Providing Vital Services to Homeowners in Puerto Rico
In the U.S., unemployment is low and economic growth is on the rise. Unfortunately, the same can't be said about the current state of economic affairs in Puerto Rico, where 11 percent unemployment (1), declining wages (2) and the looming prospect of a $70 billion debt default have touched every aspect of daily life for citizens of the Commonwealth of Puerto Rico. Nearly half of all residents of Puerto Rico officially live in poverty (3), while three out of every four households (4) lack sufficient savings to sustain themselves for three months in the event of a financial emergency or shock to income. According to the Commissioner of Financial Institutions of Puerto Rico, the rate of housing foreclosures has soared nearly 90 percent in the past decade (5), even as the housing markets in most other regions of the U.S. have stabilized since the economic crisis in 2008.
Puerto Rico's widespread household financial vulnerability threatens to place the dream of home ownership out of reach for many, while putting existing homeowners in jeopardy and further destabilizing many already vulnerable communities and the island's fragile economy. This predicament may account for the fact that the Commonwealth is experiencing its largest outmigration in more than half a century, as families search for greater stability and opportunity off the island. To help stabilize Puerto Rico's economy and support efforts to slow the exodus, Citi Community Development is investing $300,000 in several new and vital programs designed to assist aspiring homebuyers and struggling homeowners seeking to avoid foreclosure.
On May 31 in San Juan, in the offices of the U.S. Department of Housing and Urban Development (HUD), a room packed with housing counselors from Puerto Rico's leading housing counseling organizations kicked off a training initiative that will significantly expand access to high quality support services to vulnerable households across the Commonwealth.
According to HUD, borrowers who use housing counseling are at least 30 percent less likely to go into foreclosure. Additional research by The Urban Institute shows that borrowers who have missed payments on a mortgage are up to 50 percent more likely to get up-to-date with their payments if they avail themselves of counseling services.
The program will enable four leading housing counseling organizations to use new and effective strategies of support to serve 2,000 low-and moderate-income individuals and families in Puerto Rico. The organizations include One Stop Career Center of Puerto Rico, Puerto Rico Neighborhood Housing Services, Ponce Neighborhood Housing Services and PathStone, while further technical assistance will be provided by the National Council of La Raza.
Additional support went to the Puerto Rico Community Foundation, which will help build the capacity of nonprofit housing developers to acquire and rehabilitate real estate owned residential properties.
This initiative is a key component of Citi's broad-based approach to expanding homeownership opportunity and financial resiliency for low- to moderate-income residents in Puerto Rico. In 2016, Citi Community Capital provided $17 million for Las Gladiolas, a new construction of 140 units in 17 buildings on 7.2 acres of land in San Juan – 80 percent of which will be occupied by individuals living at or below 60 percent of the area median income.
By supporting the training and certification of housing counselors, we're strengthening the ability of these local organizations to enable growth and economic progress and help more families in need to develop the critical financial management skills they need to save, build credit and avoid foreclosure. By bolstering the financial resilience of residents, we can preserve and create homeownership opportunities that will help stabilize more neighborhoods across the Commonwealth of Puerto Rico.
[1] https://www.bls.gov/eag/eag.pr.htm
[2] https://datausa.io/profile/geo/puerto-rico/#economy
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