Scandal Leaves Lack Of Service In Its Wake

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With foreclosures continuing to devastate neighborhoods across the city, nonprofit organizations that provide default counseling services are deluged with calls for help. Last month alone, 2,185 new foreclosure proceedings began citywide. For groups such as Neighborhood Housing Services of New York and Margert Community Corporation, the work of helping homeowners negotiate with lenders is tedious, time-consuming and unending.
The ACORN scandal means it just got harder. The New York City office of the national group (Association of Community Organizations for Reform Now) that advocates for low- and moderate-income people is among the major providers of foreclosure counseling in the city. ACORN is also a major provider of free help in preparing tax returns. Much of that assistance is poised to disappear, now that the community organizing group is under attack after videos produced by a pair of conservative activists showed ACORN staff members giving advice to a purported prostitute and pimp on how to launder money from prostitution. (Those employees were fired, and ACORN enlisted former Massachusetts Attorney General Scott Harshbarger to conduct an independent inquiry of the group’s management and performance.)

In the uproar that followed a Sept. 14 article in the New York Post, federal, state and local governments cut off funds and legislators distanced themselves from an organization with deep roots in their districts.

New York state’s Division of Housing and Community Reinvestment froze current funding for NY ACORN Housing Company’s foreclosure prevention work pending an investigation, DHCR spokesman James Plastiras said. Losing the balance of the $365,000 contract – $243,400 – has a direct impact on how many struggling homeowners get help, said Ismene Speliotis, executive director of NY ACORN Housing Company.

A nonprofit developer that grew out of the larger community organizing group, but is independent from it, NY ACORN Housing Company has 1,300 foreclosure prevention cases in its 2009 database, Speliotis said. Not every case is active, but she said the lengthy database is a useful measure of how many people need help. The Center for New York City Neighborhoods, a nonprofit created in 2007 to coordinate foreclosure assistance, estimates it sent 10 percent of its referrals to the group.

“If you take an organization like ACORN housing off the table, the people feel it,” said Speliotis, who oversees a staff of nine housing counselors and administrative staff. She supervised the fired employees as well, but citing investigations by state Attorney General Andrew Cuomo and Brooklyn District Attorney Charles Hynes, Speliotis declined to discuss their behavior beyond saying that what she saw on the video bore no resemblance to her experience of their work. The group is not taking any new cases, but intends to continue pushing hard on the ones it has, she said. “We’re probably going to have to reconfigure the staff. We’re not ready to walk away from the work, but we can’t work for free. And the work needs to get done.”

The work is labor- and time-intensive: Calling unresponsive banks and loan servicers, trying to get them to accept payment plans and mortgage modifications for sinking homeowners, and attempting to put the brakes on foreclosure proceedings that routinely roll forward even as modification agreements are being worked out in accordance with federal foreclosure prevention initiatives.

“I’m hopeful that [the state freeze] is temporary. We’ve had situations where we’ve not had access to funds before and we’ve figured it out,” Speliotis said.

Michael Hickey, executive director of the Center for New York City Neighborhoods, says the coalition it has convened is able to take up the slack created by ACORN’s troubles. “It certainly has an impact, for a variety of reasons,” Hickey said. “But it is only one of 30 members of our nonprofit network.” The greater concern is what would happen if ACORN stopped working on foreclosure prevention altogether. He acknowledged that the scale of foreclosure crisis is “overwhelming” and all the Center’s partners are working at peak capacity.

One of those partners, Meghan Faux, co-director of the foreclosure prevention project at South Brooklyn Legal Services, said her group expects to see even greater demand without NY ACORN’s help. “There’s going to be an increase for all of us. It will be noticeable,” said Faux.

Ben Dulchin, executive director of the Association for Neighborhood and Housing Development, said cutting ACORN funding is not good for New York. “They are a creditable and important organization that does a lot of good, particularly on the housing front,” Dulchin said. “It’s counter-productive to our neighborhoods to have them lose funding.”

Not everyone agrees. ACORN critic Kevin Hassett, a senior fellow and director of economic policy studies at the conservative American Enterprise Institute think tank in Washington, wrote that the scandal and the organization’s sponsorship by congressional Democrats could be as “historically significant as Watergate.” Even so, Hassett allows that ACORN – a longtime favorite target of the right wing – may do some good work.

“It is sad really, that the more questionable things are hampering the important work until we find an alternative provider,” he said. As for who will pick up ACORN’s work helping homeowners who face foreclosure, Hassett suggests the banks might fill the gap themselves. “That kind of stuff is something one would think the lenders would take a serious interest in,” he said.

Center for New York City Neighborhoods’ Michael Hickey found that suggestion laughable – literally.

“What a really terrible idea!” he said of Hassett’s suggestion. “For a variety of conflict-of-interest reasons alone, the banks are the worst possible party to counsel homeowners.” The Center is working on a report that includes details about banks’ lack of cooperation in the settlement conferences that are part of foreclosure cases.

Default counseling is not the only ACORN work jeopardized by the scandal. Congress voted to bar federal funding for ACORN. If current grants to the national group are suspended – their legal status is unclear – ACORN will be forced to leave about $1 million on the table, said Jonathan Rosen, the New York spokesman. One of New York’s U.S. Senators, Charles Schumer, supported the ban, while the other, Kirsten Gillibrand, did not. While ACORN staff in the five boroughs say the move doesn’t impact their work, it will affect the national organization.

“This particular morass does have consequences that affect real people,” said Bertha Lewis, CEO and chief organizer of ACORN nationwide. “There are real faces, real human beings behind what is happening, which I see now as purely political.” Lewis calls the storm over the video out of proportion. “It is entirely unfair to look at one tiny period of time and just kind of throw away all the steady work that we’ve done all these years,” she said.

Lewis points to the New York affiliate’s campaign to keep Brooklyn’s affordable 5,881-unit Starrett City development from going market-rate; its lobbying in support of the 421-a program used to encourage real estate developers to set aside units for low-income people; and its record securing “economic multipliers” like food stamps and the Earned Income Tax Credit for 150,000 New Yorkers over the past five years as more indicative of the group’s contributions to the city. Under Lewis’ leadership, ACORN also supported the controversial Atlantic Yards mega-development because it included plans for affordable housing, a move that drew the ire of some usual allies.

Meanwhile, City Council grants for the housing company ($180,000), the organizing wing of ACORN ($20,000), the high school the group runs ($3,500) and the New York Agency for Community Affairs, another ACORN relative ($20,000), are under review, according to Council press secretary Maria Alvarado. That means ACORN’s campaigns against education budget cuts, in favor of affordable housing in major redevelopment projects like Willets Point, and for living-wage jobs will operate under tighter constraints, said Ann Sullivan, organizing coordinator for the New York affiliate.

But the scandal’s fallout may be felt deepest in the pocketbooks of low-income New Yorkers. Working with the IRS, ACORN has for the past six years offered free tax preparation in certain neighborhoods. In the wake of the online videos, the IRS dropped ACORN as a partner in its Volunteer Income Tax Assistance program. “In light of recent events, the IRS has decided to terminate its relationship with ACORN,” said Kevin McKeon, spokesman for the IRS New York office. Last year the group prepared 5,436 returns, netting $5.1 million in tax refunds for low-income New Yorkers, much of it in the form of the Earned Income Tax Credit, according to ACORN NY spokesman Jonathan Rosen.

The absence of ACORN’s free tax prep will have a big impact, said Sullivan, the organizing coordinator. “That’s a lot of families that are not going to get the child tax credit and the earned income tax credit that they are entitled to. That’s really millions of dollars not coming back to the community,” she said.

Carlos Rodriguez, a vice president at Food Bank for NYC, agreed. Food Bank handles 80 percent of all free tax preparation work in the city, making it by far the largest provider. Last year Food Bank’s 50,000 clients got back a combined $80 million dollars. But Rodriguez said his group and others only scratch the surface of New Yorkers who are eligible for the Earned Income Tax Credit. Greater outreach is crucial, he said, both to ensure low income New Yorkers get the tax refunds they are owed, and to keep them from going to expensive private tax preparers that engage in predatory lending such as refund anticipation loans.

“We really need to do as much free service as possible. We already had lines going around the block. Because of the recession more and more people are becoming income eligible,” Rodriguez said. “It’s hard to say exactly what the impact will be [without ACORN]. But we can’t afford to be losing anything here in NYC.”

Alex Pollack, a resident fellow at the American Enterprise Institute, offered a market-based analysis of the fallout. “If ACORN disappears, life goes on,” said Pollack. “When one organization makes mistakes or becomes corrupt others arise, some times from the people involved in the original – hopefully the parts that weren’t the problem.”

NY ACORN also believes life will go on, said Rosen, the spokesman. “I want to stress that NY ACORN is extremely confident that after these reviews are completed, this funding will resume so that the organization can continue to do critical work for low-income families across New York State,” he said.

– Eileen Markey

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