Building stronger communities

Over the past year I’ve been thinking and talking a lot about community -- exploring a longing for a deeper connection to place, nature, and neighbors.

Over the past couple of weeks I’ve been thinking a lot about our economy. It seems to me that low interest has exacerbated our societal infatuation with instant gratification and our aversion to saving and building wealth. But it is not enough to identify our addiction to credit both corporately and personally, the true challenge with any addiction is breaking it.

Thinking about getting out of debt, I was initially overwhelmed by the thought of paying off our $190,000 mortgage. My wife and I can afford the monthly payments and the mortgage has a fixed rate but even paying over the monthly minimum leaves us in debt for years to come. Then I thought, if I could get $1,000 from 190 people I could pay off this mortgage. That doesn’t seem so impossible. More importantly in lead to thinking about Amish barn building and the power of a community to do what an individual cannot.

Loving our neighbors by freeing them from debt

So here is the idea. What if a group of people pooled their resources to eliminate debt and enable people to own their homes? I think this would build stronger communities by providing a mechanism for us to give and receive from our neighbors, keeping wealth local, and by encouraging people to commit to staying in the community. Here is the plan.

Form a community development association that would collect $1,000/yr dues. If we had 100 people in the association this would raise $100,000 capital. This money would be for the sole purpose of paying off mortgages starting with the CDA member who has the lowest remaining mortgage balance. If that person owed say $80,000 the CDA would give them a grant for that amount on two conditions. 1) They continue to make their mortgage payments for 1 more year but the money goes back to the CDA. 2) If they sell their house within 10 years of receiving a grant they must return 50% of the grant money to the CDA.

One plan for the incoming “mortgage payment” money and any grant refunds would be for the CDA to invest them in a local bank. The interest from this money would form an important secondary source of revenue that could cover administrative cost (so dues go 100% towards paying mortgages) and eventually augment the power of the CDA to give grants.

While all of this is up for grabs, here is how I would answer some anticipated questions.

Q. Why pay off the lowest mortgage balance since those people are paying less interest?
A. I think it is important that the CDA rewards people who a) have worked hard to lower their mortgage balance and b) buy modestly priced houses. Also it is the in the interest of the CDA to pay of multiple mortgages per year b/c that increases income for the following year from substitute mortgage payments. It also increases the number of people we can help.

Q. If the CDA pays off one mortgage per year and there are 100 members how will you ever pay off everyone’s mortgage?
A. We will not. Giving to the CDA is not an investment in the sense that you put money in and then eventually get money back out. Instead it is an investment into the lives of our neighbors helping free them from debt. It is also a tangible investment in a place. By strengthening the financial position of our neighbors and giving them an incentive to stay we can together build the churches, schools, and community organizations that add to a neighborhood’s quality of life. I also hope that we can correct an over emphasis on individualism that ultimately leads to isolation and erodes community. If we can move beyond thinking only of our financial self interest, I think investing in our neighborhood is a good investment.

Q. I can barely make my mortgage payments and can’t afford CDA membership. As a needy member of this community why should I be excluded from a CDA grant?
A. I don’t envision this as a charity in the traditional sense of helping those who can’t help themselves. Obviously such charities are needed and hopefully some of the wealth created for the community by paying off home loans will be directed to those charities. It is also not my intention that people stop giving to churches or other charities because of giving to the CDA. I realize that this program could be seen as the rich helping the rich (especially in global terms) and think the CDA must work hard to promote other forms of charitable investment in the local community and toward global needs. Ultimately I believe a community of property owners can do more than a community of debtors to promote social justice. In an economic meltdown the most vulnerable (the poor) are likely to get hurt the worst.

Q. What form of governance would the CDA have?
A. I don’t have a full answer to this question yet and would love feedback but ultimately what I’m calling a CDA is similar to a credit union and I think we could look to credit unions to provide examples of governance structures.

I posted some additional thoughts on in a facebook note.