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May 18, 2009

Minorities Disproportionately Hit by Foreclosure Crisis

As the foreclosure crisis sweeps the area, blacks and Latinos have been particularly hard hit, according to an article in the NY Times. In fact, in 85 percent of the hardest-hit neighborhoods, the majority of homeowners are black or Latino. The most jarring statistic in the article was that middle class black households were five times as likely to have a subprime mortgage than whites earning similar annual incomes of $68,000 and higher. When The Times visited a stretch of Bainbridge Street in Bed Stuy (photo), it found anecdotally that a number of middle-class black professionals were paying interest rates of nine to 11 percent on their mortgages. One explanation given is a historic mistreatment by, and ensuing mistrust of, mainstream banks by the black community; another, of course, is the targeting of black customers by the most predatorial providers of sub-prime financing. “I don’t want to say it’s in the cultural DNA, but a lot of us who are older than 30 have some memory of disappointment or humiliation related to banks,” said Colvin Grannum, president of the Bedford-Stuyvesant Restoration Corporation. “The white guy in the suit with the same income gets a loan and you don’t? So you turn to local brokers, even if they don’t offer the best rates.” Another counter-intuitive fact: Middle-class blacks were more likely than lower-income blacks to have subprime mortgages. The hypothesized reason? The lower-income earners had access to, and took advantage of, community resources (free classes, etc.) to educate themselves. Still, the efforts to make the dream of home ownership more readily available to minorities that began under President Clinton in the 1990s has certainly had some dire unintended consequences. “Rather than helping to narrow the wealth and home ownership gap between black and white,” Mr. Grannum said, “we’ve managed in the last few years to strip a lot of equity out of black neighborhoods.”
Minorities Affected Most as New York Foreclosures Rise [NY Times]
Photo by kenf225

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Comments

That's one beautiful block. Where is it?

Posted by: NOP at May 18, 2009 10:21 AM

113-137 Bainbridge....so between Stuyvesant & Lewis.

Posted by: daveinbedstuy at May 18, 2009 10:24 AM

Stuyvesant Heights

Posted by: faithful at May 18, 2009 10:25 AM

Thanks. I'll have to extend my eventual Crown Heights walk into Bedford-Stuyvesant.

Posted by: NOP at May 18, 2009 10:27 AM

people should ALL have to pay 100 percent for property from the start. "loans" for property is an idiotic comment. if you cant afford something outright, then you dont deserve it to begin with. i feel the same way about cars, flat screen tvs, and prostitution. home loans is just a hoitey toiety high pollutant form of ghetto lay-a-way and should be abolished. we wouldnt be in the this mess if people just bought what they can afford by saving up for it and paying for it in full.

*rob*

Posted by: PitbullNYC at May 18, 2009 10:30 AM

I've always paid cash for prostitution, rob.

Posted by: daveinbedstuy at May 18, 2009 10:32 AM

i meant, it's an idiotic concept, not comment :-/

*rob*

Posted by: PitbullNYC at May 18, 2009 10:33 AM

rob,

How many people do you know who borrow money to pay for prostitutes?

Just wondering...

nsr

P.S. It is "high falutin".

Posted by: northsloperenter at May 18, 2009 10:34 AM

no no no i know the difference between high falutin' and high pollutant. i intended high pollutant. and i think my prostitution comment now that you meantion it made absolutely no sense in terms of home ownership and loans, so ill scratch that one out.

*rob*

Posted by: PitbullNYC at May 18, 2009 10:38 AM

Mortgage rates aren't set soley by the borrower's income, their credit score is a pretty heavy component of the equation.

Posted by: Pluto at May 18, 2009 10:39 AM

This block is one of the most beautiful blocks in Brooklyn. The blocks surrounding this block are equally beautiful. I would recommend people to visit this area or wait for the tours.

Posted by: Amzi Hill at May 18, 2009 10:48 AM

Good grief. This actually appears to be a case history of how lingering *paranoia* about racism has damaged black well-being more badly than racism itself. (An analogous situation is blacks' decades-long mistrust of participation in clinical trials based on the infamous Tuskeegee syphilis experiment, leading to underrepresentation of blacks in key research data and, possibly, undertreatment with the most recent and effective therapies.) Maybe the Obama era will erase the last sad vestiges of engaging in self-defeating or self-limiting behavior based on assumptions that the "white guy in the suit" will always and forever have been dealt the better hand. Where are the black "community organizers" when they're really needed?

Posted by: Brenda from Flatbush at May 18, 2009 10:52 AM

who did the Times think would be most hit by foreclosures? Rich WASPS? Hassidim? What a silly headline.

Posted by: sam at May 18, 2009 10:54 AM

Amzi,
When do the tours start? I am definitely interested.

Posted by: etson at May 18, 2009 11:05 AM

Read the whole article before you come to that conclusion. The excerpt is misleading and is based on one person's perspective. And that mistrust is based on the experience of consistently being right in regards to bias- even up to today. While one study says Blacks are more liable to not volunteer, another study from 2007 says Blacks are often excluded for various reasons. Using the Tuskegee experiment to make claims about "self-defeating behavior" is simplistic.

Another reason the quality of medical care is generally lower for Black people is that they don't have medical insurance, or the level of medical insurance may not be as good.

Posted by: bxgrl at May 18, 2009 11:28 AM

Brenda, I usually agree with your sentiments, but I have to take exception here. While I do agree that the tired adage "the white man kept me down" needs to be retired, a case can be made in this case that historically, much of what the Times reported is true. I do not think that whatever has or does happen to us as a people needs to constantly be compared to the white guy in the suit, but when it is glaringly obvious that one group is targeted for one program, or in this case, loan program or rate, and another, with the same criteria, is not, then racism has raised its ugly head.

Rob, I agree for the most part, that if you can't afford something, do without until you can save for it, and buy it outright. It's a sound principle. However, very, very few people could ever buy homes, in that case. I don't think anyone should buy a house far above their ability to pay the payments for it, but getting a mortgage for a home that one can afford is not a bad thing.

Etson, Crown Heights North house tour is Oct 3rd, Bed Stuy is Oct 17th, Prospect Hts is Oct 18th. Those are the fall house tours. The other tours this spring are PLG May 31st, Brownstone Gardens, June 14th, Victorian Flatbush, also June 14th. Park Slope was yesterday, and it was really good.

Posted by: Montrose Morris at May 18, 2009 11:32 AM

Thanks Montrose. Did you and Amzi say you were thinking of doing walking tours as well? If so, please sign me up!

Posted by: etson at May 18, 2009 11:42 AM

i feel like we've read this article about 70 times already - no new, news here. i live in this area and there are alot of people who are still committed to their homes and still living in them. there are no abandoned homes on my block, which is a blessing.

MM - i thought the PS tour sucked, what did you find so good about it?

Posted by: bkny at May 18, 2009 11:44 AM

Brenda you are cetainly way off base here. I wouldn't call this phenomonon *paranoia*. To say that is to say that the fears that some in the community may have irrational and not based on actual exeriences collective or individual.

It was an integral part of this nations fabric to institute racist policies against Blacks in an effort to keep us in a state of perpetual oppression. While I think that most people have moved on despite this, there are still people both Black and White who suffer from its affects.

Posted by: Chaka at May 18, 2009 11:57 AM

bkny, I like period detail, and they certainly had that, even if some was over the top. I also thought the more modern renos were really good, and had interesting things going on in terms of mixing the old and new. I also like people's homes that reflect their personalities and their lives, so I enjoy their art, family mementos, libraries full of books, etc. It doesn't have to be my taste, they aren't my homes. I don't go on Park Slope's tours very often, as they've conflicted with other commitments in the past, so if this was a rehash of other years, it was new to me, so I had a good time. I also know how hard it is to put these things together, so I appreciate the effort.

Posted by: Montrose Morris at May 18, 2009 11:57 AM

MM - i have only been on the tour once before. i wanted to go b/c i feel like they have similar brownstones to bedstuy, as opposed to FG, CH or BH, which are usually much bigger and wider. there were some repeats and i found the modern home, the one with the huge tub in the middle of the second floor - quite odd. i enjoyed the Carroll St, American basement house the most. Overall, i just wasn't impressed. I like to see new innovative designs. Some of the homes were just a bit too clutered for my taste. Oh well, to each his own.

Posted by: bkny at May 18, 2009 12:12 PM

Last hired, first fired.

***Bid half off peak comps***

Posted by: Brownstones Half Off at May 18, 2009 12:29 PM

This article pretty much sums up what I have been seeing in Bushwick and Bed Stuy. People living in these areas were targeted by real estate agents and mortgage lenders working together and more often than not they offered them subprime loans with adjustible ARMs at high rates and they made more on the loans than they would have on standard loans. They wanted to do as many deals as possible, they didn't care if the people buying would be able to pay two years down the road. From what I see, the agents and lenders were from the same groups as they people they were selling to -- Spanish speaking or African American, etc. I don't think the people buying were fully informed as to the details and risks of what they were doing. They trusted the agents or they didn't know any better, especially the ones who don't speak English.

The comments in the Times are really scary. Most of them say that immigrants and minorities are lazy and can't put off gratification, and that's why they took out these bad loans and ruined our economy. It's an incredible case of blaming the victim.

The agents and lenders who pushed people into these bad loans ought to be in jail. But in many cases they didn't do anything overtly illegal. But this is predatory lending and it ought to be illegal. We need laws against predatory lending, high rates, and possibly we need to consider laws against ARMs in some cases. It's the rare buyer who benefits from an ARM.

Posted by: mopar at May 18, 2009 12:32 PM

Sam, I don't think the story explained it very well. The point is that high-interest rate subprime loans with ARMs were marketed to minorities and immigrants -- very often by other minorities and immigrants. They were pushed on them. Every short sale and foreclosure I see in Bushwick, the last loan was taken out in 2005 or 2006. It sure looks like the ARMs have all reset. These loans were not marketed to me and my friends, I can tell you that. I was busy buying a coop with 20 percent down and a 30-year fixed rate (a good rate). My friends complain they didn't get the chance to buy such things.

Maybe the article should have explained how it works. Very often the real estate agent would recommend a mortgage broker and maybe even a lawyer as well.

There are some cases of outright fraud where the lawyer was working for the agent or lender, and these are being prosecuted in a class action suit in New York state. The movie Subprimed is about it.

In areas outside of New York where the buyer isn't required to have a lawyer, people were not even told the mortgage was an ARM or that it would reset. They paid the mortgage faithfully until the day it ballooned.

Posted by: mopar at May 18, 2009 12:39 PM

When that article first appeared online, they specified the block of Bainbridge St. -- between Thomas Boyland and Saratoga. In other words, the Ocean Hill section of Bed Stuy, not Stuyvesant Heights. One block from that house we've been contemplating.

Posted by: mopar at May 18, 2009 12:46 PM

If this block was in Park Slope (assuming it still isn't on account of PS's protean boundaries) it'd be worth half a billion

Posted by: dittoburg at May 18, 2009 1:24 PM

Maybe the What can explain it all in more detail. From what I gather, this is what he does for a living.

Posted by: mopar at May 18, 2009 1:58 PM

"Maybe the What can explain it all in more detail. From what I gather, this is what he does for a living."

The collapse of the Mutant Asset Bubble! The assholes who believed the Hype is getting smashed!

The What

Someday this war is gonna end...

Posted by: Return of The What at May 18, 2009 2:32 PM

What, didn't you used to make high-interest ARM loans to minorities in subprime neighborhoods? Aren't you doing it still?

Posted by: mopar at May 18, 2009 3:19 PM

I mean, would you say such clients are fully informed?

Posted by: mopar at May 18, 2009 3:19 PM

"What, didn't you used to make high-interest ARM loans to minorities in subprime neighborhoods? Aren't you doing it still?"

I know you are trying to engage me Mopar, so let me say this. I have certification in Loan Processing but never made a mortgage to anyone. I just sold houses to people and still to this day (to my knowledge) no one has defaulted yet, in fact some people made money. The reason was if you made a bad loan the Mortgage company they could "put back" the loan to you. Some Mortgage Brokers are in big trouble over this. I can sleep good at night.

Are you still looking for a house Mopar and how is the search going?

The What

Someday this war is gonna end...

Posted by: Return of The What at May 18, 2009 3:35 PM

Well, I'm not blaming you, What, but from things you've said in the past, I thought you'd have a front row seat. I thought you were a real estate agent in Clinton Hill (and thereabouts) in the run-up to the boom years, got out of it, and are now a mortgage broker. Anyway, sounds like you'd agree with some of the more conservative commenters on the NYT: That people should have known better and it was their own darn fault because they were greedy. That may be, but the owners I see don't speak English and they weren't trying to defraud anybody, they were taken advantage of. Then there are the flippers and real estate investor insider people who were doing bizarre things such as buying and selling the same house twice in one day for $100,000 more and never paying the mortgage. I guess that's mortgage fraud.

Posted by: mopar at May 18, 2009 5:25 PM

Oh yeah, we're still looking for a place. Very few two families available where we live. Most of what is there is in very poor condition.

Posted by: mopar at May 18, 2009 5:26 PM

Having read the Times article since making my comments, I will stand by them. Although minorities were unquestionably targeted by predatory lenders, these lenders apparently played into a historic mistrust of conventional mainstream banks...and minority advocates even now would do better to focus on creating a class of fiercely demanding and well-educated minority consumers (who know their rights in the financial arena and insist on them) than on stoking resentment over past injustices, however real. BTW: The next wave, according to the article, is the carcass-picking vultures circling over these communities offering to "fix" mortgages for $4K or more and then ripping these vulnerable homeowners off all over again. Why aren't our gov't consumer protection agencies and community organizers rolling out a massive educational effort (similar to efforts on AIDS testing and prevention) to warn people at risk from this second scourge? The city could literally mail a multi-lingual warning to every address in the worst-affected zip codes, along with repeated info re: trustworthy resources for real help. And the Sharptons and Charles Barrons of this world could redirect their energies to the effort...but, now I'm just dreaming!

[To quote the article:
Colvin Grannum grew up in a black neighborhood in Brooklyn and became president of the Bedford-Stuyvesant Restoration Corporation, a nonprofit organization that builds and renovates housing. His father bought several properties in the 1950s and ’60s, often without turning to banks.

“I don’t want to say it’s in the cultural DNA, but a lot of us who are older than 30 have some memory of disappointment or humiliation related to banks,” Mr. Grannum said. “The white guy in the suit with the same income gets a loan and you don’t?”

“So you turn to local brokers, even if they don’t offer the best rates.”

Posted by: Brenda from Flatbush at May 18, 2009 5:41 PM

Brenda, I don't know, but I think it's the idea that you kick some business to a brother even if the rate is not the best.

Posted by: mopar at May 18, 2009 5:49 PM

Brenda, I'm on board with getting some of our community loudmouths to speak out on predatory lending with the same vigor and vitriol they exude for lesser topics, like complaining about who the streets are named after. But there are a lot of grassroots community organizations, including mine, the Crown Heights North Assoc., that are holding seminars, sending out flyers, and doing our best to educate the community on the topic of minority held mortgages in general, predatory lending, specifically. We have been working with the DA's office, Neighborhood Housing, PACC, and other non-profits, all of us trying the best we can to help people hold onto their homes, and avoid falling prey to these vultures. It's a constant battle, as they come up with new and creative ways to screw people every day. Now it's "we can help you fix your loan problems". Yeah, the ones they created. Disgusting.

Also, as I would never presume to speak for the entire black or minority community, none of the people interviewed do either, nor did they say they did. Mr. Grannum's opinion is just that, and I really don't think he meant to imply that the "white guy in the suit" is the cause for all of the injustices, problems or blame in this matter, or every other. However, if all else is equal, except for the color of one's skin, or the neighborhood one is buying in, then questioning the reason behind the huge discrepancy in interest rates is perfectly legit. Racism is an old dinosaur lumbering towards the tar pits, but it's still got some teeth, and will still bite if you get in its path.

Posted by: Montrose Morris at May 18, 2009 6:04 PM

"But there are a lot of grassroots community organizations, including mine, the Crown Heights North Assoc., that are holding seminars, sending out flyers, and doing our best to educate the community on the topic of minority held mortgages in general, predatory lending, specifically. We have been working with the DA's office, Neighborhood Housing, PACC, and other non-profits, all of us trying the best we can to help people hold onto their homes, and avoid falling prey to these vultures."

Well, that is awesome.

Posted by: mopar at May 18, 2009 6:33 PM

It's very easy to fall into the trap of blaming the victim- as MM says, Mr. Grannum is expressing his opinion- but it takes some serious condescension to talk about Black people's "lingering paranoia" as the reason for a higher rate of foreclosures in minority areas and to reference the Tuskegee study as a classic example. To dispute the very real effects of racism- which do exist, yes-even today says loads about your own very white perspective. Your comment "This actually appears to be a case history of how lingering *paranoia* about racism has damaged black well-being more badly than racism itself. " is offensive and racist in its own right. And ignorant- for as MM points out, these communities do a great deal to help themselves- and not much attention is paid to them by the press.

I also would like to point out that while it could be said in NYC minorities dominate in poorer neighborhoods, that isn't necessarily the case in all poor neighborhoods across the country and where foreclosures are impacting just as hugely. My point being that sub-prime lenders target the poor or those with less than stellar credit. White or black- these people fell for sophisticated and predatory marketing. It's not "lingering *paranoia*, its victimization.

Posted by: bxgrl at May 18, 2009 7:10 PM

Everyone is "subprime" in the Mutant Asset Bubble!

The funny thing is no one would listen to reason. The Retards (All Races) thought they was the next Donald Trump! Now I got burned because I'm "insert excuse here".

Say goodbye to insanity, Dumbasses....

The What

Someday this war is goona end...

Posted by: Return of The What at May 18, 2009 8:02 PM

I would also be remiss in not pointing out the excellent work some of our local politicians do in regard to educating the community on predatory lending. Specifically Karim Camara, Jesse Hamilton and Tish James' offices. They have been very helpful in co-sponsoring workshops, and running programs of their own. We're on it, but let's face it, we can't catch everyone before they make the mistake of a lifetime. However, the more people know, the fewer do make that mistake.

I still say there should be a law mandating a 3 hour class for anyone getting a first time mortgage or refi. No certificate of completion of class, no mortgage.

Posted by: Montrose Morris at May 19, 2009 1:09 AM

"I still say there should be a law mandating a 3 hour class for anyone getting a first time mortgage or refi. No certificate of completion of class, no mortgage."

Good idea. Though maybe make it one hour? Ha.

Posted by: mopar at May 19, 2009 12:20 PM

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May 18, 2009

Minorities Disproportionately Hit by Foreclosure Crisis

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