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State Rep. Arce Brings Fight to Slumlords

Cheers to State Rep. Angel Arce for his new campaign again blight and absentee landlords. Less than three months into his new position, Rep. Arce is attacking the plague that is absentee landlordism, and in doing so, has shown more dignity, integrity and anger on behalf of his constituents than his predecessor.

Rep. Arce’s strong rhetoric on the internets about slumlords garnered press attention. CTLatinoNews.com quoted his Facebook post this past Monday:

If you are a slum Landlord in my District am comming [sic] after you. you will not have my Constituents living this way. UNACCEPTABLE. Specially [sic] you slum landlords from out of state that only come to pick up Rent only. AM COMMING [sic] AFTER YOU.”

While grammatical and spelling errors are hardly becoming of a state representative, we will forgive Rep. Arce his trespass, because in those two sentences, he shows more chutzpah, fire, courage and concern for his constituents than we have ever seen from his cohorts in the legislature like Rep. Minnie “Mouse” Gonzalez.

Arce, it seems, has signed on as a co-sponsor to proposed bill, HB 6235, An Act Concerning Blight Violations. CTLatinoNews reported this was introduced by State Rep. Auden Grogins, D-129, and “would allow municipalities like Bridgeport, which he represents, to impose a lien on a landlord’s private residence if that landlord’s rental properties have fallen into the category of ‘blight.’”

Now, mind you, the implementation of this by cities might be difficult to deal with, given the issues we have seen in Hartford with the Livable and Sustainable Cities Initiative. But I remain hopeful that we can begin to hold slumlords accountable.

Investment banking by out-of-town landlords who use our community and human right to housing as an ATM has long infuriated me.

The way I see it, our housing stock is a natural resource. The buildings from the 1870s and 1910s and 1930s, built by immigrant craftsmen, were here long before most of us were born. These buildings are like the trees and the rocks and rivers around us, part of our natural environment.

Thus, we are charged with protecting the housing stock, like we would the Connecticut River or Pope Park. Rep. Arce’s recognition that slumlords abusing this trust is a welcome addition to this fight.

Out-of-town landlords with access to capital invade our city, and buy up our natural resources, mediating our access to what should be ours. I liken this to the way that the federal government doles out cheap mineral and gas leases on federal lands.

Only certain classes of people (natural or corporate) will have access to those natural resources, because of their access to capital, ie. boat loads of cash. The government gives away billions of dollars in coal and gold and oil and uranium rights, and we the people foot the bill for the pollution.

Similarly, banking policies encourage this kind of rent-seeking behavior from slumlords. It is a form of colonialism for a foreigner to buy property and then lend it back to local residents at exorbitant rates. We must stop this exploitation.

Hartford’s 27 percent homeownership rate is not a mistake or a freak of nature. Hartford residents by and large do not have access to capital needed to purchase a home.

Having just endured a financial strip search to obtain a mortgage for a new condominium, I have a good idea of what it takes to secure financing for homeownership.  And what I went through is the new normal in home financing, according to my realtor Leslie Hammond, a Hartford resident.

I call it a financial strip search because the mortgage company wanted to know seemingly everything about my financial existence, except how many quarters were under my couch cushions.

Despite a relatively good credit score, I could not obtain financing through a conventional bank like TD Bank or People’s Bank. To do that, I needed 20 percent down.  For the $162,000 condominium we just purchased, that would mean more than $35,000 in cash for closing, with costs.

Who has that kind of money? I am not wealthy, but I make more than Connecticut’s median income. Yet when the banks looked at my $340 a month in law school debt (which I will be paying until I am 59 years old), my debt-to-income ratio was too high. So I had to look to a mortgage company.

Even when people come up with 20 percent down, realtor Hammond said she has had clients who wept under the pressure and tactics created by the banks giving them conventional mortgages. Financial institutions, she said, just look for reasons not to loan money.

And let’s not think that these banks or mortgage companies aren’t making mad money off home mortages. At the end of my 30-year mortgage, with a locked in rate of 3.67 percent, the investor backing my condo purchase will have made more than $100,000 in interest alone for lending me $145,800.

This profit margin is less absurd than the thieves who hold my student loans, with about a 6.8 percent interest rate. I took out $40,000 in student loan debt. When I graduated, the student loan servicer capitalized $8,000 in unsubsidized interest, so my total debt jumped to $48,000. They’ve got me paying interest on interest.

And this $48,000 a low number – the University of Michigan’s Law School debt calculator starts its calculations with a minimum of $80,000 in total debt. When I finish paying it off, will have paid $120,000 or so on a $40,000 loan. Unbelievable.

I am at the low end of the student-loan debt spectrum, and the banks refused me. I suppose I should be grateful I got a mortgage at all, but the fact that banks have made access to capital so difficult for people, after they destroyed the economy, is perverse. What law school grad with $80k in debt will get a mortgage?

I would have been less frustrated with the whole two-month lending process if someone from Goldman Sachs or Bank of America was sitting in a jail cell, pondering the consequences of causing a global financial meltdown and restricting access to credit.

But, repeatedly, we are told big banks are too big to fail, and, as we learned from Sen. Elizabeth Warren’s pressuring of bank regulators, the financial institutions are too big to jail. This cannot be so.

Yet here we sit. Hard-working people like me have to struggle and claw their way to a mortgage. Two days before the closing, the mortgage company would have withdrawn approval if I did not produce a 401k account statement showing “reserves.”

If it is this difficult for an attorney with a steady job to buy a house, how out of reach is the American dream for the average tenant living on Franklin Avenue in Rep. Arce’s district? Impossible.

As Rep. Arce continues on his quest, might I suggest that he take the next step and draft legislation creating a bank owned by the state of Connecticut, as the state of North Dakota has done and as David Samuels of the Community Party repeatedly suggests? In this way, capital could become more accessible to people.

Also, Rep. Arce can push legislation to educate people and school children about financial products available to them. In describing the mortgage process to friends and neighbors, many of whom are well-educated, I have realized many people do not know about credit reports and home equity lines of credit and certificates of deposit.

Banks operate in secrecy, which explains part of the lack of popular anger over the financial crisis of 2007-2009. Financial literacy is an imperative today.

If we are to have and create wealth in Hartford, people need to know about the vehicles that exist to manage money. If money is power, then we need to teach ourselves how to handle it with honor, intelligence, grace and maturity.

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