Last November, the group cut 200 workers when donations failed to come in and after spending $500,000 in efforts to repeal gay marriage in California. In August, Focus on the Family sold its “ex-gay” program to shore up funds.

The latest round of layoffs shutters the organization’s in-house advertising department, which will now be farmed to an outside agency.

The survey found that more than 20 percent LGBT Minnesotans do not have health insurance compared to 6.7 percent of all Minnesotans. Thirty-two percent of LGBT patients are not “out” to their health care provider and 36 percent said they felt their clinic was not knowledgeable about LGBT health issues. Despite this, 79 percent of respondents said having a LGBT-competent provider is important to them.

The report was not optimistic that the gap between insured and uninsured would close any time soon.

“As the overall economy continues to worsen, and then slowly to reverse its decline, the number of unemployed or underemployed LGBT individuals and families who will be uninsured or underinsured will continue to rise,” wrote the report authors. “And as the cost of health care also continues to increase, adequate health insurance coverage will be further out of reach of many LGBT community members.”

The report noted obvious factors — the lack of relationship rights for gay, lesbian and transgender people — and outlined some steps to bridge the gap, including “support for marriage equality as it relates to family recognition and well-being, mental health, and access to health insurance and other economic benefits” and “improved domestic partner benefits (where marriage equality does not exist) and related tax inequality issues associated with IRS regulations regarding imputed income.”

Flickr: respres

A housing program blamed in part for high default rates on government-backed loans, derided as a “scam” by the Internal Revenue Service and targeted for years for elimination by the agency that ran it looked like it finally had reached its end this fall, after Congress finally banned it. But now, in a sign that some lessons of the housing crisis have yet to be learned, a movement is afoot to bring it back.

The program is called seller-funded down payment assistance. When U.S. Department of Housing and Urban Development Secretary Shaun Donovan told Congress last month that dramatic growth in seller-funded down payment assistance programs in recent years had added to high default rates on Federal Housing Administration-backed loans, it might have seemed like the final blow. The programs, initially intended to help low and moderate income people buy homes, had long been under fire, the subject of complaints from HUD, the General Accounting Office, and the IRS. And with FHA default rates threatening to trigger yet another taxpayer bailout, policymakers have plenty of motivation to steer clear of any lending approaches deemed risky or problematic.

       

Illustration by: Matt Mahurin

But supporters of seller-funded down payment assistance aren’t giving up. Despite Donovan’s stance, they’re still supporting a bill to revive the program — a measure now before the House Financial Services Committee. Sponsored by Rep. Al Green (D-Tex.), the bill has 17 co-sponsors, among them powerful lawmakers such as Rep. Maxine Waters (D-Calif.). Backers include builders and realtor groups, the Mortgage Bankers Association, and the Congressional Black Caucus. Committee Chairman Barney Frank, D-Mass., told the Wall Street Journal last year he wants to reform the program, not kill it. And supporters are continuing to pressure HUD to preserve it.

“We do agree there were problems with the previous program,” said David Ledford, senior vice president for housing policy at the National Association of Home Builders. “But we still support the legislation. HUD was somewhat at fault for not properly monitoring it. It can be done more carefully, and with tighter controls. But HUD is just throwing up its hands and saying things turned out badly and we shouldn’t do it at all.”

But Ledford’s views aren’t widely shared by many in the mortgage industry, and they simply don’t reflect reality, according to the program’s numerous critics. FHA’s seller-funded down payment assistance should have ended years ago, given ample evidence of its problems, said Guy Cecala, publisher of Inside Mortgage Finance, a Bethesda, Md. company that covers the lending industry. The GAO concluded that homes purchased using the programs were appraised at and sold for 2 to 3 percent more than comparable homes bought without the assistance. The IRS in 2006 revoked the tax-exempt charitable status of providers of seller-funded down payment assistance – and called the programs “scams.” HUD’s Inspector General and the FHA itself have complained the programs raise home ownership costs and lead to more foreclosures, saying homeowners using the assistance were two to three times more likely to default on payments than other borrowers.

Both the FHA and HUD allow homebuyers to receive downpayment money from third parties, such as relatives, employers, government agencies and independent nonprofits. But unlike much of the rest of the mortgage industry, the FHA also allowed homeowners to get downpayment help from nonprofits or charities funded in part by sellers. And that’s where the problems came in.

In a speech last summer, former FHA Commissioner Brian Montgomery called seller-funded down payment assistance programs “circular financing schemes.” Property sellers often raised the sales price of a home to cover the cost of downpayment “gift,” the GAO noted. The charity or nonprofit that supplied the down payment money was reimbursed by the seller for it, along with service costs and fees, once the deal closed. Borrowers unwittingly paid for it all. Critics contended some charities existed solely to funnel the downpayment money from the seller to the buyer. The program was especially popular with builders.

The Mortgage Lender Implode-O-Meter, an influential financial blog leading a blogosphere campaign against reinstating the downpayment program, explained that buyers qualified for FHA loans using grant letters from the charities as proof of downpayment. As far as the FHA was concerned, the grant was a charitable donation that came from an independent nonprofit, and not the seller.

Suckers!…Of course the losers in this scheme are the FHA (the taxpayer –who actually has to insure these loans), and ultimately the borrower — who is probably already underwater and overextended.

After buyer lawsuits, rising defaults, and other controversies, Congress finally ended the practice as part of the mortgage rescue package approved last summer, and the programs were banned as of Oct. 1. The bill to revive them is a long shot to eventually become law, given the past controversies. But the fact that a campaign even exists means one of the biggest lessons of the financial meltdown – that buying homes with no money down isn’t exactly a great idea – seems to be lost, at least on some.

“It’s a program that HUD doesn’t really want, the mortgage industry doesn’t really want and most community groups don’t really want,” Cecala said. “It’s got such a lousy track record. That anyone would want to resurrect it at all is astonishing.”

Added Cecala: “The fact that Congress would even consider this… are these guys serious? Did they do any research on this at all? It should have a skull and crossbones on it.”

Dean Baker, co-director of the Center for Economic Policy and Research, who warned before the financial crisis of a growing housing bubble, expressed similar sentiments. “I’d say it’s a bad idea that won’t go away,” Baker said. “I think it’s basically crazy. Arguably one of the lessons we were supposed to have learned is that we shouldn’t have been pushing homeownership, everywhere and always.”

“It’s a long shot to become law, but I wouldn’t rule it out. You have some big groups pushing it on the other side.”

Seller-funded down payment programs drew little attention earlier in the decade, when the FHA had a much smaller share of the mortgage market, and when helping low-income borrowers get into homes was an aggressive public policy goal, noted Patricia McCoy, a University of Connecticut law school professor who specializes in banking and securities regulation.

But use of the programs increased sharply, after the subprime meltdown led to an expansion of FHA-backed lending. And last month, HUD Secretary Donovan told Congress that while loans with seller-funded down payment assistance represented only 12 percent of the FHA portfolio at the start of 2008, they accounted for 30 percent of all foreclosures completed that year. He said the end of the program “should substantially reduce FHA losses on new originations in the years ahead.”

Some large down payment assistance providers, however, are countering with a campaign that contends the ban is hurting working class Americans, who want to buy homes but can’t come up with steeper downpayments because of tightened lending standards. A website sponsored by the bill’s supporters refers to the measure as “DPA Reform” and includes a running tally of the number of Americans denied access to homeownership since the programs officially ended.

Ann Ashburn, president of AmeriDream, a Gaithersburg, Md. provider, said in a statement last fall that “eliminating charitable down payment assistance will slam the door on over 100,000 teachers, firefighters, working families and others who rely on these programs annually to become homeowners.”

AmeriDream spokesman Henry Fawell said the company is “cautiously optimistic” about prospects for reviving the program. Helping buyers with downpayments would benefit the economy as a whole and could jump start the housing market, he said. Vacant homes are scarring neighborhoods with blight, but many borrowers can’t come up with downpayments on their own to buy them, he said.

Fawell acknowledge problems with the programs in the past, but said the new bill addresses them by including requirements for higher credit scores, fees for riskier borrowers, and penalties for inflated appraisals. “We have support on both sides of the aisle,” Fawell said.

The bill’s co-sponsors include one Republican, Rep. Gary Miller of California, a former builder.

With the Obama administration busy handling banks stress tests, bailouts and financial regulatory reform, the bill to reinstate seller-funded down payment assistance isn’t facing much active lobbying opposition. And down payment providers and housing lobbyists have a long history of successfully fighting off attempts to end the programs. HUD began trying to do so back in 1999 and again in 2007, when it was successfully sued by AmeriDream and by the Nehemiah Corp. of America, another large provider. Barely 24 hours after Congress approved the ban last summer, Rep. Green introduced a measure to bring it back.

One possibility is that supporters could slip in reinstatement of the program into a larger housing bill. But Cecala, of Inside Mortgage Finance, thinks it’s still a hard sell. Putting people in homes with no money down is a widely discredited idea, he said. Although civil rights groups still support the programs, the thinking has changed regarding the best approach to help minority borrowers.

“The Community Reinvestment Act and other programs are a much more sustainable way to get people into homes as opposed to subprime and no-downpayment FHA loans,” Cecala said. “But they also are a lot more work for both the lenders and borrowers.”

In the meantime, Ledford, of the builders’ association, said his group is working with HUD to see if first-time homebuyers can apply some of the new $8,000 tax credit toward downpayments. HUD is trying to make sure some of the same circular financing problems that plagued the seller-funded down payment assistance program wouldn’t affect that proposal, he said.

It seems that when it comes to seller-funded down payment assistance, the fight never really ends

Congressional leaders will have to negotiate the Senate bill with an $820 billion stimulus bill passed by the House, a process leaders say should be completed by week’s end.

Minnesota’s delegation plans to lean on key decision-makers. Reps. Tim Walz, Collin Peterson and Michele Bachmann all told MinnPost.com that there are significant issues with both versions of the bill, and that changes will need to be made in negotiations.

All Democrats and independents voted for the measure, and three Republicans — Susan Collins and Olympia J. Snowe of Maine and Arlen Specter of Pennsylvania — joined to push the bill over the 60-vote cloture threshold.

Photo by Lisa Yarost, Flickr

As the budget battle at the state Capitol gets going, MinnesotaRepublicans are promising to obstruct efforts to both cut expenses and raise taxes. DFLers are looking at a pending stimulus plan from the White House in February in order to guide how the budget session takes place. And at least one DFLer thinks that Gov. Tim Pawlenty might change his stance on taxes (or “revenue enhancements”) to help fill a historic $4.8 billion deficit.

House Minority Leader Marty Seifert, R-Marshall, says his caucus would not vote for any tax increases, with the only possible revenue generator an expansion of state-sponsored gambling. He called any tax increase “dead on arrival” during a press conference late last week.

Pawlenty continues to talk of “no new taxes,”but Sen. Mary Olson, DFL-Bemidji, allows that Pawlenty has indicated he would support “revenue enhancements,” and those enhancements could mean sales taxes on food and clothing.

“If I’m correct in reading between the lines, that is the kind of revenue enhancement the governor means, but I don’t know,” Olson told the Bemidji Pioneer.

On the other half of the equation to balance the budget, Seifert wants to put DFLers on the hook for what will surely be painful cuts to public programs and services. In an interview with Minnesota Public Radio’s Kerri Miller last month, Seifert said, “I probably will not be voting for any of these cuts.”

And he won’t be encouraging his fellow Republicans to support cuts either. “The budget bills coming up, I will be giving suggestions, ideas and the like on how to balance the budget,” he said. “But I can tell you that the political road is littered with the bodies of House Republicans who made tough decisions on balancing the budget.”

While the Republican caucus looks for ways to pin painful cuts on Democrats, DFLers are working toward the very real possibility that an Obama administration will be sending a large sum of money to Minnesota. MinnPost spoke late last week with DFLers who anticipate anywhere between $1 billion and $10 billion to eventually show up in Minnesota. The DFL’s first bills submitted this week are tailored to streamline any stimulus money.

Some Republicans say that if the bill does not meet their standards, they might vote to reject the money.

Photo: Lisa Yarost

Bluestem Prairie reports that each year Walz has to send a letter to the U.S. Treasury to turn down the automatic raise in pay, including last year’s which he already declined. Spokester Meredith Salsbery told Bluestem Prairie, “[He] has to keep declining [the last raise]. We’ll send Treasury a letter that will deduct an amount equal to this year’s [cost-of-living adjustment] and last year’s COLA from each paycheck.”

Last year, Walz said he would not accept a pay increase until the federal budget is balanced. “I am committed to fiscal responsibility and to changing the way Washington works,” he said in January. “The reinstatement of pay-as-you-go budgeting has finally put this country back on the right track towards a balanced budget, but until we reach that milestone I will refuse any pay increase.”

Democratic Reps. Betty McCollum and James Oberstar joined with Republican Rep. Jim Ramstad in supporting the bill, while Democratic Reps. Tim Walz and Collin Peterson joined Republican Reps. John Kline and Michele Bachmann in opposing the measure. Rep. Keith Ellison did not vote.

Walz (pictured) explained his vote in a statement Wednesday. “Nothing in this bill will prevent the auto manufacturers and their suppliers from continuing to move jobs overseas,” he said. “And we have no guarantee that spending $15 billion in taxpayers’ money will actually solve the Big Three’s problems. We must preserve and create jobs in America but this isn’t the way to do it.”

Bluestem Prairie, a blog that follows news about Walz, notes that the Star Tribune reprinted a New York Times article that incorrectly states that Walz and Peterson voted for the bill. In another area of the paper, they reprint an Associated Press article that got the votes correct.

Home values fell 9.7 percent year-over-year in the third quarter to a Zillow Home Value Index of $202,966, according to the third quarter Zillow Real Estate Market Reports, which encompass 163 metropolitan areas.

Home values have dropped a total 12.8 percent since the market peaked in 2006.

Year-over-year declines in the second quarter were 8.8 percent, indicating that price drops continued to accelerate in the third quarter, the reports showed….

Over the past 12 months, 30.2 percent of homes sold were sold for a loss, up from 23.7 percent at the end of the second quarter.

Bloomberg News reports that the Federal Reserve Bank is “refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral.” Reporters Mark Pittman, Bob Ivry and Alison Fitzgerald add that Bloomberg has tried to obtain the information through a Freedom of Information Act request and a federal lawsuit filed last week.

But mum continues to be the word, not only from the Fed but from the Obama transition team:

Federal Reserve spokeswoman Michelle Smith declined to comment on the loans or the Bloomberg lawsuit. Treasury spokeswoman Michele Davis didn’t respond to a phone call and an e-mail seeking comment.

President-elect Barack Obama’s economic adviser, Jason Furman, also didn’t respond to an e-mail and a phone call seeking comment from Obama. In a Sept. 22 campaign speech, Obama promised to “make our government open and transparent so that anyone can ensure that our business is the people’s business.”

Before Rep. Michele Bachmann’s Oct. 17 statements on MSNBC about “anti-America views” she feared some in Congress hold, the airwaves in the 6th Congressional District were relatively quiet. But over the past two weeks well over $1 million in campaign contributions from people outraged by her comments have poured into the campaign of DFLer El Tinklenberg. Meanwhile, outrage over what conservatives have deemed a media smear-job against Bachmann have generated half as much money for her campaign.

The result has been a slew of ads pushed out by campaigns and third-party supporters — at least half a dozen in the last five days.

Flush with new money, DFL candidate El Tinklenberg has started airing his third ad of the campaign season, which includes words from former Secretary of State Colin Powell. Bachmann has released four new ads in the last five days. Two repeat a misleading message regarding Tinklenberg’s term as transportation commissioner, one attacks him on property taxes and another promotes Bachmann’s “23 foster children,” as well as her opposition to the Wall Street bailout.

Alliance for a Better Minnesota put out an ad with Bachmann kissing Bush, saying “she embarrasses us.” The Democratic Congressional Campaign Committee attacked Bachmann on her deregulation stance on Wall Street.

Bachmann: Tax Hikes Up Ahead!

Bachmann: Google Search Tinklenberg

Bachmann: Tink’s Failed Leadership at MnDOT

Bachmann: A Brighter Future

Alliance for a Better Minnesota: Michele Bachmann – Nonsense

Tinklenberg: Crisis

DCCC: Michele Bachmann – She’s for Wall Street, not Minnesota