 million on the site at 428-432 East 58th Street, which was recently appraised by Cushman Wakefield as being worth nearly $270 million as-is, and over $1 billion if the 68-story, Norman Foster-designed luxury condominium project were completed. The developer subsequently defaulted on that debt in January.

But with the bankruptcy filing, Bauhouse succeeded in delaying the foreclosure sale sought by the lender. Gamma, led by Richard Kalikow, could pursue a motion to lift that stay, which if successful could enable it to proceed with the site’s auction.

It is unclear whether Gamma has already filed such a motion. If the lender were to avoid going down that route, or if its motion to lift the stay on the foreclosure sale were denied, the initiation of Chapter 11 bankruptcy proceedings could buy Bauhouse time to restructure and pay off its debts on the property, as Crain’s reported today.

But the move may also expose Beninati and his partners on the development to personal financial liability, according to Crain’s.

Neither Bauhouse’s bankruptcy attorneys nor representatives for Gamma returned requests for comment.

Stephen Meister, a real estate attorney who is representing Bauhouse in its separate legal complaint against Gamma but isn’t involved in BH Sutton Mezz LLC’s bankruptcy filing, said he recommended his client appeal the ruling that struck down the proposed injunction against the sale.

“Many judges would have granted that restraining order,” Meister said, adding that Bauhouse’s lawsuit against Gamma Real Estate will move forward “on a money-damages basis.” The biggest bone of contention, he said, was the extremely short window that Gamma and its broker Eastdil Secured gave potential bidders to vet the site, which Bauhouse’s lawsuit claims would make Gamma the only viable bidder.

“The two weeks that Eastdil and Kalikow worked out was total bullshit, as far as I’m concerned,” Meister said.

Article source: http://therealdeal.com/2016/02/29/bankruptcy-filing-at-3-sutton-halts-foreclosure-sale-for-now/

St. Lawrence County wins years old foreclosure battle with Gouverneur property owner

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CANTON — An ongoing legal battle over the foreclosure of tax liens between St. Lawrence County and the former owner of a Gouverneur property has come to a close, with the county on the winning side.

In a Jan. 29 decision and order by the State Supreme Court, Appellate Division, Third Department, a 2013 appeal by YNGH LLC and YNRH LLC owner Peter L. Hoffman — seeking the return of $229,888.84 that was turned over to the county — has been denied.

Mr. Hoffman previously owned Butternut Hill apartment complex and was ordered to pay back taxes on the property by St. Lawrence County Court Judge Jerome J. Richards to St. Lawrence County in 2013.

The money was placed in escrow on July 10, 2013, including taxes owed to the village of Gouverneur from 2009 to 2012.

In 2009, Mr. Hoffman sued the village, alleging overcharges for water, unequal treatment based on fees for different multi-unit complexes and for imposing a rate that he said was not legally adopted.

Now-retired state Supreme Court Justice David R. Demarest granted the village summary judgement on the matter in 2013 and dismissed the action.

Mr. Hoffman appealed to the Third Department and in October 2014, Judge Demarest’s decision was reversed and the case was sent back to St. Lawrence County Supreme Court, where it remains pending.

When Mr. Hoffman refused to pay water and sewer charges to the municipality, those charges became part of delinquent taxes which were returned to St. Lawrence County, said County Attorney Stephen D. Button.

The county reimbursed Gouverneur and included the unpaid village tax in the foreclosure proceeding.

On Aug. 7, 2013, Mr. Hoffman filed the appeal seeking a return of those funds.

Mr. Button said he filed a motion to dismiss the YNGH LLC and YNRH LLC appeals in May after Mr. Hoffman attempted to stall the court’s decision in the appeal for more than two years.

The May motion to dismiss was denied, but was finally granted after Mr. Button said he renewed that motion on Dec. 23.

“Obviously St. Lawrence County is pleased that this matter has come to a conclusion after essentially five years of culminating in this moment, we are pleased to be on the winning side,” Mr. Button said.

Mr. Hoffman was unable to be reached for comment.

YNGH and YNRH’s position was that the county and the village of Gouverneur were united in interest in moving forward in this matter, Mr. Button said.

“And that the result from the village of Gouverneur litigation that YNGH and YNRH are currently involved in in the State Supreme Court would have direct bearing on the result of any appeal that St. Lawrence County and YNGH and YNRH could be potentially involved in,” Mr. Button said.

“Our position was that the foreclosure matter was separate and distinct from any potential breach of contract action that YNGH may still be able to maintain in the Supreme Court against the village of Gouverneur,” Mr. Button said. “Clearly the Third Department disagreed with this position and we are pleased with the outcome.”

Article source: http://www.watertowndailytimes.com/news05/st-lawrence-county-wins-years-old-foreclosure-battle-with-gouverneur-property-owner-20160229

Sutton Place Developer Files for Bankruptcy as Foreclosure Auction Looms

A rendering of the planned Sutton Place tower shows the skyscraper towering over its surroundings.

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MIDTOWN EAST — The developer of a planned 950-foot skyscraper in Sutton Place has filed for bankruptcy as mounting legal challenges throw the tower’s fate into question, according to court documents filed on Friday

Bauhouse Group, which has spent more than a year laying the groundwork for the luxury residential tower the firm’s principal Joseph Beninati hoped to build on East 58th Street, declared bankruptcy in what appears to be a last-ditch effort to derail a foreclosure auction scheduled for Monday by Beninati’s lender. 

Gamma Real Estate, an investor to whom Beninati owed nearly $150 million, had planned to auction off the developer’s properties at 428, 430 and 432 E. 58th St. on Monday, according to Crain’s New York Business.

Beninati borrowed $147 million from Gamma in order to begin building his skyscraper, but was unable to get the project fully financed and defaulted on the loan in January, according to Crain’s. 

In addition to the loan from Gamma, Bauhouse owed substantial sums ranging from $49,000 to nearly $1 million to at least 20 other architecture, engineering, construction, interior design and marketing firms, according to documents filed on Friday.

The bankruptcy claim came at the end of a very bad week for Bauhouse. On Feb. 23 a judge tossed the developer’s request for an injunction that would have blocked Monday’s foreclosure auction, and on Feb. 25, JLL, a commercial broker, accused Beninati of illegally breaking a contract for a $1.9 million commission.

In a lawsuit filed on Feb. 25, JLL accused Beninati of taunting the firm and refusing to pay them the agreed upon commission its lawyers say it earned when it secured Bauhouse the $147 million loan from Gamma, according to court documents.

“We will do what we want— and if you don’t like it, sue us,” Beninati said, according to the lawsuit.

The bankruptcy claim has postponed the foreclosure auction for now, according to The Real Deal, but it’s not immediately clear for how long Beninati can keep it at bay.

Furthermore, while the move could give Bauhouse time to restructure and pay off its debts, it could also open up Beninati and co-owner Herman Carlinsky to personal liability and allow creditors to seize their personal property, including cars and homes, according to the Crain’s report.

Bauhouse Group’s Sutton Street tower has faced stiff opposition from neighbors since plans were announced last year. A neighborhood group, the East River Fifties Alliance, teamed up with several local and state lawmakers in January to file an application for rezoning that would impose a 260-foot height cap in the neighborhood to block future skyscrapers.

With the rezoning proposal filed with the Department of City Planning, neighborhood skyscraper opponents are more concerned with keeping the area free of any new tall buildings than who ends up in control of Beninati’s East 58th Street properties, according to the group’s president Alan Kersh.

“No matter what happens with the proposed megatower on East 58th Street, our vision remains the same: a residential neighborhood that grows in a smart, sustainable way,” Kersh said. “It’s the outdated zoning laws that allow developers to create these out-of-scale and contextually inappropriate supertall buildings and our plan will stop that from ever happening again in our residential community.”

Gamma Real Estate did not respond to several requests for comment on Monday, and a representative of Bauhouse Group has not responded to repeated requests for comment on Beninati’s legal troubles.

Article source: https://www.dnainfo.com/new-york/20160229/midtown-east/sutton-place-developer-files-for-bankruptcy-as-foreclosure-auction-looms

Louisville Housing Group To Study Gap In Foreclosure Process

A Louisville housing advocacy group is launching a research effort to examine how an aspect of the foreclosure process may impact the city’s stock of vacant properties.

The Metropolitan Housing Coalition will investigate what happens to property deeds as a foreclosure progresses.

Cathy Hinko, executive director of the coalition, said with no specific law or policy requiring deeds to be transferred within a certain timeframe, some properties may never officially transfer from one party to another despite being foreclosed upon. This can lead to former property owners being left to foot the bill for code violations or lingering utility bills incurred after they’ve relinquished control over the property, she said.

It can also leave properties in limbo, with no dedicated owner willing to maintain structures or trim grass, Hinko added.

She said concerns about this process have been perpetually voiced at housing advocacy group meetings. So in response, her group will begin looking at past foreclosure sales to see what happened to the deeds of sold properties.

Hinko recently spoke with WFPL News about the research project, which she hopes to have completed in the coming months. Listen in the audio player above.

 

Article source: http://wfpl.org/foreclosure-research/

Fresh perspectives on reducing nonperforming loans in banking sector

This gave rise to more concerns about the stability and efficiency of banking and financial systems, and the need for central banks to tighten supervision and regulation of lending activities of banks.

Indeed, Tanzania’s central bank and financial regulator, the Bank of Tanzania, introduced, over the past six years, numerous reforms aimed at strengthening Tanzania’s banking and financial system.

Today, several assessments are periodically conducted to timely forecast any undesirable exposure. Specifically, the ratio of nonperforming loans (NPLs), to gross loans is normally used as a soundness indicator. But what are NPLs? By definition, NPLs are credit facilities – secured or unsecured-in respect of which the interest and/ or principal amount has stayed past due for a definite period of time.

NPLs are non-performing because they stop generating income for the bank. According to the Banking and Financial Institutions (Management of Risk Assets) Regulations, 2008, NPLs are “any credit accommodation[s] for which contractual repayments are 90 days or more past due or [are] classified as substandard, doubtful or loss, and [are] placed on a nonaccrual basis”.

It should be noted that although applied in Tanzania, the 90 days overdue criterion to identify exposures as non-performing is not universally applied. Moreover, NPLs in Tanzania cannot be reclassified as “performing” merely by substituting them with new loans.

In a 2001 International Monetary Fund (IMF), Working Paper entitled “The Treatment of Nonperforming Loans in Macroeconomic Statistics”, Adriaan Bloem and Cornelis Gorter argue that the primary cause of NPLs is the unavoidable number of erroneous economic decisions individuals make and bad luck e.g. unfavourable weather conditions and abrupt changes in the cost of fuel, prices of export products, foreign exchange or interest rates, etc.

This is why a bank’s credit committee should properly review the aptness of advancing credit facilities to a company or individual and adhere to sound lending principles and practices by steering clear of insider lending, for instance.

Another cause of NPLs in the banking system is the poor fiscal policies which militate against NPL resolution. Such policies result into high inflation rates.

Anticipations about future inflation influence interest rates, which would remain high if investors believe that the government wants to pump more money through the central bank into the economy.

The direct impact of NPLs on the financial performance of banks in Tanzania has led to concerns amongst bankers. Eric Ouattara, Deputy Head of Risk Management at Bank of Africa (BOA), Group, which runs a subsidiary bank in Tanzania, emphasizes that “NPLs impinge on operational efficiency which consequently affects profitability, liquidity and solvency position of banks”.

Besides this, Mr Ouattara notes that “NPL’s affect the thinking and attitude of bankers and financiers with regards to disbursement of funds to borrowers”.

Hence, NPLs create a vicious effect on the survival and growth of banks, all the more reason for the Bank of Tanzania (BOT), to help banks manage properly their NPL portfolios. In a Financial Stability Report (FSR), issued five years ago, in 2011, the BOT admitted that the upturn in the ratio of NPLs needed to be monitored carefully.

More recently, the IMF said in an advisory note that while Tanzanian banks are sufficiently capitalized with good returns on equity, the increasing number of NPLs is an issue that needs to be examined more thoroughly.

According to the IMF, the ratio of NPLs to gross loans in Tanzania increased from 7.1 per cent in September 2013 to 8.5 per cent in September 2014.

Underperformance in manufacturing, trade and agriculture was the main reason for the increase in the reported NPLs. In its latest Financial Stability Report (FSR), for September 2015, the BOT said that the ratio of NPLs to gross loans which had dropped to 6.5 per cent as at end March 2015 increased to 6.8 per cent as at end September 2015, above the threshold of 5.0 per cent with an adverse effect on banking sector asset quality.

It should be noted that, in one of its FSR issued five years ago, in 2011, the BOT admitted that the upturn in the ratio of NPLs needed to be monitored carefully, and embarked on a process to update its legal and regulatory framework for the banking and financial sector.

However, despite the enactment of various legislation and the ongoing efforts by the BOT to underscore the importance of credit recovery, NPLs are, especially in view of Tanzania’s fiscal deficits, still a major concern to not only banks as noted above, but also to taxpayers and the general public (depositors), out of whose deposit funds loans are disbursed.

A high stock of NPLs in banks’ balance sheets can lead to taxpayers’ money being used to bail-out banks, or else depositors would have to suffer financial losses.

This could hurt confidence in the country’s financial and economic system. Because the development of the banking and financial sector is crucial to the endurance of the Tanzanian economy, Jacqueline Woiso, Deputy CEO of Bank M (Tanzania) Limited, agrees that the level of NPL’s must be brought down significantly.

“Maintaining a lower level of NPLs, preferably far below the 5.0 per cent threshold, not only allows banks to expand their lending activities for supporting development plans and minimize the chances of insolvency and bankruptcy, but also safeguards depositors’ funds and promotes a stable and efficient banking and financial system.” In this regard, the government of Tanzania, working together with the BOT, could introduce clearer, more rigorous, and more explicit measures to help banks recover their NPLs from defaulting companies and individuals, and revivify lending to economically viable Tanzanian businesses, projects or investment activities. One such measure would be for the reintroduction of foreclosure legislation.

Simply defined, foreclosure is the institution of legal proceedings to transfer title or ownership of a property mortgaged to the bank as a security for a loan to a facility in the name of the bank.

The legislation could require that banks issue a foreclosure notice as a first step and; if not complied with, file an application in court for an Order to foreclose on the mortgaged property or charge in respect of matured or expired loans and loans which are not eligible for extension, renewal, roll-over, and renegotiation or restructuring.

Courts could issue an Order to foreclose only if the mortgaged property or charge was duly registered with the Ministry of Lands, Housing and Human Settlements Development or the Business Registration and Licensing Agency.

Furthermore, it would be a prudent requirement for banks to report foreclosed assets to the BOT and to seek a time frame within which to sell the assets.

Foreclosure however, as David Mukaru, General Manager (Credit) at Equity Bank (Tanzania) Limited, says, is without challenges: “Since foreclosure could be an undesirable measure from a bank’s standpoint due to; in part, the possibility of prolonged legal proceedings ensuing, banks should resort to foreclosure only as a last recourse when it would have been established that the borrower is either unable, or unwilling, to repay the loan”.

By and large, Mr. Mukaru believes that “if implemented well, foreclosure could generally be seen as an effective measure to enforce recovery of banks’ NPL’s owed by Tanzanian companies and individuals”.

Apart from the reintroduction of foreclosure legislation, the BOT could introduce the “strategic debt restructuring” measure, whereby banks would be allowed, at the time of the initial restructuring, to include, in loan restructuring agreements with borrower entities, an option to convert the whole or a part of the loan and interest outstanding into a 51 per cent (or more) equity stake and to bring in, as soon as possible, ‘new promoters’ in entities defaulting on their debt commitments agreed under restructuring plans.

The new promoters should in no way be related to the borrower companies, and it would be sagacious for the BOT to relax the measure from regulatory ceilings or restrictions on capital market exposures, investments, and intra-group exposures.

Likewise, banks acquiring shares of companies listed on the Dar es Salaam Stock Exchange (DSE), and under restructuring could be exempted by the Capital Markets and Securities Authority (CMSA), from certain disclosure requirements and from making open offers.

With strategic debt restructuring, a committee formed by lenders of the defaulting company could closely monitor the company’s performance and, if necessary, appoint a new management to replace the existing one.

If shareholders and directors of a defaulting company get the message that they could lose control over their company, repayment culture and credit management could improve.

In reality, this would provide more funds to lend to business and industry in Tanzania. Furthermore, if a smooth cycle of lending and recovery went on, the Tanzanian economy would grow.

In this process, strategic debt restructuring would have a huge role to play in the recovery of banks’ NPL’s. Nevertheless, banks’ control of the acquired company comes with the responsibility to run the company efficiently and effectively.

In light of this, Isidore Shirima, Principal Consultant at FK EconoConsult says, “banks might be apprehensive [given the fact that the business of banks is not to run companies, but to lend money], and understandably so, that they don’t have the dynamism, internal technical expertise and know-how to manage a large company”.

As an alternative, Mr. Shirima suggests that, “banks could use the existing management to run the companies, but with more external monitoring and supervision.” This could afford opportunities for Tanzanian corporate lawyers, specialist debt advisers and interim directors to support banks, as long as professional liability issues are properly addressed.

Other practical challenges that banks might grapple with include lack of, or little, cooperation by the trade unions of Tanzania; as well as, finding new promoters (investors) to buy the 51 percent or more equity stake acquired in the defaulting companies. For these reasons, unless a disposal is assured, banks might not want to immediately exercise the option of strategic debt restructuring.

Instead, like in the case of foreclosures, the option should be resorted to only as a last recourse when it has become clear that repayment of the loan can no longer be expected.

Executed well, strategic debt restructuring could ultimately boost the bargaining power of banks during loan restructuring negotiations and ensure that defaulting companies comply with their restructuring plans. “This would be a key reform for helping resolve stress in the banking system, and improve cash flows for companies,” notes Mr Shirima.

Nevertheless, such strategic restructuring should be done at a “fair value” and not lower than the “face value” for the shares. The existing regulations on debt restructuring in Tanzania do not make it easy for banks to take control over defaulting companies.

Thus, by making banks majority owners and replacing the existing management and therefore giving banks the power to turnaround the ailing company by making it financially viable and then selling their stake to an investor as a way to recover their money, it is hoped that willfully defaulting companies would be endeared to better credit compliance and responsible management and; as a result, ensure better corporate governance structure in the companies.

All the same, there are bound to be difficulties in introducing strategic debt restructuring and reintroducing foreclosure legislation, and this article has not exhausted all the difficulties.

Accordingly, at this moment when banks are facing challenges to recover NPL’s, organizing a workshop, under the joint auspices of the BOT and the Tanzania Bankers Association, could create a powerful opportunity to understand how these measures could be precisely implemented and the difficulties so that appropriate regulations and guidelines could be developed by the government through the BOT.

Finally, comprehensive and holistic legislative reform towards a healthier, more vibrant and more sound banking and financial system could be a long time coming, yet given the fact that banks continue to struggle with a surge in NPL provisions – which are a drag on Tanzanian banks’ profitability and a negation of new lending activities – Dr. John Magufuli’s government, which was voted into power last November, must rally behind the BOT Governor, to strengthen the value of the shilling and improve the economy and; in the process, lower interest rates.

This would allow Tanzanian enterprises and individuals in business to improve their cash flows and finances thereby creating a positive impact on economic activities, primarily due to the increase of availability of affordable, potential of funding.

The author, Paul Kibuuka, is the managing partner of Kibuuka Law Chambers. Email: paul.kibuuka@ kibuukalaw.com

Article source: http://dailynews.co.tz/index.php/features/47393-fresh-perspectives-on-reducing-nonperforming-loans-in-banking-sector

Park County shooting suspect Martin Wirth was fighting eviction, had run for state office

DENVER – The man suspected of shooting three Park County Sheriff’s Office deputies wrote on Facebook just last month that  “I am a high value target” and “cops want me dead.”

Martin Wirth titled a Facebook post last month, “Cops draw guns on former Senate candidate for attempting to purchase car insurance.”

Wirth had run for office in 2014.

After six long paragraphs in the Facebook post dated Jan. 22, he said, “One cop repeatedly punched my face and knocked two of my teeth out after others piled on. This was after aiming loaded pistols while screaming threats at me. I may have provoked them with a finger or gave them the skunk eye. Then I turned my back to go home. They were about to open fire.”

Wirth said, “It’s better to be shot in the back while unarmed because the coroner will usually record that as a homicide.”

Wirth admitted in the post that his driver’s license had been revoked because he refused to pay for a speeding ticket. That wasn’t the only thing he refused to pay. He refused to pay his mortgage company.

Financial woes likely contributed to the legal action to evict him from the ranch home at 36 Iris Drive in Bailey, where he’d lived in since about 1998.

In 2008, a debt-collection firm called Asset Acceptance LLC won a $12,292 judgment against Wirth, court records state. In 2006, North Star Capital Acquisition LLC won a $14,908 judgment against him.

Park County assessor records indicate that Nationstar Mortgage LLC owned the home until it was sold in early 2014 to Federal National Mortgage Association, known as Fannie Mae.

Fannie Mae filed the eviction case against Wirth in April 2014. 

At one point, the Colorado Foreclosure Resistance Coalition even wrote a letter to the Park County Sheriff saying, “Members of the Colorado Foreclosure Resistance Coalition, Occupy Denver and MoveOn.org Denver Metro will be on the property in a NON-VIOLENT FORECLOSURE RESISTANCE ACTION to support Mr. Wirth and our constitutional rights.”

The group’s letter asked the sheriff, “Please do not evict Mr. Wirth until he has had full opportunity to be heard in court.”

That letter was sent in the summer of 2014.

The website said the judge hearing Wirth’s case dismissed it.

Trouble with the law and money problems

Wirth had scrapes with the law and money troubles that lead to multi-thousand-dollar judgments against him.

At the time of the shootout, he had a pending court case for eluding a police officer, obstructing law enforcement and driving under restraint during a Jan. 20 incident, according to court records. Park County deputies issued him a summons in that case.

In 2004, Wirth had a 2004 driving while ability impaired conviction. He received a suspended sentenced of 355 days in jail and was ordered to serve 10 days in jail, records state. In 2005, his probation was revoked and then reinstated to one year of probation.

Court records show that a Platte County School District board member obtained a permanent restraining order in 2005 which prohibited Wirth from contacting him. Details on why the man requested the order were not immediately available.

According to a January 20, 2016 report by the Jefferson County Sheriff’s office, Wirth expressed hostility toward law enforcement after he was denied insurance.  

The report notes, as Wirth was leaving the State Farm insurance officer in Conifer, he said something to the effect of: “I should just get my gun and shoot the first cop I see!” A concerned employee then called the Jefferson County Sheriff’s Office.              

Less than an hour after making that comment, deputies followed Wirth to his home. A deputy tackled him after he wouldn’t stop to meet with them.

Wirth also suffered from an anxiety attack and broke his dentures during the confrontation.

Wirth ran for office

At the same time he was fighting the eviction, Wirth ran for office. He ran as the Green Party candidate for State Senate District 2 in 2014.

Wirth got 25 percent of the vote with 13,019 votes. He lost to Republican Kevin Grantham who still holds the seat.

Wirth said he spent his “entire personal fortune of about $380″ to run for office.

Joined Black Lives Matter protests

Wirth’s Facebook page photos and comments show he participated in several Denver demonstrations in late 2014 involving the Black Lives Matter movement. They included “die-ins” where people fell to the ground in protests against the deaths of black men in confrontations with white police officers in the United States. The demonstrations erupted around the country after Michael Brown, an unarmed black teenager, was shot and killed on Aug. 9, 2014, by a white police officer, in Ferguson, Mo., a suburb of St. Louis.

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Article source: http://www.thedenverchannel.com/news/local-news/park-county-shooting-suspect-martin-wirth-was-fighting-foreclosure-of-park-county-home

Hope Place nears reality: ‘I will not stop until we have a place for every child and teenager to stay’ – Daytona Beach News

DAYTONA BEACH — While the disagreement between the city and county governments over funding for a proposed homeless shelter for adults drags on, an idea to turn a vacant elementary school into a refuge for unsheltered kids and their parents is speeding toward reality.

On Thursday, the Volusia County Council will vote on providing more than $1 million to set the children’s shelter project in motion. And in coming weeks, council members are expected to approve giving another $3.5 million to transform the old Hurst Elementary School into an assistance center that will provide families and teens on their own a temporary place to stay and an array of help to get back on their feet.

The 55,000-square-foot assistance center would be called Hope Place. It could house 300 people and might open in a year or less.

“It’s the right thing to do,” said County Manager Jim Dinneen.

“Every fraction of the homeless population is important, but when it involves kids, that’s as important as it comes,” said County Councilman Josh Wagner.

The proposal ready for a vote this week calls for the county to buy the school property just north of Daytona Beach for $200,000 and also cover the $10,700 survey and title insurance costs. That’s a bargain because the land is valued at $182,700 and the 1961 buildings are valued at $1.3 million, according to Volusia County property records.

The deal would also require the county to offer the school district an $800,000 interest-free loan that would be used to develop a new place for school employee training that’s currently done year-round in the old Hurst buildings.

This spring, County Council members would also have to vote to rezone the sprawling property west of Nova Road, and then donate to Halifax Urban Ministries the land, buildings and $3.5 million for repairs and renovations. The nonprofit Halifax Urban Ministries, which provides help to Volusia’s homeless in various corners of the county, would become the owner and operator of Hope Place by the end of June.

The School Board is tentatively scheduled to vote at its March 15 meeting on a contract that would lock in the deal, said Volusia County Superintendent of Schools Tom Russell. Russell noted that the school district would have the option to take the $800,000 loan, but wouldn’t be obligated to use the money that would have to be repaid by October 2019.

The school system still uses a maintenance building at Hurst Elementary, and would be able to continue that under the deal. The staff training at the Wright Street school, however, would cease in September and relocate to county government buildings free of charge for three years until a permanent location is finalized.

Last year, the Volusia County school system identified more than 2,300 of its students as homeless. Russell said the district wants to help pare that number as much as possible.

“We want the best for our students and their families,” he said.

With hopes high for what can be accomplished at Hope Place, some in the community have suggested more vacant schools should become additional homeless shelters. But that would be impossible, Russell said, since the district’s last vacant school has been sold.

In addition to Russell and Dinneen, the force behind Hope Place is Halifax Urban Ministries Executive Director Mark Geallis and Forough Hosseini, who has been heavily involved in helping struggling kids and their parents through Food Brings Hope and other local agencies.

They see the complex of 55-year-old buildings as a place with the power to turn around thousands of troubled lives. Dinneen, who’s been skeptical of aspects of a proposed homeless shelter for adults, has called Hope Place “the best opportunity we’ve ever seen.”

“This is the first program I’ve seen that’s community-wide and self-sustaining,” Dinneen said recently.

Hope Place is completely separate from the three-year-old effort to create a homeless shelter near the Volusia County Branch Jail for adults who are on the streets alone. A year ago, the county offered to provide land and up to $4 million for construction of the adult shelter provided operating costs are covered by city governments or some other non-county source.

With that operating money still not lined up early this year, the County Council agreed that if the Daytona Beach City Commission didn’t have a solid plan in place by Thursday to cover the estimated $1.6 million in annual operating costs, the county’s offer for land and cash for the adults-only shelter would be withdrawn. Daytona doesn’t appear to have the money locked in, and some of its elected leaders have called the deadline “arbitrary” and signaled they’re ignoring it.

The Daytona Beach City Commission meets Wednesday, but there are no items on its agenda regarding the deadline. The deadline isn’t mentioned on Thursday’s County Council agenda, either.

BIRTH OF HOPE PLACE

The idea to use Hurst Elementary goes back to the fall of 2012, when former Halifax Urban Ministries Executive Director Troy Ray was looking for a place to relocate the family shelter he was running one block off of Ridgewood Avenue in an urban Daytona Beach neighborhood saddled with crime and poverty. 

Close to 150 homeless families have turned down a chance to stay at that existing Halifax Urban Ministries shelter because they didn’t feel comfortable living in the neighborhood and being around people who’ve been on the streets for years and use services in the same complex of buildings, Geallis said.

After Ray spotted Hurst Elementary — located in a quieter, more residential area north of LPGA Boulevard — he and Hosseini started talking with the school district about a new life for the place that hasn’t been used to teach children for several years.

Hope Place will have the capacity to help three times the number of people who can be accommodated at the Halifax Urban Ministries shelter, which will eventually close if Hope Place comes to be.

The parents and teens who want to stay at Hope Place would need to contact Halifax Urban Ministries first, and pass both a drug screening and criminal background check.

Residents would work with case managers who would aim to get them living independently again within two or three months.

One of the nine buildings would be dedicated to emergency shelter for more than 100 people to start, and in the future that could expand to more emergency beds in another one of the buildings. A third structure on site would have 10 apartments for families and space for 32 teenagers on their own.

The facility would also include a medical clinic overseen by Halifax Health Medical Center. Other buildings would be used for pre-kindergarten classes, adult classes on things such as creating a resume, a cafeteria, family TV room, laundry room and 20 computers.

For kids, there’s a playground, baseball diamond, basketball court and plenty of open land on the 15-acre site to run around and play. Geallis said all of the Hurst buildings will get new roofs, and two of the former classroom wings will be gutted and rewired with upgrades that will include adding Wi-Fi.

There’s hope of using federal funds to buy and renovate the dozens of homes in the surrounding neighborhood that are in foreclosure, and selling or renting those homes to the families who stay at Hope Place.

‘COLLABORATIVE EFFORT’

Wagner, who was 13 when his mother suddenly became a struggling single parent, doesn’t flinch at the county’s proposed expenditures.

“Not doing anything is a lot of money,” Wagner said. “It’s an investment that will bring many, many returns.”

Project leaders hope local businesses will collectively donate $1 million, and the interest that money earns could be used to help run Hope Place. Geallis estimates he’ll need about $530,000 per year for operating costs.

After years of countless meetings and phone calls, Hosseini is happy to see plans falling into place.

“It’s an exciting time for us after all the years of working on this,” said Hosseini, who is the executive vice president of information systems for ICI Homes.

Hosseini’s ultimate goal is a huge one. In 10 years, she hopes the school-turned-assistance-center will wipe out the epidemic of homeless children in Volusia County. 

“Who doesn’t want to help homeless children?” asked Hosseini, who also chairs the Daytona State College Board of Trustees and is a member of the United Way Foundation Board. ”I will not stop until we have a place for every child and teenager to stay.”

Randy Croy, the former head of Serenity House, hopes for good things to come out of the little red brick school buildings.

“I think it’s fantastic that our community seems to be rallying behind a concrete plan and have a location that seems to be acceptable to everyone,” said Croy, who along with two other former heads of local nonprofits that helped the unsheltered, has been offering suggestions to help Volusia’s adult homeless.

“It’s a wonderful, collaborative effort that seems to be a model that could be used for single adult homeless,” he said. “I’m just really impressed by it.”

Article source: http://www.news-journalonline.com/article/20160227/NEWS/160229507