Fewer Mortgages for Minority Communities
Brooklyn mortgages dropped 18 percent in 2007, reports the Daily News, in line with the city’s statistics. But it turns out the number of mortgages was chopped in half, or more, in poorer, minority neighborhoods, which are bearing the brunt of the foreclosure crisis — they call it the “tale of two Brooklyns.” “The number…
Brooklyn mortgages dropped 18 percent in 2007, reports the Daily News, in line with the city’s statistics. But it turns out the number of mortgages was chopped in half, or more, in poorer, minority neighborhoods, which are bearing the brunt of the foreclosure crisis — they call it the “tale of two Brooklyns.” “The number of mortgages issued fell by 60% in Brownsville, 58% in Bushwick, 57% in East New York and 45% in East Flatbush,” they write. “Experts say the declines are due to a combination of the drying up of the subprime market and lending discrimination by banks reluctant to make loans — even to qualified buyers — in those neighborhoods.” Now for the other Brooklyn: the number of mortgages rose 48 percent in Brooklyn Heights and Fort Greene; 11 percent in Williamsburg and Greenpoint; and stayed the same in the Slope.
Mortgages Plunge by 50% in Some Minority Neighborhoods [NY Daily News]
Photo by Jimmy Legs.
Most of the mortgage crisis was caused by giving people in minority neighborhoods mortgages that everyone clearly knew they couldn’t pay back.
Having just read the article…
I see that mortgages are up 27% for asians in Sunset Park.
How much of this is due to credit scores and income levels -and how much of it is due to racism?
Is there anyone here who works in the industry who can tell us how much the address of the property is taken into account when deciding whether to make the loan or not? And who actually makes that call?
I’d be interested to see the figures for asians – clearly a minority but also having the highest average household income (above whites), and presumbaly good credit too.
“”The number of mortgages issued fell by 60% in Brownsville, 58% in Bushwick, 57% in East New York and 45% in East Flatbush,” they write.”
These are also areas which, I believe, experienced among the largest percentage increases in the number of mortgages (including subprime mortgages) issued during the home-purchase frenzy of the last few years. Considering this, it’s really not surprising there’s been a steep decline now that the bubble has burst.
In terms of “discrimination by banks reluctant to make loans — even to qualified buyers — in those neighborhoods” – that’s not a new phenomenon unfortunately, and is in part the reason why many buyers in these areas originally turned to small (and sometimes unscrupulous) mortgage companies.
Well said, tybur6. Yesterday’s posts, too.
This new redlining is unfair, inherently racist, and most important, dangerous. The American dream aside, neigborhoods made up of homeowners, and homeowners who are on-site homeowner/landlords are more stable than those that are not.
I am in full agreement that in the last few years, many people were given loans that they were not eligible for, and many people made ignorant, and often stupid choices, and acted as if the cow was never going to have to come home to the barn. BUT…the decisions to stop redlining minority neighborhoods was not made by major banks solely out of a realization that it was an evil and racist practice that should be stopped. It was mostly from them looking around and seeing that there was plenty of money to be made making the same subprime loans that the smaller mortgage companies were cleaning up on. So now that that well has dried up, is it just fine to go back to being racist and evil? I don’t think so.
The stakes are too high here. Real estate, in even the worst neighborhoods, is really expensive, and above the budgets of responsible, working, deserving would-be owners. Our city will never truly grow, our “fringe” and “developing neighborhoods” will never develop, if they are mostly owned by absentee landlords, or worse, the city of New York. This problem needs to be addressed before we once again relive the worst of the 70’s. I used to live in the Bronx when I first moved to NYC, in 1977. I remember the burning Bronx, and all that went with it. We really don’t want to do that again.
Nice photo, Jimmy Legs. The NY Daily News is doing a good job covering this story. They seem to be the only paper aware of what is going on.
The neighborhoods seem likely to suffer because mortgage brokers knowingly made bad loans. I just hope most people who are losing their homes didn’t put money down. In New York, unlike other states, buyers are required to have lawyers. Didn’t their lawyers inform them of the risks? Or were they in the pocket of the mortgage brokers?
Everyone benefits from safe, affordable, diverse neighborhoods with retail amenities. Like Jackson Heights. It’s a balancing act.
But clearly the way things are going, housing costs are going to go down or flatline in the next few years. Unfortunately, I’m afraid there are going to be a lot of job losses at the same time.
quote:
Soon – in ALL areas of this city – no one except the rich will be able to afford to live in this city.
the sad thing is a lot of people think that is a GREAT thing. they will you the bull line of well, if you cant afford to live in beverly hills what makes you think you can live there!? well newsflash. beverly hills was MADE FOR rich people to begin with. NYC is an old school city built on farmers and immigrants and people from all walks of life. it wasnt some artifically made city explicity made for rich people. yeah i know, move to the suburbs will be their next answer. well you know? what now? now that rich people think the city is the good thing and the answer they want to throw people not as rich as them to the middle of no where? blech.
-rob
%^ awesome post
-r
You thought I was done with yesterday’s conversation about the $400 rebate check… but this article is just another symptom of the bigger ills at work.
The race issue is only marginally at play when it comes to granting of loans etc., though it is obviously a huge issue when it comes to the INCOMES of minority populations…
It is the income part that is huge. Of course Park Slope and Brooklyn Heights and Fort Greene will have more mortgages approved… that is where the folks making $250,000 or more live. Ya know, those folks on here that characterize that as “not a lot of money.”
Real Estate ALL OVER the city is overinflated and unsustainable… How could someone with a decent salary even think about saving for a downpayment, nevermind thinking about the mortgage payment. And by decent salart, I mean a family income of $75-100k. Forget single folks making a middle-management salary of $50-60k. And if you make less than that, as many many many people in this city do, you might as well get together 30 of your friends and start a commune in a 3-family home. Modest homes in the “less desirable” parts of Brooklyn are still in the half-a-million-dollar range.
OK – the obvious response is, “Well, obviously you can’t buy. You should just rent if you make less than $250k per year.”
That’s fine – I agree with that statement. I think this need to own has gotten a bit out of whack. BUT… and this is a big BUT… The real estate prices in this city have made the RENT prices outrageously unsustainable. A $1.5 million 3-unit property. What is the rent per unit? Perhaps $3500 or $4000 a month. Can someone making $70k per year pay that… that answer is not even close, if you didn’t catch the rhetorical style of the question.
What if it’s a 12-unit building that costs the low low price of $2 million… The minimum rent per unit is still going to be around $1,500 if the owner wants to break even.
Yes, you are rich at $250,000 per year because you can actually AFFORD to own or even rent in this city. You have choices… and when you’re done paying for the roof over your head you don’t really have to hesitate when you make the decision to buy 2 $5 lattes a day or get a handful of baseball tickets on a whim or whithout “saving up” you can enjoy any type of theater outside of the cineplex just cuz. Maybe you don’t think you’re rich, but guess what… you are.
But I digress. My point is this. The real estate prices are unsustainable — whether you are a person who has the luxury to buy or are simply a renter.
Soon – in ALL areas of this city – no one except the rich will be able to afford to live in this city. Granted, the $250k per year folks will be the “new poor.” But who will run your shops, provide services, support you in your offices (including management), and so on.
Given fuel costs and the inadequate transportation system, do you really think folks are going to commute from far-flung areas for the “privilege” of working in this fair city?!! Do you not think folks will start to resent living like their suffering immigrant ancestors of 50-100 years ago?
Yesterday, under the $400 rebate post, brought up the notion of the “Dutch Disease.” Look it up, it’s very interesting. He’s right – NYC is looking into the face of a “neo-Dutch Disease.”