A Happy Story About Housing

My colleague Andrea Riquier writes at MarketWatch about housing and the housing companies and organizations like Fannie Mae and Freddie Mac.  Fannie and Freddie, the government sponsored entities or GSEs, now have a cult following that follows us both around on Twitter anytime we mention them.  That’s because the two organizations were, after the financial crisis, put under a conservatorship led by the FHFA and then subjected to a US Treasury profit sweep that is not too popular with the remaining minority shareholders of both.

In fact, the shareholders of both have sued many parties involved, including the federal government and the auditors of both, Deloitte and PwC, respectively, over what they say was a master plot to take their rightful property.  In both cases against the auditors the plaintiffs say that the audit firms plotted with the government to falsify the accounting at both entities to make them look financially weaker and therefore subject to takeover.

For more on that controversy you can read Andrea’s story here, and one by her predecessor Ruth Mantell, who is now at The Pew Trusts, here.

PwC settled its Freddie Mac shareholders suit, not long after settling its exposure to the Taylor Bean & Whitaker bankruptcy I write about here, also with a sealed agreement.  That knocks a fourth trial exposure out but still leaves two more for early next year – Colonial Bank and MF Global. The case against Deloitte is still pending.

(It’s not the first time the auditors have been sued by the GSE shareholders. Find a summary of my writing on the subject here.)

Andrea took a field trip to Indiana earlier this year on a tip about a group that helps people struggling to get their act together and prepare for home ownership.  It’s a nice thing to see, given all the ongoing struggles many still have with jobs, finances and the challenges of this economy, especially in the heartland.

Andrea is a career changer like me, although not as recently.  Before coming to MarketWatch she was the economy and central banks reporter for Investor’s Business Daily, a beat which included housing, jobs, manufacturing, consumer spending, the Fed, the Bank of Japan, and how the ECB handles challenges for the future of the Eurozone. Before that she covered distressed and high-yield municipal debt, as well as more general public finance issues for Debtwire. She broke lots of news about public pensions, especially about CalPERS. She had a career in not-for-profit before deciding to take on some debt to attend the Columbia Journalism School, where she received a Master’s degree. Her undergraduate degree is from Boston University, where she studied film.

Andrea’s story is called, “Life Happens”:

[Dawn Newerth’s] car died five months after she’d knocked on the door of the Indianapolis Neighborhood Housing Partnership. Seeking the group’s help buying a home, she learned how to set up a budget and clean up her credit along the way.

INHP — and organizations like it across the country — are invaluable to people like Newerth, guiding them into starter homes in unsexy neighborhoods and housing markets many miles and dollars from high-profile locales like New York and San Francisco.

They help thousands build long-term wealth and become anchors in their communities not just by getting them into houses — but by helping them pick the right ones and then keep them.

INHP prepares clients for a roof that leaks a month after closing, unexpected medical bills and cars that start smoking just before the mortgage comes through. It does this with a simple motto its counselors say matters more than choosing a loan or real-estate agent: “Life happens.”

At a time when so much seems broken — from the housing finance system to the safety nets that were supposed to help people — organizations like INHP can seem like the makers of small miracles, helping ordinary people participate in the American dream.

Its program can be a slog. Finishing can take years. INHP’s clients usually have challenges: too much debt, dented credit scores, low salaries.

And they’re often what INHP calls “problem avoiders,” people who let financial issues pile up unaddressed.

Not Newerth.

“I’m not too prudish to ride the bus,” she said in May. “If that’s what it takes, I will do it.”

Enjoy Andrea’s story.  It’s a little bit of happiness for the holidays.