How would you define the point at which a family is poor in this country? How about in San Francisco? Most people are shocked when they learn how the federal government measures poverty. If you’re unfamiliar with this number you too will be shocked. Especially if you are a Californian.

According to the Feds, a family of three has to be earning under $17,600 per year to be poor. Let’s put this into perspective: The average family income in San Francisco is $94,000 per year, according to HUD, and the average is about $50,000 per year for the entire United States. But there is no allowance to adjust poverty levels locally. In addition to being unfair, this is unreasonable.

The Federal Poverty Rate is an absolute dinosaur of policy tool. It might even be funny if its obsolescence didn’t make it so harmful for tens of millions of poor Americans. Mayors across the nation have long bemoaned this discrepancy – because it has shortchanged cities of cash they’ve needed to serve the huge number of poor people the federal government won’t recognize, due to where the poverty line rests.

But it appears local efforts at redefining a definition of poverty, by Mayors, has created some new momentum at the national level.

A September 1st, 2008 NY Times article describes a meaningful, bi-partisan effort in Congress to redefine the poverty line. According to the article, “Democrats and Republicans alike say [the federal policy level] is hopelessly outdated…This month, Representative Jim McDermott, the Democrat from Washington who is the chairman of the House subcommittee on income security, plans to introduce legislation that would require the government to develop a more modern and accurate method to determine who is poor.” For more click here.

What is now unclear is how the staggering $700 billion price tag on the bailout package might make reasonable legislators think twice before they expand the universe of people who become eligible for federal aid.

I recently had the opportunity to participate in a working group tasked with identifying strategies that encourage CalWORKs clients to take full advantage of asset building programs and services. As mandated by AB 1078 (Lieber), a bill that was signed into law earlier this year, the California Department of Social Services (CDSS) assembled this large working group in Sacramento recently.

As I’ve reflected on this day, I’ve been struck by the promise this group has and what a shift this conversation represents. I was heartened that asset-building was finally being officially integrated in the state’s approach to helping low income families get ahead.

Representatives from the public and nonprofit sectors working on local, county, and state levels engaged in lively discussions to identify effective administrative and legislative strategies that encourage CalWORKs families to take advantage of

Earned Income Tax Credit (EITC), a refundable tax credit that is among the nation’s most effective tools in helping families leave poverty;

Save or invest part of their EITC funds;

And, leverage their savings through matched savings programs such as Individual Development Accounts (IDA)

The upshot of this group will be a formal report to elected officials. Findings and recommendations made by EARN and APIC along with other public and nonprofit organizations will be outlined to the legislature and released December 1, 2008. We hope creative conversation like this grow within California and in states around the nation.

FDIC, which took over IndyMac last month, has unveiled an ambitious plan this week to help thousands of troubled IndyMac borrowers repay their mortgages and stay in their homes. The FDIC will be mailing out about 25,000 loan modification proposals to borrowers whose mortgages it currently owns and services.

This plan aims to assist 37% of IndyMac’s seriously delinquent borrowers by conditionally modifying the loan into a fixed-rate mortgage with an interest rate capped at 6.5%. Once the modification offer reaches the borrower, all they need to do is sign the new agreement, send a check for their new mortgage payment, and information necessary to verify income.

“Keeping borrowers in their homes is the optimal low-cost choice,” says Sheila Bair, Chairwoman of the FDIC.

Recent FDIC research finds that sales of performing loans to outside investors recover 87 cents on every dollar, compared to 32 cents for nonperforming loans.

The large-scale nature of this new program hopefully signals a paradigm shift in the way regulators and banks assist borrowers. Analysts predict dozens of small bank failures in the next two years. If successful, this loan modification plan could be FDIC’s new strategy in the event of a similar bank takeovers.

To learn more click here and here.

A new documentary produced by the California Reinvestment Coalition (CRC) entitled “Mo’Money, Mo’Money, Mo’Money” shows how foreclosures destroy the dreams of California families and threaten the stability of small businesses, city governments, and neighborhoods.

The film reveals how this disaster could have been avoided if regulators and government officials had not ignored predatory lending practices.

California accounts for a quarter of all foreclosures in the country and seven of the state’s cities are consistently in the list of top ten foreclosure rates in the nation. Earlier this year, seven bills were introduced in the California legislature to address the mortgage foreclosure crisis. Despite strong support from community groups, the legislature only passed one meaningful bill.

To view the documentary and learn more click here.

The California Homeownership Preservation Initiative has announced that over the next two years, mortgage counseling agencies will receive $5 million to conduct outreach, hire, and train mortgage counselors throughout the state.

It is predicted that half a million California mortgage borrowers will struggle to make payments on their home loans in the next two years. To address this growing need, grants have been awarded to 39 mortgage counseling agencies enabling them to serve over 40,000 troubled home loan borrowers residing predominantly in low-moderate income neighborhoods, communities most impacted by predatory subprime loans.

California Reinvestment Coalition partnered with Merryl Lynch, HSBC-North America, Wachovia Bank, Comercia Bank, Wells Fargo Bank, Countrywide Financial, Citi, Bank of America, Washington Mutual, JP Morgan Chase, San Francisco Foundation, and California Community Foundation to create this $5 million initiative.

Adjustable Rate Mortgages originated during the housing boom are expected to reset for tens of thousands of families in California in the coming year. An overwhelming number of California homeowners will be looking to modify the terms of their loans as payments become unaffordable. Anticipating the growing need for effective housing counselors in the State, the California Reinvestment Coalition has raised $4 million dollars in funding from major financial institutions for a two year initiative aimed at increasing capacity of mortgage counselors to better assist troubled homeowners.

Thus far Merrill Lynch, HSBC, Wachovia, Countrywide, Comerica, Wells Fargo, Bank of America, and Citibank have contributed to this program and fundraising efforts are ongoing.

CRC expects to work with partners to issue an RFP making funds available for housing counseling agencies to help families suffering from the sub prime crisis.

The APIC blog will post updates on this RFP as the project evolves.

Under a recent plan announced by Governor Arnold Schwarzenegger, four major subprime lenders promised to freeze the initial, lower mortgage interest rates for subprime borrowers who cannot afford their escalating mortgage payments. According to Barclays research estimates, this will help about 12 percent of borrows with adjustable-rate subprime loans.

Countrywide Financial Corp., GMAC Mortgage, Litton Loan Servicing and HomeEq Servicing—together have serviced more than 25% of California’s subprime loans, however under this voluntary agreement, the four lenders have agreed to contact borrowers before their rates adjust and establish a streamlined process for handling loan modifications. To qualify for this special program, the borrower is required to occupy the home, have made their payments on time, and prove they cannot afford payments with the higher interest rate.

The agreement states that all four loan servicers will provide this interest freeze program for a ‘sustainable’ period of time.

“Lenders could freeze rates for five years or longer, but terms will depend upon each borrower’s situation” Schwarzenegger said.

“We’ve been in like a desert of despair. There’s not been any good news, and it had not appeared the state was taking sufficient steps to intervene…This seems to be a significant step.” Said Kevin Stein, associate director of the California Reinvestment Coalition who was quoted in The Sacramento Bee. Advocates for lending policy change remain cautiously optimistic about the impact of these approaches, and note that the real impact will be driven by program design details.

I was just a child during the Vietnam War. It didn’t really register for me. When I moved to San Francisco as a young adult and did advocacy work with homeless people, I was upset to learn that a third of the folks on the city’s street were military veterans and most had served in Vietnam. They were soldiers who returned from the trauma of war, to a country ambivalent (at best) about their service and shamefully unprepared to help them make their way back to a stable civilian life.

Fast-forward thirty years. America is again engaged in a protracted, potentially futile, certainly unpopular war. But now I’m a grown up; this war is happening on my generation’s watch. The people fighting are our peers, and some are even our children. Regardless of what we think about the current war, it is imperative that we not neglect our soldiers, as this country did after Vietnam. We must remember that for the soldiers, the struggle isn’t over when the war ends.

Already more than one third of Iraq and Afghanistan war veterans are suffering from post traumatic stress disorder (PTSD) or traumatic brain injury (or both), and these numbers are certain to grow. Forty percent of our soldiers are Reservists and National Guard members.

They tend to be older and have left behind families, financial responsibilities and jobs. After serving multiple tours, they are too often returning to find their jobs gone and their families in economic distress.

Unemployment among young veterans (ages 20-24) is currently 15%, three times the national average for this age group. And preliminary research shows extremely high rates of sexual trauma for women in the service (20%-40%), making them particularly vulnerable to PTSD.

Some of our policymakers are waking up to this reality, recognizing that many veterans and their families will need substantial services and opportunities to successfully transition back to civilian life. In its November e-newsletter, APIC highlights recent legislation including the proposed Twenty-First Century GI Bill of Rights Act (SB1409), which would expand education benefits, business development assistance and favorable homeownership financing for veterans of the Iraq and Afghanistan wars.

These are critical initiatives. But those of us devoted to helping low-income people build wealth and achieve lasting economic advancement also need to take a fresh look at this issue: How can we tailor asset-building strategies to ensure they reach and are of value to veterans and their families? It is a challenge well-worth grappling with and I look forward to your thoughts.

Amanda Feinstein is the Program Officer for Economic Security at the Walter and Elise Haas Fund in San Francisco.

California is ground zero in the nation’s subprime mortgage foreclosure crisis. According to Realty Trac, California ranks third among all states, and is home to six of the 10 hardest hit metropolitan areas in the country, from Sacramento down to Stockton and Fresno, and through the Inland Empire to San Diego. Like the demographics of subprime lending, foreclosures are falling disproportionately on Latino and African-American homeowners, taking not just most of their wealth, but also the chance to pass along wealth to their children. All told, more than one in five of all subprime mortgages originated in 2006 will end in foreclosure, with as many as 500,000 lost homes coming from loans made between 1998 and 2006. And foreclosure stories dot the front pages and business pages of all California’s major dailies.

Despite the large and growing sweep of the foreclosure problem, the response of state lawmakers has been muted. Unlike other hard hit states like Ohio, Massachusetts and Colorado, California lawmakers have not even attempted to provide any relief to subprime borrowers who are at risk of foreclosure. These states have mobilized stakeholders, energy and resources to fund and train housing counselors to help borrowers negotiate with lenders and have crafted creative financing mechanisms to help borrowers in crisis. Other states, like North Carolina and Maine, have embraced far-reaching reforms to provide subprime borrowers with greater protections in the future. By contrast, California took almost a year to enact limited federal regulatory protections (after 35 other states) and passed ineffective reforms to the appraisal process. Lawmakers could not even agree on providing non-English speakers the right to receive a simple summary of key terms in their native language.

I’m not sure what explains the lack of attention to this immediate crisis which threatens to plummet California’s economy into recession, though I have a few theories. First, the crisis emerged last winter well after the state’s big ticket legislative agenda—including prison reform, the state budget and health care reform had been set. Second, the legislature’s banking committees are dominated by industry-friendly moderates who are expected to generate large campaign contributions from banks and other mortgage lenders, while those affected by foreclosures are a diffuse, disorganized constituency who don’t necessarily look to Sacramento for help. Third, the sheer size and scope of the problem may have paralyzed lawmakers from attempting to tackle it despite the massive media attention.

Whatever the reason, it’s time for the legislature and the governor to show some leadership and work immediately to help borrowers at risk of losing their homes right now and provide subprime borrowers with greater protections in the future.

Paul Leonard directs the California operations of the Center for Responsible Lending (CRL) a non-profit, non-partisan research and policy organization dedicated to protecting homeownership and family wealth by working to eliminate abusive financial practices. CRL is affiliated with Self-Help, one of the nation’s largest community development financial institutions.

Speaking to the Congressional Black Caucus, Democratic front-runner Hilary Clinton spoke about her baby bond proposal saying, “I like the idea of giving every baby born in America a $5,000 account that will grow over time so when that young person turns 18, if they have finished high school they will be able to access it to go to college, or maybe they will be able to put that down payment on their first home, or go into business.”

Her announcement sparked a short, but heated national debate over the feasibility and success of such a policy. Rudolph W. Giuliani opposed Clinton’s idea saying, “Now, I know this never occurs to the people like Hillary and the other Democrats here in Washington…[that] This costs money.”

The Los Angeles Times published an article in reference to the criticism and the negative media spin sparked by her proposal. The LA Times argued that baby bonds are actually more feasible than critics claim. Not only do similar policies enjoy bipartisan support in the US, but countries such as Britain have instituted very similar programs. “The intellectual history of this idea is property ownership…the idea is to put children on a path toward lifetime savings and wealth accumulation, a notion that appeals to conservatives and liberals” said Ray Boshara, Director of the Asset Building Program at the New America Foundation.

For example, “When everyone was talking about Social Security and savings and retirement security, this was the only idea that brought Democrats and Republicans together.” Boshara argued in a recent piece in the Washington Post.

Unfortunately, Clinton has publicly disavowed her baby bond idea, declaring to the Wall Street Journal that it was off the table. Policy makers and advocates of similar policies such as the ASPIRE Act are sad to lose Clinton’s ability to give currency to this idea. Hilary’s public disavowal begs the question of whether the asset building field risks losing further momentum after her change of heart.

The good news is that Hilary Clinton is offering new savings plans that would match every 401(k) retirement account up to $1,000 annually. Here’s hoping this proposal has a longer shelf life!