The coronavirus pandemic has placed enormous stress on low-income homeowners. According to Black Knight, 2020 ended with 1.7 million more seriously delinquent mortgages than at the start of the year. In “The State of the Nation’s Housing 2020,” the Joint Center for Housing Studies at Harvard University reports that Hispanic/Latino households are the most likely to be behind on mortgage payments, followed by Black, Asian and multiracial households.
Christie Peale is one of the nonprofit leaders grappling with this crisis. As executive director of the Center for NYC Neighborhoods, Christie leads an agency devoted to protecting affordable homeownership in New York. Created in the wake of the 2008 subprime mortgage crisis, the center is one of the largest nonprofit organizations in the country helping homeowners at risk of foreclosure.
I talked to Christie by phone not long after President Joe Biden signed an executive order extending a federal moratorium on evictions and foreclosures. What follows is an edited transcript of our conversation.
Berman: What is your sense, one year into the COVID crisis, of what’s going on with the housing market in New York?
Peale: We are laser-focused on home ownership. When we think about the housing market, we’re thinking about the impacts of a “K”-shaped recovery. What that has meant is that a lot of the people who are able to work remotely and who still have jobs are taking advantage of low interest rates. A lot of people are refinancing, a lot of people are buying. And so that’s been propping up the purchase housing market from a price perspective, in a way that people did not expect.
The other side of the “K” is the folks who have been falling behind on their mortgages or who are in mortgage forbearance, which allows them to pause payment for about a year. The federal government enacted the payment pauses as part of the CARES Act, and so it applies to FHA-backed mortgages and mortgages where Fannie Mae and Freddie Mac are the investors. That’s about 60% of the mortgage market. But it’s not 100%. That means that there are a lot of people who have mortgages that are in much more challenging circumstances. It’s been very uneven and very challenging for consumers to navigate.
A lot of the people who are in forbearance say that they are unsure about whether or not they’re going to be able to restart their mortgage payments. We are facing so much uncertainty. We are bracing for a tsunami that we think is coming in terms of foreclosures. We don’t know how big it is going to be and we don’t know exactly when it’s going to come, but we feel the vibrations. It’s coming.
Berman: The Biden Administration recently extended the foreclosure moratorium …
Peale: Let’s talk about the moratorium. What the moratoriums do, for both eviction and foreclosure, is prevent you from being thrown out of your house. Whether you’re a renter or an owner, you can’t get thrown out, which is fantastic. But it doesn’t really address either the unpaid rent or your unpaid mortgage payments. A lot of the way our legal services partners get connected to people in need is through the court process, but the courts have been completely shut down since the middle of March. No foreclosures have been filed, which is good, but it has been really challenging to reach out to folks and get them engaged in services.
Berman: Do you have ideas that you’re trying to promote for what happens after the moratoriums?
Peale: The biggest thing that we’re pushing right now on a federal level is asking for homeowner relief to be included in the recovery package. The Biden plan acknowledges that 10 million homeowners are struggling to preserve their homes, but there are no financial resources in the plan to help them. What we’re pushing for is a homeowner assistance fund that is modeled on the Hardest Hit Fund from the last foreclosure crisis. And that funding would be used to help people get current on their mortgage, to restructure their mortgage, and to negotiate a payoff with their servicer. The idea is to give them some bargaining power so that they’ll be able to get back into an affordable payment plan.
Right now, what’s happening is that people are saying, “Well, everybody can just shift their missed payments to the back of the mortgage.” This means mortgage terms are going to be extended. OK, that’s fine, but that only works if the income that you lost has been recovered 100%, right? A lot of places are also asking people to make bullet payments at the end of the forbearance period, which is just impossible for a lot of people. We heard of a homeowner this week who was being asked to pay $10,000 at the end of her forbearance period. This is somebody who has lost income. It’s just impossible.
Berman: You recently launched a Black home ownership project that underlines the importance of home ownership to closing the racial wealth gap. What are you trying to do with that project?
Peale: Our focus on the racial home ownership gap goes back to the beginning of the financial crisis, where we saw that in Queens alone there were over 22,000 fewer Black homeowners between 2007 and 2017. Brooklyn had 5,000 fewer Black homeowners. Looking at those numbers, it became very clear to us that our mission of promoting and protecting affordable home ownership had to be strategically deployed to increase the number of Black homeowners in New York. There’s a real injustice here that comes from redlining, predatory lending, and deed theft schemes that have really been concentrated in certain neighborhoods in Southeast Queens, Brooklyn, and the Bronx that have a high concentration of low-income homeowners.
Our goal, from a policy perspective, is to think about what we need to be pushing on the city/state level to ensure equal access in home purchasing and home lending. At a programmatic level, we also want to look at estate planning and other services that target Black homeowners who want to pass on their homes and build inter-generational wealth. I think the question of who gets to own in a high-cost, high-value market like New York is really critical. We’re really interested in engaging a lot of the folks running for elected office in this next cycle around their visions for promoting racial equity in home ownership.
Berman: My sense is that there’s a lot of anti-development sentiment in the nonprofit community. I’m not an expert in this area, but I don’t really understand how you can expand home ownership in New York without significant real estate development. I’m curious to hear how you think about that.
Peale: I think it’s a big city and there are a lot of different opinions. When you talk to 10 different New Yorkers, you’re going to get 10 different opinions about development. I think at least one of those New Yorkers will say, “I would like to be able to buy a home for myself, or I would like my adult child to be able to afford a co-op or a condo here.”
A lot of affordable housing development is driven by the financing tools we have available. And often, those financing tools don’t necessarily meet the needs or the expectations of community members. That can translate into negative feelings about development as a whole. If developers are approaching buildable lots from the perspective of highest and best use, they’re going to ask for the highest rents they can get, and that is usually way more than local residents can afford. I think there are some structural problems in how we approach real estate development in the city.
Now, more than ever, we can also see how dependent we are on property tax revenue in this city. And that’s been a challenging needle for us to thread in the affordable home ownership space: when property values go up, it increases costs for families whose incomes have not gone up commensurately. It’s a conundrum that we haven’t really thought about how to solve.
Berman: Another thing that has been in the news recently is the problem of senior homeowners getting scammed. Is there any indication that that’s gone up over the past year?
Peale: There’s no scam index, unfortunately. But what I would say is that after every disaster, we see a lot of this activity. After the financial crisis, there were mortgage modification scammers. After Hurricane Sandy, there were contracting scammers. I’ve been hearing recently about vaccine scams. It just feels like every moment of disaster brings out predatory actors who try to take advantage of our most vulnerable neighbors. And I think that the challenge for our senior neighbors is that they have less access to digital tools. They prefer paper processes and one-on-one engagement. During the pandemic, it has been really hard to maintain the same level of engagement that we had when we could talk to folks in senior centers and in other places.
Berman: You run a complicated organization. How do you get your staff on the same page in terms of how they describe the work of the agency?
Peale: Getting everybody on the same page is incredibly challenging. Our three approaches are inter-related, in that we provide access to direct services for folks, we provide homeowners with direct financial assistance, and then we do advocacy and policy work to improve resources available to homeowners. I think we’ve talked more and more about how those three interventions are mutually dependent upon each other. It’s much harder to do this work with just one of those three. If it’s just services without the financial intervention, then you’re relying on the banks and the mortgage servicers to provide all the relief. And if it’s just services without the public policy, then you’re always fighting against the same problem.
Berman: Talk to me a little bit about stepping up to being the executive director of an organization. I was surprised, psychologically, what a big jump it felt like when I made that move. What did it feel like for you?
Peale: I have to admit that it was something I had sworn I was never going to do. Two things about being an executive director seemed particularly intimidating – and they still feel hard, to be honest. First is the constant fundraising. And then there is how much communication leadership requires. You have to say what you’re doing and why you’re doing it. And you have to say it over and over – to your staff, to your board, to your funders. You’re constantly communicating about what you’re doing and why.
Berman: Has your approach to leadership changed over the nine years that you’ve been running the organization?
Peale: I feel like a lot of us think leadership looks like X, and that we need to do that to be a leader. And so being able to develop my own leadership style that feels authentic and genuine has been very important and hard to do. I’ve felt very lucky to have the opportunity to grow within the role. Both the board and the staff have allowed me to grow and get my footing. And there’s still so much that I don’t know how to do and so much I have to learn. As our work has gotten more complex, it requires me to stretch my brain.
Berman: There’s been a lot of focus recently on the need to improve the diversity of nonprofit leadership. What do you think the current generation of executive directors should be doing to help groom the next generation of executive leadership and help ensure that it is more diverse?
Peale: There’s a lot that we need to do. For example, we need to make sure that we are able to pay competitive salaries. I think we need to make sure that we’re looking not just for folks within our industry but to attract talent from many different industries. I think we need more resources. We have a tremendous opportunity to make the tent bigger and create more seats at the table.