House Financial Services Subcommittee Issues Statement From Housing Assistance Council Research & Information Director George
* * *
Chairman Cleaver, Ranking Member Hill, and members of the Subcommittee, greetings and thank you for this opportunity to testify on persistent poverty in rural America, specifically the colonias, the Black Belt, and the
HAC helps build homes and communities across rural America. Founded in 1971, headquartered in
HAC also produces robust research on rural housing, demographics, and poverty, with leading public and private sector institutions relying on HAC's research and analysis to shape policy. We are independent, non-partisan and regularly respond to Congressional committees and Member offices with the research and information needed to make informed policy decisions. If you need to know how a new program or policy could impact America's smallest towns, please don't hesitate to call on us. It is an honor to be here in this capacity today, on a panel with so many distinguished experts.
Persistent Poverty Landscape
The issue of poverty is complex, but it is much more than an abstract condition for the over 37 million Americans who face daily struggles with food insecurity, access to health care, and search for basic shelter. Poverty is often imagined as an urban issue in the national discourse, but some of the country's deepest and most persistent poverty can be found in rural areas. Identified as "Persistent Poverty Counties," these communities are generally rural, isolated geographically, lack resources and economic opportunities, and suffer from decades of disinvestment and double-digit poverty rates.
Persistently poor counties are classified as having poverty rates of 20 percent or more for three consecutive decades. Using this metric, HAC estimates there were 377 persistently poor counties in 2020 using data from the
Between 2010 and 2020 the overall number of Persistent Poverty Counties declined, but some counties were added to the list. The number of Persistent Poverty Counties declined from 433 in 2010 to 377 using the 2020 data. Overall, 70 counties moved off the persistent poverty list while 13 counties that were not classified as having persistent poverty in 2010 reached that threshold in 2020. Three-hundred and sixty-three counties were classified as persistently poor in both 2010 and 2020. One of the initial findings from the new analysis is the continuation of many counties classified with persistent poverty status. Approximately 78 percent of Persistent Poverty Counties in 2020 have been in this status consistently since 1980. The map below shows the change in Persistent Poverty Counties from 2010 to 2020. Yellow counties are those that left the Persistent Poverty County list in 2020 and the pink counties are those that were newly added.
* * *
1
2 Ibid.
* * *
One of the consistent features of many Persistent Poverty Counties is their clustering within several rural geographic regions that have a large footprint over
* * *
3 Partners for Rural Transformation, "Persistent Poverty in America," accessed
* * *
One highly visible impact of this economic distress can be seen in these areas' housing conditions. The incidence of housing units lacking adequate plumbing is twice the national rate, and over 380,000 households in Persistent Poverty Counties live in crowded conditions. Additionally, while housing costs are relatively low in many of these communities, more than half of Persistent Poverty County renters encounter affordability problems and are considered housing cost burdened (defined as paying more than 30 percent of income in rent).4 Mortgage and housing finance are similarly unbalanced in persistently poor communities. Mortgage activity including applications and loan originations are substantially low in many Persistent Poverty Counties. Likewise, more than one-quarter of mortgage applications were denied in these communities - more than six percentage points higher than the national rate. And when loans are made in persistently poor communities, they tend to have higher interest rates. The level of 'high-cost mortgages5' in these counties is two-thirds higher than the rate than for all mortgage loans in the United States.6 Colonias
In
Despite being categorized together, colonias vary extensively within the border region, from small clusters of homes located near agricultural employment opportunities to established communities whose residents commute to nearby urban centers.7 The
* * *
4
5 A higher-priced mortgage loan is defined by the
6
7 Guillermina G. Nunez-Mchiri, "The Political Ecology of the Colonias on the
* * *
Various other factors led colonia development within each border state. The increased visibility of colonias in
* * *
8 Federal Reserve Bank of
9
10
11
12 Federal Reserve Bank of
13 Parcher and Humberson, "CHIPS."
14 Donelson and Holguin, "Homestead Subdivision," 39-41; Mukhija and Monkkonen, "Federal Colonias Policy in
15 Nunez-Mchiri, "Political Ecology," 70; Mukhija and Monkkonen, "Federal Colonias Policy in
16 Donelson and Holguin, "Homestead Subdivision," 39-41.
* * *
Additionally, manufactured homes are an important part of housing in both the border region as a whole and colonias in particular. A review of HMDA data finds that loans involving manufactured homes represent a relatively large share of lending in rural areas in general and are even more prevalent in colonias. Approximately 15 percent of all home loan originations in rural colonias involved a manufactured home, which is more than twice the percentage for rural areas in general.
To address the poverty and lack of infrastructure present in communities along the border and to target funding to these areas, several federal agencies and policymakers have developed geography-based definitions of colonias over time. These governmental definitions vary, and the criteria of what exactly constitutes a colonia continues to be challenging.
In 2020, HAC developed the concept of "Colonias Investment Areas" to improve comprehensive understanding and definition of colonias for the purpose of home mortgage finance.17 The ultimate goal of this research was to create a usable and programmatic definition of colonias so that mortgage and finance resources may be more efficiently directed to these often overlooked and long-struggling communities.
The Colonias Investment Areas concept relies primarily on the
1. Identification: Create a universal list of officially recognized colonias from existing lists of colonias established by federal, state, tribal, or local governments.
2. Location: Geolocate the recognized colonias records on a map, using census blocks.
3. Aggregation: Aggregate the identified census blocks into tracts.
4. Compilation: Consolidate disparate data into one uniform Colonias Investment Area database.
5. Exploration: Conduct preliminary analyses to better understand basic social, economic, housing, and mortgage finance elements of the constructed Colonias Investment Areas and compare them to larger regional and national dynamics.
6. Feedback: Obtain expert and stakeholder feedback on the concept of Colonias Investment Areas.
The map below shows in brown what areas are captured by HAC's Colonias Investment Area definition.
* * *
17
* * *
The
Southern Black Belt
The Southeastern region of
A significant challenge to housing wealth in the Southeast region is the issue of heirs' properties. Because Black families were excluded from federal, financial, legal, and housing systems, some developed their own methods of generational land control that did not include established wills or other means of estate transfer through the legal system. An heirs' property occurs when the owner of a property dies without a will. The rights to the property transfer to the deceased's heirs over generations. Residents of heirs' properties are unable to access legal and financial systems because they do not hold clear legal title. They are also ineligible for insurance and disaster recovery aid. These properties can be vulnerable to exploitation from development corporations.
* * *
18
* * *
The path toward identifying and resolving issues with heirs' properties must include systemic changes and individualized assistance. While one-on-one aid to assist families in clearing their titles is essential, meaningful and sustainable change must include policy improvements and allowances for residents of heirs' properties to access emergent capital and services. The path towards resolving this issue begins with opportunities to identify and provide aid to heirs' property owners. Various organizations and researchers have identified regional methodologies for estimating the magnitude of heirs' properties. HAC, in collaboration with partners, is conducting a substantial effort to help better understand this long overlooked issue and solutions for remedying it.
Rural areas comprise 97 percent of the nation's land mass and are spread across a vast and diverse set of communities. These areas include homes and populations in often overlooked
Throughout HAC's history, we have provided both technical assistance and lending in the
* * *
19
* * *
Challenges and Opportunities in Addressing Persistent Poverty
Persistently poor rural communities all face unique regional and local challenges and have unique local assets, strengths, and opportunities. To combat geographic inequality and its attendant downsides, HAC recommends proactively considering geographic factors in federal policymaking. In our experience, and given the persistent poverty landscape outlined above, there are two critical factors necessary to build equity in persistently poor rural places: local organizational capacity and access to capital. Additionally, tailoring of federal resources and improving the reliably and availability of rural data would improve equity for Persistent Poverty Counties.
Federal investment in capacity building launched almost every successful local and regional housing organization that we know today. However, very few of those local organizations are in rural regions. Fewer still work in areas of persistent rural poverty. The power of capacity building in rural communities cannot be overstated. Rural communities often have small and part-time local governments, inadequate philanthropic support and a shortage of the specialists needed to navigate the complexities of federal programs and modern housing finance. Targeted capacity building through training and technical assistance is how local organizations learn skills, tap information, and gain the wherewithal to do what they know needs to be done. Rural places need increased capacity building investment in order to compete for government and philanthropic resources. Without deeply embedded, high-capacity local organizations, available federal funding and other capital will never evenly flow to persistently poor rural communities.
Access to Capital
In recent decades, many rural regions have been stripped of their economic engines, financial establishments, and anchor institutions. Persistently poor areas are often characterized by a history of extractive industry. The result is that Persistent Poverty Counties face a dire lack of access to capital. Without access to financial services and capital, individuals cannot access safe credit and financial literacy resources, businesses cannot grow and serve the needs of their communities, and ultimately the communities' economies cannot thrive. The banking industry has undergone considerable consolidation, with the number of lenders insured by the
HAC supports systems such as the Community Reinvestment Act and Duty to Serve requirements, which encourage traditional lenders to meet local needs, and we also support provision of alternative financing options. For example, community development financial institutions (CDFIs) are private, mission-focused financial institutions that offer responsible, affordable lending to low-income, unbanked and underserved people and communities. For more than 30 years, CDFIs have had a proven track record of making an impact in the most high-needs rural regions. As banks have consolidated and pulled back from serving the deepest pockets of poverty, CDFIs have stepped into the breach and are working in rural regions and Tribal areas across the country to address the financial services needs of otherwise unbanked communities.
Tailoring of Federal Programs
Often, federal housing programs are not well-suited to function in the rural, persistent poverty context. Capacity challenges make it difficult for rural places to compete for funding with larger metropolitan areas. Additionally, available data on rural areas is often partial and inaccurate, making it difficult to define the true need. Public and private funding naturally flows to the highest capacity, simplest to serve communities, so HAC encourages proactive consideration of persistently poor communities in the federal policymaking process. Tools like
One specific policy that could have positive impacts for persistently poor rural communities is the creation of a program to improve manufactured housing opportunities. Manufactured homes are a too often overlooked and unfairly maligned component of our nation's housing stock. The physical quality of manufactured housing has improved substantially in recent years and continues to progress due to responsible regulation and advances in technology. However, the basic systems by which these homes are sold, financed, managed, and insured are still often problematic and in need of improvement to ensure that manufactured homes are a reliable affordable housing option for sometimes vulnerable populations.
There are approximately 6.7 million occupied manufactured homes in
HAC supports the creation of a manufactured housing program and has been glad to see the bipartisan support for this issue in the House Fiscal Year 2023 Transportation-HUD appropriations bill.
* * *
20 Congressman
21
* * *
Data Reliability
A lack of available data to conduct assessments on the effectiveness of a particular program or regulation in persistently poor rural places is a constant challenge - obscuring the realities of rural needs and corresponding federal responses. Without that data access, the scape of informed stakeholder engagement is limited.
For example, the 2020 Home Mortgage Disclosure Act (HMDA) final rule22 gutted housing data collection in rural communities, especially those that are already underserved by traditional financial services.
Since the 1980s, HAC has prepared a research publication titled Taking Stock every ten years following the release of decennial Census data. In the next few months, HAC will be releasing our newest iteration of this publication looking at rural people, poverty, and housing trends from the 2020 Census. We look forward to sharing this resource with the Subcommittee when it becomes available.
Conclusion
Persistent poverty is a too-little-discussed condition in our country, and HAC appreciates the Subcommittee's interest in this topic. It is something that has been core to our mission for the last five decades. HAC looks forward to continuing our work with
* * *
22
* * *
Original text here: https://financialservices.house.gov/uploadedfiles/hhrg-117-ba04-wstate-georgel-20221115.pdf
House Financial Services Subcommittee Issues Testimony From Hope Policy Institute VP Burt
House Financial Services Subcommittee Issues Testimony From Coalition for a Prosperous America Senior Economist Ferry
Advisor News
- Regulator group aims for reinsurance asset testing guideline by June
- Bessent confirmed as Treasury secretary
Former hedge fund guru to oversee Trump's tax cuts, deregulation and trade changes
- Jackson National study: vast underestimate of health care, LTC costs for retirement
- EDITORIAL: Home insurance, tax increases harm county’s housing options
- Nationwide Financial Services President John Carter to retire at year end
More Advisor NewsAnnuity News
- MetLife Among the World’s Most Admired Companies by Fortune Magazine
- Aspida and WealthVest Announce a Suite of New and Enhanced Indices for Their WealthLock® Accumulator Product
- Brighthouse Financial Inc. (NASDAQ: BHF) Sees Notable Increase in Tuesday Morning Market Activity
- Hexure Integrates with DTCC’s Producer Authorization, Providing Real-Time Can-Sell Check within FireLight
- LIMRA: 2024 retail annuity sales set $432B record, but how does 2025 look?
More Annuity NewsHealth/Employee Benefits News
- Plan to tax employer-provided insurance would harm lower-income Hoosiers
- 'Floridians need to pay attention.' Are we prepared for federal cuts to our health care?
- New New York state tax credit for small businesses introduced
- How did health insurance coverage changes affect older adults? Two new studies take a look: Michigan Medicine – University of Michigan
- Montana House approves pay raises for state employees, legislators
More Health/Employee Benefits NewsLife Insurance News
- Legals for January, 31 2025
- Automatic Shelf Registration Statement (Form S-3ASR)
- Best’s Special Report: Impairments in US Life/Health Insurance Industry Jump to 10 in 2023
- AM Best Maintains Under Review With Developing Implications Status for Credit Ratings of Solidarity Bahrain B.S.C.
- AM Best Maintains Under Review With Developing Implications Status for Credit Ratings of First Insurance Company
More Life Insurance News