After Marcus Weaver graduated from college, he landed in jail — a bumpy start to adulthood resulting from poor choices that he came to recognize were influenced by growing up with an abusive stepfather.
Weaver became determined to turn his life around, so when he was released from jail about eight years ago, he went to live at New Genesis, a transitional housing space in Denver. “They offered me a job,” he tells Elizabeth Hernandez of the Denver Post, “and I didn’t screw it up.”
Weaver did much more than just not screw up — he began to help his fellow shelter residents find job placements, clothes for work and places to live. Through his efforts, Weaver connected with DenverWorks, a nonprofit that helps find employment for low-income people with disabilities, criminal records and past addictions. The organization found a job for Weaver: working for them as a mentor to others.
“It felt really great, like this was my purpose,” he says. “If you can give a person a job, that changes everything for them. I felt really good for the first time in my life.”
But then on July 20, 2012, Weaver decided to see the premier of the film “The Dark Knight Rises” with a friend. Chaos erupted when a gunman opened fire inside the theater, killing Weaver’s friend, Rebecca Wingo, and shooting Weaver in the arm.
The trauma of losing his friend and suffering a serious injury on that horrific night rattled him, and he was unable to continue his job. Finally he went to therapy and was diagnosed with PTSD.
Even though Weaver’s arm is still not healed — another surgery is scheduled for November — in March he felt ready to apply for jobs. He found himself back at DenverWorks and now serves as their outreach coordinator since the nonprofit believed that everything he’d been through would make him a big asset mentoring people trying to right their lives after suffering hard knocks.
“I see a lot of my former self in the people I’m helping. You see them change. Get a suit, get an interview, get the job. It’s so important,” says Weaver.
Currently finishing up a degree in nonprofit management, Weaver hopes it might lead to starting his own nonprofit. However lofty his goals, anyone familiar with Marcus Weaver’s life story knows it would be foolish to ever count him out.
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Tag: housing
This Nonprofit Says ‘Welcome Home’ to Low-Income and Immigrant Families
Hailing from Haiti, Ermance Cyriaque has been in the United States for two decades, and her hard work as a shelf stocker at Walmart paid off as she recently moved into a house of her own in New London, Conn.
Hope Inc. (Housing Opportunities for People), a nonprofit that provides affordable housing for working-class people in Connecticut’s southern Middlesex County, purchased and renovated the home, then sold it to Cyriaque at a below-market price. The Hope Inc. program is geared toward low-income people that are well-equipped to stay in their homes, and Cyriaque was chosen because of her excellent credit.
New London’s neighborhood stabilization program contributed $34,000 so that HOPE could purchase the home. The organization has renovated 13 homes on the street where Cyriaque will live, and the houses will remain permanently affordable — even if their original owners sell them.
Cyriaque has been living with her daughter Annesylly and her nine-month-old grandson Zorienn Canuto in a three-bedroom apartment, struggling to make ends meet in a community where prices were outgrowing her retail wages. To qualify for the program, she had to earn no more than half the median annual income in the area for a family of two: $33,850. Annesylly, who also qualifies for the program, will rent the apartment attached to her mother’s house.
When the family saw their new home for the first time, the Ninigret Quilters Guild presented Cyriaque with a hand-pieced quilt to make it cozy. (The Rhode Island quilters frequently donate their handiwork to needy families in the area.) According to Lee Howard of The Day, Kate Lamoureux, one of the quilters, tells Zorienn, “I hope it becomes your favorite blankie.”
Meanwhile, Ermance Cyriaque had a gift of her own to give. She gave Marilyn Graham, the Executive Director of HOPE, a painting with the words Do What You Love. “You went over and beyond to take care of us and help us out,” Annesylly says of Graham.
Of Howard, Graham says, “Theirs is a nice American dream story.”
And it comes wrapped in a warm, new quilt.
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Residents in America’s Poorest City Receive Customized Housing
It sounds strange, but there are still towns in American without paved roads and sewage systems.
This is the reality facing many people living in Texas’s 1,800 colonias — neighborhoods originally developed in the 1950s on unusable land for low-income people, particularly Hispanics.
Brownsville, located in Texas’s Rio Grande Valley, is home to many colonias. In addition to being the poorest city in America with 36 percent of residents living in poverty, Brownsville residents also have some of the highest rates of obesity and diabetes.
Considering all of these factors, the quality of life in this Texas town seems pretty poor, or at least it was until the nonprofit bcWorkshop (led by Dallas architect Brent Brown) and the Community Development Corporation (CDC) of Brownsville stepped in.
The result of their collaboration? A 56-unit apartment complex called La Hacienda Casitas. Together, the groups have also designed a hiking and biking trail through one of the worst neighborhoods, a disaster relief housing prototype and improved infrastructure plans for seven colonias.
Next, the groups are working on La Hacienda Two. And while apartment complexes can be churned out quickly according to CDC executive director Nick Mitchell-Bennett, these groups are taking their time and adding a personal touch.
Instead of making cookie-cutter houses, bcWorkshop and the CDC asked the individual residents what they want in their residences. While the personalization may add an extra four to six weeks to the building process, the results are worth it.
“Somebody who makes $8.50 an hour, they’re never asked, ‘What do you want?'” Mitchell-Bennett tells City Lab. “By the end of the process … they designed this house.”
And for people who are used to living with very little, the pride in ownership and design is a new and welcome phenomenon.
“There’s a real need for what I would consider design-focused effort to assist other organizing and community-building efforts” in the Rio Grande Valley, Brown explains. “So it made a nice fit.”
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How HUD is Helping Four Cities Rethink Housing Projects
In our opinion, the best prize is always cold, hard cash.
And this year, that’s exactly what four cities are receiving from the federal government after competing for funding to support low-income communities. This year’s winners are using the money to rethink the potential of public housing.
The Department of Housing and Urban Development (HUD) awarded a total of $119.7 million (about $30 million each) to Norwalk, Connecticut; Columbus, Ohio; Philadelphia and Pittsburgh for its annual Choice Neighborhood Initiative.
These four recipients bested 40 other cities that applied for the urban housing program. Each will combine the grant money with private funding to transform aging public housing and depressed neighborhoods into mixed-income, mixed-use communities, Next City reports.
“By working together, with local and state partners we will show why neighborhoods should always be defined by their potential — not their problems,” said HUD secretary Shaun Donovan. “Together, we will work to ensure that no child’s future is determined by their zip code and expand opportunity for all.”
Donovan, who led President Barack Obama’s Hurricane Sandy Task Force, has made sustainable building a priority at HUD in the wake of recent natural disasters. The agency has collaborated with FEMA in redesigning recovery projects, which extends to Norwalk’s project: rebuilding a blighted public housing development devastated by Sandy.
New units will be built six-and-a-half feet above the floodplain and will be protected by FEMA-funded storm-proofing infrastructures. The new development will also include community gardens, fitness trails and parks with playgrounds and sports fields.
In Pittsburgh, officials will use the grant to redevelop two of the city’s low-income neighborhoods. Plans include a one-to-one replacement of 155 public housing units and development of the area surrounding the new, upscale Ace Hotel.
“It will be the most significant investment in low- and moderate-income communities in the East End in 75 years,” Councilman Ricky Burgess, who represents the neighborhoods, told the Pittsburgh Tribune-Review.
HUD began the initiative under President Obama’s order in 2011, awarding Chicago, Boston, San Francisco, Seattle and New Orleans a total of $122.27 million in grants. Submission for applications for next year’s funding is slated to begin this fall.
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Entrepreneurs Trying to Catch a Break Get a Leg Up in Flint
Sometimes it’s hard to make money if you don’t have serious bank already.
This goes for low-income entrepreneurs especially. Businesses can take months, if not years, to turn a profit. But what if you need that profit now, to provide a roof over your head?
Habitat for Humanity knows a thing or two about putting roofs over people’s heads. Acknowledging the conundrum of start-ups, the national institution has launched an innovative program to provide people with homes and business space at the same time.
Starting with a pilot program in Flint, Mich., Habitat for Humanity will build live/work spaces for aspiring low-income entrepreneurs. The goal is to help the recipients establish a business while stabilizing blighted neighborhoods. The effort is a collaboration among Habitat, the University of Michigan and MasterCard, which chipped in a $400,000 grant.
The first recipients: Scott Hempel, 24, and Tyler Bienlein, 22. They plan to launch Great Escape Gaming on the bottom level and live in an apartment above in the Grand Traverse District Neighborhood on Court Street, a main route that leads to downtown Flint. The store will sell board games and serve as a community space where customers can gather and play.
“By giving gamers the opportunity to come in and play the game and try it out, that prompts them to want to buy the game,” Hempel told Nicole Weddington of MLive. “Also, having people in the store, you will sell things like drinks, snacks, food.”
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Teachers in the University of Michigan-Flint, including the school’s entrepreneur-in-residence Michael Witt, will mentor Hempel and Bienlein through the business startup process.
Sue Henderson, vice president of the U.S. and Canada for Habitat for Humanity International, told Weddington that in order to revitalize places like Flint, “First, you bring neighborhoods back. You get people living in houses, you take down blighted structures. And then the next step is, how do you bring business back?”
Or in Flint’s case, maybe you accomplish everything all at once with a single building.
A Housing Model That Works — With No Parents
In the summer of 2006, 4-year-old I’nesha Williams went to visit her grandmother, Rose Stigger, at her home in Kansas City, Mo. The little girl was supposed to stay for two days. After settling in, she asked if she could stay forever.
“So I said, ‘Well, we gotta see,’” recalls Stigger, who was 53 at the time, owned a house and worked at Sam’s Club.
Stigger had raised two sons, one of whom was I’nesha’s father. He and I’nesha’s mother had both gone “down the wrong path” and couldn’t take care of her, according to Stigger, so Inesha had been staying with her maternal great-grandmother elsewhere in Kansas City. But Stigger and I’nesha had a special bond, and when the child said she wanted to live with her grandmother instead, Stigger got permission from Inesha’s great-grandmother to take over her care.
For years, Stigger and I’nesha’s life together was unrelentingly stressful.
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In 2007, Stigger was laid off from Sam’s Club, fell behind on her mortgage payments and lost her house to foreclosure. Grandmother and granddaughter took refuge with a relative in town for a month and then found a house to lease, but soon the rent went up, forcing them to move again. Stigger got another retail job, at the payday loan store Quick Cash, only to end up with a pink slip again in 2009, during the depths of the recession. The nightmares continued: Soon, Stigger’s car broke down and the house she was renting became infested with snakes.
“I said, ‘I’ve gotta get away from here,’” she says.
Finally, nearly five years after she took in her granddaughter, Stigger got a chance to start again.
Under the guidance of a local social worker, JoAnn Stovall, Stigger and Inesha, who was then 8, moved to Pemberton Park for Grandfamilies, an innovative new apartment community in Kansas City for grandparents raising their grandchildren under trying emotional and financial circumstances. The “grandfamilies” receive rent support from the federal government under its Section 8 program, and the 36-unit complex, a partnership between a private developer and the Housing Authority of Kansas City, was built with federal stimulus dollars.
Most of the grandparents who live at Pemberton Park are single women, though there’s a single man and a married couple, too. To qualify for the housing, grandparents must be 55 or over, demonstrate serious financial need and agree to seek legal guardianship of their grandchildren, who must be under 21. Neither the grandchildren’s parents nor adult grandchildren are allowed to live there.
Pemberton Park residents benefit from a broad range of amenities and services. There are financial literacy courses for the grandparents and cooking classes for the grandkids. An on-site counselor provides individual therapy and facilitates support groups. The complex is equipped with a computer lab, a children’s activity room, a grandparents’ lounge, a playground and a food pantry. From time to time, there are carnivals and community dinners.
“I’m so glad they did this,” says Stigger, now 61. “Because I don’t know where I would be right now.”
Since moving to Pemberton Park, she has found stability, peace of mind and a sense of kinship with the other grandparents, who look after one another’s grandchildren at home, at the school bus stop and beyond. She’s also found a job: Pemberton Park’s management company was so impressed with Stigger that it offered her a position at one of its other properties. Meanwhile, her granddaughter, Inesha, now 12, talks about applying to the University of California at Berkeley and eventually becoming a lawyer.
More Grandparents Are Raising Grandchildren
In Kansas City and around the country, the number of grandparents raising grandchildren has been increasing for several decades, researchers say. As of 2011, roughly 2.7 million grandparents were responsible for one or more of their grandchildren, according to the U.S. Census Bureau, up from 2.4 million in 2000, the first year the census counted the figure. A parent may drift in and out of these households, but a grandparent is in charge. Some of the parents have died, while others are too troubled to raise their kids. Some are ill; others are addicts; still others are behind bars or homeless.
And the grandparent who takes over — usually a grandmother — tends to be under an enormous amount of stress, as Stigger’s story demonstrates. She may still be grieving the loss of an adult child to drugs, violence or some other misfortune. She may be unfamiliar with the habits and needs of today’s children, and she probably can’t turn to her friends for support because they haven’t raised kids in a generation either. She may have health and financial problems that are exacerbated by her new responsibilities. She may not have a suitable home in which to raise children, and if she lives in federally subsidized senior housing, she’s probably not even allowed to take kids in.
In 1998, the first housing community in the country specifically tailored to the complicated needs of grandparents raising grandchildren opened in Boston. Since then, similar complexes have been built in the Bronx, N.Y., Cleveland, Detroit, Phoenix, Hartford, Conn., Baton Rouge, La., and several other places in addition to Kansas City. More are under construction.
From Concept to Bricks and Mortar
Kansas City housing developer Brian Collins got the idea for Pemberton Park after reading about Grandparent Family Apartments, a complex in the Bronx that opened in 2005. But it took a whole team to make Collins’ idea a reality — a diverse coalition of public and private players, including some grandmothers, who united, collaborated and persisted in spite of unforeseen roadblocks.
First, Collins tried to ascertain whether special grandparent housing might be needed in his city. A former city planner, he was “frankly amazed” when he learned that there were about 9,000 grandparents raising grandchildren in the metropolitan area, which includes both Kansas City, Mo., and Kansas City, Kan. Most were single women with low enough incomes to qualify for subsidized apartments.
Soon, Collins began putting together a team of allies, including Jim Scott, a local architect with a specialty in urban redevelopment; John Monroe, director of planning and development at the Housing Authority of Kansas City, who was game for trying something new; and Stovall, the social worker who ran a program at Children’s Mercy Hospital for grandparents raising grandchildren and was raising two of her own grandchildren across the state line in Kansas.
At Collins’ request, Stovall recruited Stigger and about 40 other grandmother caregivers she knew to attend a preliminary brainstorming session. The grandmothers told the building team that the apartment complex would best meet their needs if it was built near schools, day-care sites, grocery stores and parks. As it turned out, the Housing Authority already owned a piece of land on Swope Parkway that was “ideally suited” — near a shopping center, a park and a community center, Monroe says.
Once the site was chosen, the grandmothers assembled for another brainstorming session, this time to talk specifics.
“We simply got a sensitivity to what their lives were like, how complex their lives could be,” says Scott, the architect.
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He realized that the grandparents would need somewhere to relax, so he designed a lounge for adults only. Since many of the grandparents were raising several grandchildren, Scott created a few four-bedroom units, but he grouped them together to isolate noise. He made all the units handicapped accessible. For the grandchildren, he designed indoor and outdoor play areas and put in window guards and childproof locks. Scott, Collins, Monroe and Stovall also traveled to New York to learn what they could about the Bronx development, a shiny and inviting five-story building on Prospect Avenue, south of Crotona Park.
By 2008, the Kansas City team had secured funding for their project through a federal program that gives tax credits to private investors willing to finance affordable housing. But when the recession hit, the investors pulled out, and it looked like the project might fall apart. The team pushed forward, until finally, in 2009, they received a $5.6 million grant from the federal stimulus bill.
Pemberton Park was completed in 2011, and its very first residents were Stigger and I’nesha.
“I said to them, ‘This is my last stop,’” Stigger recalls.
The Community Evolves
“Rose came in and became absolutely our best marketing person,” Collins says of Stigger, who also took in I’nesha’s half-sister, Alexus Stigger, 16, about a year ago. Although Stigger and Stovall both spread the word about how well the apartments had turned out, it took many months for the units to fill up. Initially, the complex required grandparents to become legal guardians of their grandchildren before moving in, a regulation intended to create a stable tenant community. But when the management team realized that few of the grandparents who wanted to live at Pemberton Park had taken this step — some were holding out hope that their adult children would get their lives together and reclaim their children — the rule was changed. Now, grandparents are allowed to move in if they agree to secure guardianship of their grandchildren within a year.
DON’T MISS: How the Golden Girls Can Help Senior Women Solve a Housing Problem
With occupancy up, Pemberton Park has faced other challenges. Not long after the building was finished, Stovall’s hospital eliminated her position, which left Pemberton Park without its “spiritual leader,” says Scott, the architect. The Housing Authority has assigned one of its own social workers to the site, LaToya Walker, but she says she’s not able to organize nearly as many activities for residents as she’d like because she has such a small budget. Meanwhile, the property’s manager, Michelle Stevens, says security at the site needs to be beefed up to deal with “outside traffic.”
Scott has two regrets. Because of funding constraints, he didn’t get to build the walking trail around the property that the grandmothers wanted. And the resident-run coffee shop that he lobbied for was nixed.
But the community is still evolving, and some tenants, including Stigger, are taking on leadership roles. She liked the idea of a shop, too, especially when she realized that some of the grandchildren were hanging out at a notoriously unsafe store a few blocks away. So she took matters into her own hands and started an informal one in her apartment. Now, when kids want a can of soda or some ice cream, they knock on her door and come in for a snack and some conversation.
“We’re one big happy family,” Stigger says. “We help each other.”
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How ‘The Golden Girls’ Can Help Solve a Problem Facing Senior Women
“The Golden Girls” went off the air in 1992, but many of us still remember the show about four senior women sharing a home in Miami, in part because there hasn’t been anything else like it on T.V.
It turns out “The Golden Girls” was ahead of its time in more ways than one, and that its model of communal living—with some good-natured bickering thrown in—might provide a solution to a problem facing millions of Baby Boomer women as they reach retirement age. One third of Baby Boomer women live alone, and 50.8 percent of the 78.2 million Boomers in America are women. Many of these single women are divorced, a situation that often leaves their finances in disarray as they head into retirement.
According to the PBS NewsHour, the median income of senior women in Minneapolis was $11,000 less than that for men, which gave Connie Skillingstad an idea. She runs Golden Girl Homes, Inc., which helps match older women in the Twin Cities with others who’d like to reduce loneliness and split expenses by sharing a home. She told Spencer Michels of the NewsHour that each of the women who band together as roommates offers some asset that can help the others. “For example, there are women who have no money, but they have a house. They have space and they can share it with somebody, and it will help them to survive,” she said.
Karen Bush, Louise Machinist, and Jean McQuillan are longtime friends in their 60s, each of them divorced, who now share houses in Pittsburgh, Pennsylvania and Sarasota, Florida. The women reach agreements about cooking, cleaning, finances, and what to do should any of them fall ill. They have legal documents in place stipulating what would happen if any of them are no longer able to take care of themselves. Together, they’re renovating their Florida condo to allow them to age in place. Bush told Michels, “The whole setup that we have here is going to help me be independent for a long time. And at the point at which I can no longer be independent, I will have additional resources to pay for what I need.”
Half a million women over the age of 50 in America live with roommates who are not romantic partners. Now this sounds like a case of smart women banding together to solve their own problems. Could a sitcom be next?
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What Happened When This World War II Vet’s Home Caught Fire?
If a burning hot fire suddenly engulfed your house, how would you recover from the disaster?
That’s the situation that World War II veteran Tom Porter faced last August when the kitchen of his house in Gregory, Michigan went up in flames. After hurrying outside in just a t-shirt and underwear, carrying tubes for his oxygen tank, Porter was left virtually possession-less from the fire that tore through his house. Porter, who served as a radio operator in the Army, didn’t have fire insurance on his home (which sat on a 25-acre farm), and he didn’t know how he was going to come up with enough money to rebuild.
That’s when his neighbors stepped in. The next morning, residents from all over Livingston County, Michigan began to arrive. They salvaged and cleaned what they could from the burned home, then set about rebuilding the property — all without being asked. “There were people working here that I’ve never seen,” Porter told Jim Totten of the Daily Press & Argus.
For five months, the community worked: Repairing Porter’s home, building a new kitchen, and making sure his appliances were code compliant. Many neighbors would stop by after they got off work in the evening to spend some time building, a fact that brings Porter’s daughter to tears when she recalls their efforts. The Home Depot donated some supplies, and when money ran low halfway through the rebuilding process, the Livingston County Department of Veterans Affairs chipped in $10,000.
In January, Porter moved from the trailer where he had been living temporarily into the refurbished home, where he hopes to live out his days, caring for his 20 cows. And yes, he purchased fire insurance.
Tom Porter’s grandson Jason Porter said the community effort rekindled his belief in human kindness, which had wavered. “I totally changed my mind about people,” Jason said. “The community coming together. I cannot express how I feel about the community; it’s beyond words. It was unreal.”
But that outpouring of generosity was real — and Tom Porter has a brand new kitchen to prove it.
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Can’t Afford a Down Payment? Let Investors Help You Buy Your Home
During the buildup to the great housing bubble of the 2000s, I watched the dream of owning a home slip from my grasp. Prices were growing more unreasonable by the day, and I knew I’d collapse under the wacky mortgage plans available to a reporter, on a reporter’s salary, possessing neither the discipline nor the extra scratch to scrape together a down payment.
Thankfully, the bubble eventually burst, prices plummeted and I wriggled my way into the market. But there are millions of other aspiring homeowners in America who are still shackled to their landlords because they either don’t have the money for a down payment or can’t afford a mortgage in situations where the loan can represent up to 97 percent of the purchase price.
Enter PRIMARQ, the world’s first residential real-estate equity exchange — a soon-to-launch venture of San Francisco entrepreneur Steve Cinelli. Can’t afford a down payment? Let investors put together the capital you can’t, without relinquishing all your clout as a homeowner. By letting “co-owners” buy shares in your home, you’re able to put down a bigger down payment, which means you end up carrying less debt and can get a loan free of mortgage insurance, which is commonly tacked on for down payments of less than 20 percent. “I think the market is overly dependent on mortgage-debt financing,” Cinelli says. “The application of debt has gone way too far.”
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Investors can bet on housing without having to deal with the actual house. They’ll get their money back (plus profits if there are any), under one of several circumstances: when you sell your home, when you decide to buy back your shares, or when the investor sells his shares back to the PRIMARQ exchange itself, which offers a “liquidity guaranteed” 90 percent of their value. So, if an investor puts up $10,000, and then wants to cash out for any reason before you sell your home, they’ll walk away with no less than $9,000 (unless the home price drops) — and it doesn’t affect you either way.
Not all homebuyers and not all houses can qualify for PRIMARQ funding. If there’s a mortgage involved, the buyer has to meet strict credit-score criteria, and the home has to have a certain expected price appreciation — meaning it’s got to be a decent property in a good location. That doesn’t necessarily rule out homes in lower-income neighborhoods, but it does stand to reason that unless those neighborhoods are deemed “up-and-coming,” the homes there might not qualify for PRIMARQ.
But once those burdens are met, the company has designed a program that Cinelli says complies with existing regulations and is working to convince banks that more equity in the mix makes a better-quality loan — and that it’s not necessarily a risk for borrowers to invest less of their own money in their home. If mainstream lenders get on board, it should mean more people have greater access to the housing market, which has only in the past year or so begun to rebound from the Great Recession it helped cause.
So how does this work, exactly? Without getting too deep in the weeds, PRIMARQ has created investment units, or shares, known as “Q’s”; each one is valued at $10,000. Through a broker, you, the potential homeowner, would list shares for sale in your desired property. Investors then make bids for them (minimum $25,000), based on a variety of factors, including the amount of equity capital being sought versus ownership to be shared, and how much the property is expected to appreciate in value. Then, PRIMARQ works with you to apply those funds to your purchase, and provides quarterly portfolio management reports to the investors.
Q’s are bought and sold just like shares on the Nasdaq, so investors can trade them anytime during your ownership. Once you sell, you hand over your investors’ share of the profits and pocket the rest. Or, if you sell your home at a loss, investors take their share of the hit as well.
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Cinelli hopes this kind of “liquidity in a historically illiquid market” will not only beef up America’s less-than-impressive rate of home ownership (65 percent) but also help prevent the next crash, by deleveraging some of the many debt-crushed mortgages out there. Back before the New Deal in the 1930s, buyers put 50 percent down on a house and paid the rest of it in two years. But in a push to expand ownership to more Americans, President Franklin D. Roosevelt established the Federal Home Loan Bank System, government-backed banks that paved the way for the onslaught of home lending that commenced in the coming decades. This worked fine, until the frenzy that was the housing bubble of the 2000s came along. Global investors flooded the market with easy cash. Complicit lawmakers, mortgage brokers and real estate agents rammed exorbitant home loans down the throats of hapless (or irresponsible) Americans who by that time had grown so comfortable with borrowing up to their eyeballs that many didn’t stop to consider how they’d actually make the payments on a half-million-dollar house in the ’burbs. The crash was both inevitable and colossal. “We saw the result of the overleveraged problem, over the last handful of years,” Cinelli says. It got him thinking, “Why is housing devoid of [outside] equity?”
To be sure, the PRIMARQ model involves risks for both investors and homeowners — not the least of which is a gaming of the system by nefarious investors, says David Reiss, a professor of law at Brooklyn Law School in New York who researches and writes about the American housing-finance sector. While Reiss calls PRIMARQ a “supercool idea” for all the aforementioned reasons, he could imagine various ways for unsophisticated homeowners to get fleeced without proper consumer protection regulations (the program has not yet been reviewed by a government regulatory agency). Unscrupulous investors could demand fees or increased equity in exchange for agreeing to help fund a second mortgage, for example. By participating in PRIMARQ as a homeowner, “you are not the master of your own destiny,” Reiss says.
Indeed, PRIMARQ homeowners aren’t exactly as free as they would be on their own. For one thing, they’re generally not allowed to rent out their place. Certain kinds of refinancing would also require the sign-off of the investors. They also get some say in the choice of homeowner’s insurance, how the property is marketed for sale, and the final sales price that is accepted. Investors further have the right of first refusal for a home at market value, which may discourage a seller who thinks he or she can get more than that. (Homeowners, too, have rights of first refusal for the equity.) Beyond that, there are ample ways for the deal not to pan out for either party. The homeowner could trash the place or fail to fix the leaky roof, tanking the value of the property (which PRIMARQ’s contract would label a “default” of the agreement). Or the market could again take a dive, which means investors take a loss just as if they’d bought Facebook stock.
But the system also provides a way for investors to get in on what can be a hugely lucrative bet, without taking on the same level of risk involved in actually purchasing a home. Investors don’t have to pay insurance, property taxes, homeowner dues or repair costs. Instead, they’re “passively” partnering with the owner-occupant, who — in theory — has a vested interest in keeping the property in good shape.
At this point, PRIMARQ’s entry into the $17 trillion market is too small to make much of a dent. There are currently some 350 to 400 investors on the platform and about 30 transactions in progress about a month out from the company’s formal launch. If it grows substantially, Cinelli sees the equity-over-borrowing model becoming a stabilizing force, helping homeowners avoid getting sucked into big mortgages, making them less likely to wind up in foreclosure, should financial problems arise. “Our goal is to really change the overall paradigm of housing finance,” Cinelli says. “The fundamental problem is that with debt as the only third-party capital available, lenders overlend.”
There is inherent value in bringing outside capital into an arrangement now monopolized by the banking industry, Cinelli says. It spreads out the players and the risks and those with stakes in the game, which at least in principle should strengthen the whole system.
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Introducing the Nonprofit Whose Mission Is to Help High School Dropouts and the Homeless
Back in the 1990s, Dorothy Stoneman had big dreams. Not only did she want to help high-school dropouts and unemployed young people, but she also wanted to reach out to poor people in need of housing. So what did she do? She started YouthBuild U.S.A. in 1998, a non-profit that works to solve all of these problems simultaneously.
Today, YouthBuild U.S.A. has grown far beyond its humble beginnings: Now, it has 264 programs in 46 states and 120,000 young people have signed on with the non-profit to build 22,000 units of affordable housing since 1994.
YouthBuild works like this: Its programs across the country recruit unemployed young people ages 16 to 24 (many of whom don’t have high school diplomas). As they learn to build houses and apartment buildings for the homeless and low-income families, participants must also attend an alternative school to earn their diplomas or a G.E.D. They alternate one week working construction with one week in the classroom until they achieve these goals. Meanwhile, the young people learn leadership skills and can obtain counseling and mentoring. When they complete the program, they’re matched with job opportunities.
In an article for Skoll World Forum on Social Entrepreneurship Stoneman wrote about Xavier Jennings, a program participant who’d turned his life around and shared his story at the Aspen Ideas Festival in 2012. As a teenager, Jennings was living in Denver with his grandmother, who lost her food stamps because she was too ill to travel to the office to renew them. To make ends meet, he started dealing drugs. Then at age 18 he heard about Mile High Youth Corps’ YouthBuild program, and for the first time experienced the people in his community treating him with respect rather than as a threat.
“I used to be a hoodlum,” Stoneman writes that many participants say, “Now I am a hero.” She continues, “We need to invest in the education, well-being, inspiration, and character development of every young person born, including those who were born into poverty through no fault of their own. They will grow up to be responsible, productive, caring citizens if society recognizes their value and invests in opportunities for them to realize their full potential.”
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