Economy

Feb. 19, 2009

Transcript:

José Cárdenas: Good evening, I'm José Cárdenas. Welcome to "Horizonte." President Obama signs the stimulus package into law and here in Mesa, announces a plan to tackle the home mortgage foreclosure crisis. What it means for community organizations helping people in Arizona. Also in Eso Si Cultura the work of the crafty chica and her husband on display here in the Valley and we'll introduce you to a journalist now using his experiences to teach students about covering issues affecting Latinos. That's all coming up next on "Horizonte." Good evening and thank you for joining us. This week, President Barack Obama continued to tackle the economic meltdown by signing the $787 billion stimulus bill. He also rolled out a plan to keep families from losing their homes. Here is part of what he had to say about how the housing crisis has affected our economy.

President Barack Obama: The effects of crisis have reverberated across the financial markets. When the housing markets collapsed so did the availability of credit on which our economy depends. And as that credit has dried up; it's been harder for families to find affordable loans to purchase a car or tuition and harder for businesses to secure the capitol they need to expand and create jobs.

José Cárdenas: Joining me now to talk about what this means for organizations helping people in Arizona are David Adame, Chief Development Officer for Chicanos por la Causa and Terri Leon, Chief Operating Officer for Friendly House. Thank you for joining us on "Horizonte." David, you were here about a year ago talking about housing assistance at C.P.L.C., Chicanos por la Causa provides for residents in the Valley. How has that changed over the course of the year with the growing housing crisis?

David Adame: Definitely it's shifted 360 from being -- or 180, from being a pre-purchase, people trying to buy homes to now just phones ringing off the hooks for people looking for help as they get through the foreclosure problem we have in our economy today.

José Cárdenas: What are you doing in terms of helping people to prevent foreclosure?

David Adame: We're a H.U.D. certified counseling agency. What we can do is we can have the family come in and look through their documents or situation and work with the lenders and anyone involved in the home buying process or mortgage and work through and see if there's a solution we can figure out how to refinance the loan, reposition it or if we can't do that, how do we make it as easy as possible for the family to transition from knowing they're going to lose a home into another housing situation; like getting into a rental housing or other solutions, to help from being a homeless family.

José Cárdenas: Now as I understand, C.P.L.C. was one of the number of organizations that had some advance discussions with White House staff the plan that President Obama rolled out in Mesa and then you heard the specifics of the plan. What's your reaction?

David Adame: I'm very excited about the package overall. We need to do something quickly. I think the biggest thing about it, I think it's more proactive and dealing with folks that are currently -- current on their loan right now, but on the edge of potentially being at risk of going into delinquency. And they can't refinance their loan because, one, they're current, and two; probably the biggest problem is that they're most likely the value of the home is less than the current outstanding balance of the loan. So they can't get the refinancing. This will provide incentive for the lenders to work with the families and have the federal government provide some of that gap financing to help get people that refinance maybe just getting a low interest rate would help stabilize their particular situation. The other thing this program does is provides capital for the market, which is a big concern. It's been tough to get mortgages approved. There hasn't been the capital in the market. By having the treasury provide funding availability to Fannie and Freddie, that lessens the tightening of the capitol out there, relieves the stress to the mortgage companies to have that money to start making these loans and that's the biggest thing that I see out of this thing. Providing a break-through and being proactive. You still have the families under water or in delinquency for 90 days. In some cases we are not going to be able to do something but at least we can be proactive with folks that have the opportunity by maybe just a rate adjustment and allows the guidelines that the lenders have to work with, whether dealing with Fannie or Freddie or any other loan program. It provides that flexibility for them as an option provided that the numbers-- what would the cost of a foreclosure be versus trying to work with a family. If those numbers offset each other, dollar for dollar basis, the incentive is let's get the family in. The good thing about this is it provides the lender the incentive if we get somebody in and get them refinanced and they stay in, one, two, three, five years, the lender has also provided incentive to continue to keep track of that family and work with them. That's the big excitement for me, one, that we're doing something and two, that it's more proactive because a lot of calls and the families we get, they want to do something, they're trying to be proactive. But the problem is lenders can't deal with them because they're so bogged down with the regulations and bogged down with the people in the foreclosure process. This will provide the incentive to be proactive and get people to avoid -- the last thing we need it more stock in the market because if we continue to do that, as Obama said in his speech today, it's going to continue to diminish the market and have those ripple negative effects on our neighborhoods and our family and everybody else in this market.

José Cárdenas: Based on what you heard so far, you're a thumbs up on the proposal?

David Adame: I am a thumbs up, I am looking for more of the details he did reference in his speech today, more of the guideline details that will come out and that's the details we need to know, but as an agency, we're going to stay on top of it. We we're in the call with the Washington staff today with other agencies across the country to provide input on what the guidelines would be and we want to stay on top so we can educate our community on what's out there and how we can get them through the situation.

José Cárdenas: Terri, Friendly House is not directly involved in housing assistance but you do financial education. What does that consist of?

Terri Leon: Our financial literacy program works with adults and families in educating them about how the finance system works in this country. We talk to them about the importance of a good credit rating in order to purchase a home; the banking system in terms of checking and savings accounts and investment banking, and investments in retirement, and investing in their child's college education. All of those things so that they can help their families get to a level where they can enjoy the American dream.

José Cárdenas: And have you seen demand for those services grow?

Terri Leon: For the financial literary program, we really refer them because like David indicated, the majority of calls we receive are related to: how can you help me with my housing situation? We refer to agencies like Chicanos por la Causa that provide that kind of counseling service. We have seen an increased demand for bank needs like food and shelter. We've been able to assist people find affordable rental housing or housing where they can go so they're not homeless. So we have seen an increased demand for those and quite frankly, the demand has increased average from 12 to 15 requests for food boxes daily up to upward of 50 daily and the demand not only for us to be able to meet that -- we're not able to meet that demand completely. But throughout the city, Saint Mary's Food Bank and others are not able to keep up with the demand. It's a real crisis that we find ourselves in.

José Cárdenas: As I understand it, Friendly House has under consideration the development of programs to help with housing assistance.

Terri Leon: As an organization we're looking at going into housing counseling. The demand is so great, that we believe that we would be helping the community at large and we would primarily be focusing on the Spanish speaking community because that is primarily the community we serve.

José Cárdenas: As I understand it, organizations like Chicanos por la Causa have had to be creative in terms of financing for example. You're not necessarily looking to the banks to help you out. Can you explain that?

David Adame: I'd love to. I talked about the capital markets not being there. So as an agency, we try to do other developments that we can self generate revenue so we're not dependent on the state or other jurisdiction. As we try to do housing developments or commercial real estate developments and these are regular straight commercial type developments, the markets are not there. The banks, they have some money they're working through, but the markets are still tough; you can't get the type of financing you need. What we did was look to other partners to try to support us and a great partnership we have -- had for a long time, but really blossomed is State Farm Insurance, where they came to the table and without their help, we couldn't have done this new 40,000 square foot commercial development that's going to support our community and bring services that are needed in our community even in these economic times and that's where we needed to be creative and have creative corporations come to the table so we can still provide the needed services to our community.

José Cárdenas: Now, we've been focused on the housing proposals. Let's shift gears and talk about the stimulus bill and how that helps an organization like Friendly House.

Terri Leon: Friendly House for many, many years, since our inception has worked with job development, helping people find work, new arrivals to this country, find meaningful employment. This current fiscal year, which began July 1 in 2008, Friendly House lost 100% of its workforce development funding through our contract with the workforce investment act through the city of Phoenix. Because of the federal cuts that were brought down on them, as a result, we haven't been able to provide services to adults and the stimulus package does include workforce development and we're meeting with other nonprofit providers, as well as the city, developing a plan on how this program will be laid out and rolled out come -- when the funding becomes available which I believe is early March.

José Cárdenas: David, what does it mean for Chicanos por la Causa?

David Adame: It's trying to find out what the detail is and where we can match our lines of business and we operate 34 lines of business from economic development to prevention services to intervention services as domestic violence shelter. We're trying to find out the details where we can leverage and create innovative creative partnerships with such as State Farm or other business partners that we work with so we can use the money effectively and wisely and we're trying to make it where it's a value for value proposition. Whether we work with a business partner or the federal stimulus program, we want to make sure that there's a bottom line or other people say a win-win situation where we can provide the service, create revenues for us and continue our other social services but ultimately provide the best services to the community because the gap just continues to grow in the funding availability with, you know, banks merging and those types of things. It's challenging for us to raise these kinds of monies. When I used to get two checks from two different banks to support an effort we were doing, now that they've merged, I'm not getting the same amount and we're just trying to find a way where we can leverage these dollars and make it more than a one-time shot. What can we create that will be an ongoing creative service to our community.

José Cárdenas: Last topic Terri, the impacts of the budget cuts on Friendly House?

Terri Leon: We're looking at cuts in our charter school, we operate a k-8 charter school which receives funding from the state and we're looking at the cuts being made there, providing those educational services to children as well as we receive dollars from agency on aging that come from D.E.S. to our services for the elderly and physically disabled the home care services we provide and looking at cuts to our child protective services and parenting services we provide to families involved with child protective services and we're looking at significant cuts. We are in the process of evaluating the impact that's going to have on us as an organization in terms of staff layoffs and what are the scenarios to preserve as much as we can in terms of staff so that people don't go unemployed.

José Cárdenas: And I'm afraid we've run out of time, but David, Chief Development Officer for Chicanos por la Causa, and Terri, C.E.O. of Friendly House, thank you for joining us.

Terri and David: Thank you.