Privacy breaches offer ‘teaching moment’ for financial education

By Pam Bailey, NeighborWorks America blogger

One of the most effective ways to stay relevant to your community, build support and attract positive attention is to tie your services and message into “hot topics” in the media and around the kitchen table. One of those hot topics these days is the security of personal data, triggered by the theft of credit and debit card numbers and the personal information — including names, email addresses, phone numbers and home addresses — of as many as 70 million Target customers.

This conquest of hackers of corporate America made big news. However, while it was indeed one of the biggest such breaches of privacy in U.S. history, it was only the latest in an increasing trend. Also last year, the Barnes & Noble bookstore chain reported that someone had planted software in PIN-pad devices at 63 of its stores in nine states, stealing data from cards’ magnetic stripes when swiped. And it’s not just chain stores that are at risk. In January, the U.S. district attorney in Manhattan announced indictments of 13 people for installing Bluetooth-enabled, banking-data-gobbling skimmers at gas stations.

Participants listen closely in one of NBRV's financial-
education classes. 

NeighborWorks Blackstone River Valley (Woonsocket, RI) recognizes a “teaching moment” when it sees one. Drawing on the expertise of its financial-education coaches, it responded with a list of tips for preventing identity theft on its website and in its e-newsletter, which it sent to its 1,000-plus subscribers as well as to more than 1,000 clients. Readers are directed to contact the NBRV team for a personal credit analysis. (Now, that’s a newsworthy call to action!)

“How to protect personal data has always been an important part of our counseling program,” says Ainsley Morisseau Cantoral, director of resource development and communications for NWBRV. “But with identity theft in the news, our homeownership staff and I saw an opportunity to reach out to a broader audience.”

Cantoral is passionate about her organization’s outreach programs because she knows what it feels like to be faced with a financial crisis. Several years ago, someone stole her Social Security number and used it to obtain a credit card, putting her into serious debt. Her family also had experience the foreclosure crisis firsthand.  Working to promote NWBRV's Homeownership Center is an ideal “match” for her.

Ten years ago, NWBRV was among the first NeighborWorks network members to open a homeownership center.  A credit review was a standard element of the coaching the organization provided potential homeowners. However, four years ago, NWBRV began broadening its financial-education services in response to a worsening economy in which credit was becoming more difficult to understand and improve for a broader population.  And in 2011, the Local Initiatives Support Corporation (LISC) chose NWBRV as one of the partner agencies to run a state Financial Opportunity Center. Through the center, residents can access employment counseling, personal financial-management assistance and help in accessing public benefits such as food stamps and health care insurance. Recently, to serve a greater number of residents, NWBRV decided to supplement the center’s four-week-long financial-management series with six, stand-alone, one-hour workshops on specific topics such as improving your credit score.

“When we were brainstorming, it became clear that our clients’ needs are very diverse, and the series couldn't do justice to them all,” explains Cantoral. “For example, in one series, the participants might include a homeowner facing foreclosure mitigation, someone transitioning to rental unit from the local homeless shelter, and another individual preparing to buy a home for the first time. Their financial coaching needs are very different but our curriculum was trying to be ‘everything to everybody.’"

Data security will be among those topics, as NWBRV continues to adapt to respond to the changing needs and concerns of its community.

Tax time is ideal platform for financial-education outreach

It's the time when residents across the country think about preparing their tax filings -- and that often translates into stress for a lot of people, especially new homebuyers facing the task of itemizing for the first time. For organizations that offer financial education and counseling programs, it's an ideal opportunity to build your community visibility and reach new clients. The op-ed below was issued nationally by NeighborWorks America, but could easily be adapted for placement in local media, newsletters, etc. 

Don't be 'taken' this tax season

By Marietta Rodriguez, vice president of mortgage programs for NeighborWorks America

Marietta Rodriguez

All of the data aren't in yet for 2013, but it's safe to assume that hundreds of thousands of people became first-time homeowners last year. Becoming a homeowner also means that many people for the first time will find it beneficial to itemize their tax returns. The advertisements about using a paid, professional service for completing and filing tax forms are filling the airwaves, newspapers and other media. Most of these advertisements promise friendly and fast service. But few if any of these ads disclose the cost.

According to a study by the National Society of Accountants, the average cost of tax-preparation services in 2012 individuals without itemized deductions was $143 for a 1040 form and an accompanying state tax form. The same survey found that the cost to have a longer, itemized tax return completed -- required by most homeowners -- was $246.

To put those costs in the context of everyday household expenses, $246 is slightly above the average monthly winter utility bill forecast by the U.S. Energy Information Administration.

How to avoid the cost of tax preparation fees

But taxes are complicated, especially for consumers who have never itemized deductions before, which is usually the case for first-time homeowners. So, isn't using a professional tax preparer a good idea?

It is a good idea to seek trained help, especially if it is available at little to no cost. And that kind of help is available for many people, especially those with low- and moderate incomes, whether homeowners or not.

More than dozens of NeighborWorks organizations and their local partners are ready to work with taxpayers on their forms. NeighborWorks organizations and other community-based nonprofits offering tax preparation services typically do so as part of the Internal Revenue Service's Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. The VITA program is limited to people who make less than $51,000 -- about the median income in the United States -- while the TCE program is limited to filers who are 60 years or older.

In 2012, more than 92,000 people volunteered to help and more than 3.3 million returns were filed by all VITA sites around the country-- all at no cost.

The attraction of 'fast-money' tax services

Many advertisements for tax-prep services also promise fast refunds – a prospect that is particularly alluring to low-income individuals and first-time homebuyers. However, these refund advances or loans should be avoided.

The truth is, refunds from tax returns filed electronically are available  within a week or two, making the fees charged for on-the-spot "advances" of highly questionable value. According to an analysis of 2012 refund programs by the National Consumer Law Center, the average annual interest rate charged for a quick refund loan exceeds 100 percent. No homeowner would be willing to pay such a rate for a mortgage, and there's no reason anyone should pay that kind of  fee just to receive the money they earned.

So collect your W-2 and other financial documents for 2013 and head over to one of the hundreds of locations that offer free tax-prep services.  A list of locations can be found on the IRS website. It's worth it.

Redefining ‘renters vs. owners’ to ‘neighbors’

By Pam Bailey, NeighborWorks America blogger

Surveys show wide disparities between perceptions of renters vs. homeowners – some based on reality, and others that are not. Many of the problems could be alleviated, however, if more programs encouraged neighbor-to-neighbor social connections, rather than owners to renters.

That’s the aim of programs like NeighborCircles, sponsored by Lawrence (MA) CommunityWorks. The concept is simple: Residents recruited as “circle hosts” invite five to 10 neighbors – ideally from homes they can see from their own yards – to a series of three dinners over the course of a month, designed to both connect them to each other and unite them in a common project to improve their community.

“In 2008, about 75 percent of the houses in our neighborhoods were at some point in the foreclosure process. A lot of people left the community,” explains Spencer Buchholz, director of network organizing for Lawrence CommunityWorks. “I’d say that today, about 80 percent are renters, mixed in with the original homeowners.”

At one NeighborCircles, participants trace on a
map their families' journey to Lawrence, MA.

The first dinner, led by two facilitators trained by Buchholz’ team, is designed to build common bonds. The facilitators lead the group in an ice-breaker in which each person literally traces on a world map their family’s journey to Lawrence, MA. More than 70 percent of residents come from Latino immigrant families, originally from places as far flung as the Dominican Republic and Puerto Rico. “They tell each other how and why they got to Lawrence and what keeps them here,” explains Buchholz.

In the second and third meetings, circle participants discuss the quality of life in their neighborhood, the improvements they’d like to see and how they could join together in a project to accomplish one of those goals – whether it be a street clean-up, a petition to the city council to repair sidewalks or a meeting with the police department on neighborhood crime prevention.

“Our goal is to build social capital,” says Buchholz, adding that his team coordinates an average of about 12 circles a year – approximately 130 to date. “Now participants know who is across the street, and they can watch each other’s houses when someone is gone. It’s all about connection...finding common interests across the divide.”

The NeighborCircle concept is easy to adapt to other locales and situations, and Buchholz’ team has trained groups in states from Massachusetts to Arizona to implement their own.

Block club members work to improve neighborhood
conditions for children.

Taking a similar approach is Neighborhood Housing Services of Chicago, which works with community leaders (some of whom serve on the organization’s advisory council) to form block clubs, with leaders specifically trained to engage renters. One recent survey, for instance, found that while 61 percent of homeowners know their neighbors’ names, that’s true for only 39 percent of renters.

“Renters are usually not there permanently, and fixing up the property is the owner’s or manager’s responsibility. And they’re often not really encouraged to feel involved in any case,” explains Janece Simmons, neighborhood director for NHS of Chicago. “It’s the job of local organizations and our block club leaders to take a holistic approach in their outreach; after all, the neighborhood is where renters’ children walk and play too. They need to be included in planning activities like planning block club parties and improvement projects. Plus, for us, outreach is a great way to connect renters to the information and resources that can help prepare them to become homeowners someday.”

NHS of Chicago has been helping organize block clubs since 1975, and there are currently about 100 active groups in the Auburn-Gresham community, says Simmons -- many of which have been active for years. Representatives from each of the clubs meet monthly, giving new members the opportunity to learn from the “veterans,” as well as hear about grant opportunities, etc.

“Through the block clubs, homeowners have come to welcome renters’ involvement,” says Simmons. “And renters soon come to see that their participation makes a difference, for them and the community.”

Absentee owners often the root of ‘the renter problem’

By Pam Bailey, NeighborWorks America blogger

It’s a common perception among homeowners that neighborhoods go downhill once too many renters move in. Anecdotes abound of rental properties with peeling paint, dilapidated porches and other problems.

However, says William Rohe, director of the Center for Urban and Regional Studies at the University of North Carolina at Chapel Hill, “there's a lot of research to show that rental properties are kept up as well as homes, and when they're not, it's usually the landlord, not the renter, who is to blame.”

In the wake of the housing crisis, large numbers of buildings whose owners were facing foreclosure have been bought up by investors – with little incentive to keep them in tip-top shape, given the demand for affordable housing.

“In Silicon Valley (San Jose, CA), there isn’t much incentive to improve property (among absentee owners), because they can still command high rents,” says Matt Huerta, executive director of Neighborhood Housing Services of Silicon Valley, a member of the NeighborWork network. “It’s a huge issue, impacting every neighborhood.”

Huerta echoes the complaints of many nonprofit housing professionals, but what sets his organization apart is that the group decided to help renters – and the neighborhoods – bring owners to the table through a mediation program. The idea blossomed three years ago when NHS sent a team of resident volunteers to NeighborWorks America’s Community Leadership Institute. The team was challenged at the event to identify and develop an action plan to address a pressing local challenge, and they focused in on absentee owners.

The result is the Responsible Landlord Engagement Initiative (RLEI), a program that provides a forum to which residents and neighborhood organizations can take complaints about neglected property and irresponsible tenant/landlord behavior. RLEI staff investigates the charges, then finds and contacts the owner -- inviting the company or individual to collaborate on a solution, or face the consequences.

“Half of the time, the owners plead ignorance,” Huerta says. “Others immediately admit to the problems and are embarrassed – or, at the other extreme, deny there is an issue. We emphasize support and collaboration, but there are options to force action if needed – ranging from small claims court or class-action lawsuits, to the city attorney’s office in the case of serious code violations.”

This is a before-and-after photo, showing the unsightly mess at one rental
home before RLEI intervened, and the cleaner look after.

To date, the RLEI has accepted 21 cases, and for all of them, some degree of success has been achieved, although a few have required more than a year to fully resolve. For example, owners have improved safety by installing surveillance cameras and sensor lights, reduced blight by implementing better trash pick-up procedures and repairing structures, become more responsive to community concerns by replacing property managers and initiating neighborhood-involvement programs. One recent example of an RLEI success story is featured in a video on the NHS website.

A large part of that track record is due to the broad-based involvement in the steering committee that runs the RLEI, including representatives from NHS as well as United Neighborhoods of Santa Clara County (a coalition of more than 100 neighborhood groups), the Tri-County Apartment Assn., the Law Foundation of Silicon Valley, the city council, the mayor’s office, the police department and the local housing department.

The program has proved to be so popular that when the original funding from a city re-development agency was cut back, the NHS of Silicon Valley self-funded it, supplemented by individual city council members and a NeighborWorks America Impact Grant to assist with training for capacity-building. However, a new infusion of funds is hopefully coming early this year from a major foundation.

“More funding will enable us to build an online toolbox and database, so the program can be a model for others across the country,” says Huerta.

The next blog post will explore innovative ways to bring renters and homeowners together as "just neighbors."

Is there truth to those renter stereotypes?

By Pam Bailey, NeighborWorks America blogger

The national “ethos” that values homeownership over renting has a long history. On Dec. 2, 1931, for example, President Herbert Hoover said in an address to the White House Conference on Home Building and Homeownership, “[There is] the high ideal and aspiration that each family may pass their days in the home that they own…There can be no fear for a democracy or self-government or for liberty or freedom from homeowners, no matter how humble they may be.”

A white paper from the National Multi-Housing Council observes that today, its members encounter so much preference for homeowners that, “When an apartment community is proposed… local activists respond with NIMBY (not-in-my-backyard) complaints so frequently that some have suggested a better acronym might be BANANA (build absolutely nothing anywhere near anyone).”

Every renter is different, of course, just as are homeowners. So some renters – whether they live in an apartment building or single-family house -- don’t take care of their living environment or interact with their community as much as is ideal. (The consensus seems to be that a critical determinant is whether the planned stay is temporary or longer term.) As for impact of rental housing on property values, it depends on a lot of factors, such as the number of units, the characteristics of the tenants and the nature of the owners and management. But the facts don’t support broad generalizations.

Most studies in this arena have focused on clusters of rental housing -- such as apartment complexes -- and on lower-income tenants, rather than on scattered, individual rental homes. But the findings offer plenty of caution about buying into negative stereotypes related to either quality of community living or property values.

For example, the Joint Center for Housing Studies found several years ago that apartment residents – who represent the highest-density renters – are almost twice as likely to socialize with their neighbors as homeowners, and are just as likely to belong to structured social groups and to closely identify with the town or city in which they live. (The one area in which apartment residents significantly lagged homeowners in this study was voting in local elections.) It’s true that other studies have produced data suggesting that homeownership is associated with a better social environment, such as a lower crime rate, improved educational achievements among children and greater involvement in neighborhood organizations. However, these studies typically don’t control for confounding factors such as chronic unemployment. The bottom line: The picture is clearly mixed, with data available for arguments on both sides.

As for property values, a Boston study by the MIT Center for Real Estate concluded that, “the introduction of large-scale, high-density mixed-income rental developments in single-family neighborhoods does not affect the value of surrounding homes. The fear of potential asset-value loss among suburban homeowners is misplaced.” A presenter to Harvard’s Joint Center for Housing Studies’ Revisiting Rental Housing summit agreed, writing, “The fear that housing density will hurt property values seems to be primarily based on anecdotes. By contrast, most research has come to a different conclusion: In general, neither multifamily rental housing, nor low-income housing, causes neighboring property values to decline.”

Bernadette Orr, director of community building for NeighborWorks America, observes, “Most of our groups that work at the neighborhood level deal with these stereotypes and the resulting challenges in one way or another. That’s why our groups have gone in the direction of helping to support neighborhood associations instead of homeowners associations.”

Of course, anecdotes of the negative consequences of “the renters” abound. Even some of the nonprofit housing professionals interviewed for this series had such stories to tell from their own neighborhoods. Whatever your point of view or experience, however, renters are here to stay. The demand for affordable rental housing – homes or apartments – is growing. According to a December report from Harvard’s Joint Center for Housing Studies, American households are increasingly turned to the rental market for their housing. From 31 percent in 2004, the renter share of all U.S. households climbed to 35 percent in 2012, bringing the total number to 43 million by early 2013.  And they aren’t just young adults just out of college; a third are between the ages of 35 and 54.

So what can be done to bridge the divide between renters and owners? The next two installments of this blog will explore innovative solutions from member organizations. Check back daily to read the rest of the series, or sign up (see box, right) to receive new posts directly in your inbox.