Suppose some local genius came up with a scheme to strengthen neighborhoods, keep families together, help the economy and reduce homelessness, all while saving millions of dollars for the federal government and the private sector. Suppose also that the scheme was no mere theory but a program of demonstrated effectiveness. What do you suppose might happen?
If you are an optimist, you would guess that the program would be eagerly embraced, replicated across the country and held up as a national example, and that its originator would be summoned to the White House for one of President Bush's "points of light" awards.
If you are a cynic, you'd guess that someone would find a way to kill it.
Score one for the cynics. Barring an 11th-hour reprieve, the Home Owners Protective Effort (HOPE) will be out of business by the end of the month -- the victim not of bad guys or greed or heartless officials but of bureaucratic inertia.
HOPE is the brainchild of Jim Butler, president and chief executive officer of Housing Opportunities Inc., a McKeesport, Pa., nonprofit agency started in 1975 to help financially strapped first-time buyers find mortgage financing and to build and rehabilitate housing in the area's declining neighborhoods.
But then, with the closing of the steel mills, the area found itself with an even more critical problem: finding a way to help existing homeowners keep their homes. That's when Butler founded HOPE as an arm of Housing Opportunities.
It was, it turned out, a brilliant idea. HOPE counselors would work with families threatened with foreclosure, both to help them juggle their drastically reduced incomes in ways that would allow them to keep their homes and to help them with access to governmental and private sources of cash, food, clothing and other resources. The counseling fees would be paid by the banks and other interested institutions -- but only if HOPE succeeded in getting the mortgages paid up.
"The crucial fact," says the 42-year-old Butler, "is that lenders lose money on foreclosures -- an average of about 37 cents on the dollar. They found it cheaper to pay us to help people save their homes than to foreclose, particularly since we don't get paid unless we are able to prevent the foreclosure. It was also good PR for them."
In short order, Butler had expanded his program to include five counties around Pittsburgh, of which McKeesport is a suburb. Six years ago, with a solid record of success in Pennsylvania, Butler approached the federal Department of Housing and Urban Development with the idea of replicating the approach in other parts of the country.
HUD bought it. Beginning with a sole-source contract of $75,000, HUD gradually expanded its participation to more than $1 million a year. Programs were launched in Houston, Dallas, Fort Worth and Denver. The Federal National Mortgage Association (Fannie Mae) kicked in, as did "MAGIC" -- the Mortgage Guaranty Insurance Corp., the country's biggest issuer of mortgage insurance. The private sector put in slightly more money than did the government.
And it worked. During the past six years, HOPE has prevented some 2,600 foreclosures at a savings, according to Butler, of some $6.5 million. One Pittsburgh bank, Pittsburgh National, has instituted a policy that it will not begin the foreclosure process without first referring the family to HOPE. It's simply good business. "For every dollar they pay us in fees, they are saving $5.08," says Butler, a contention HUD does not dispute. HUD Secretary Jack Kemp was so enthusiastic about the program that, on a February visit to McKeesport, he promised that his agency would work to become an "even better" partner of HOPE. HOPE was so excited by the prospect that it put Kemp on the cover of its annual report.
Now the entire program is in trouble. Why?
As a result of the HUD scandals, officials there are afraid to death of sole-source contracting -- even though HOPE's unique and unquestionably effective program would make it a likely recipient of sole-source contracts. Even so, Butler is willing to do business with HUD on a bid basis. The problem is that since HUD hasn't gotten around to issuing the necessary requests for proposals, there's nothing to bid on. And because HUD has become such a major participant in the program -- and because so much of Butler's meager resources have been devoted to replication -- the whole scheme is likely to collapse when the present contract expires at the end of this month.
The cynics won't be surprised. I will be. HOPE is too perfect an example of the president's idea of private/public undertakings and too exemplary of Kemp's own notion of "bleeding-heart conservatism" for me to believe they will let it die.
The problem is that the issue has been buried in the HUD bureaucracy and didn't come to Kemp's attention until a couple of days ago when Robert L. Woodson, president of the National Center for Neighborhood Enterprise and a recent winner of a MacArthur Foundation "genius" award, called it to his attention.
I'm willing to bet that, now that Kemp is aware of the situation, he will steal a page from the Jesse Jackson phrasebook and keep HOPE alive.