Grim Perspective on Mortgage Crisis in Poor Nabes
Former FT scribe and Bed Stuy resident James Doran has a powerful piece on WNYC this morning about how the combination of lending abuse and outright fraud are combining to hit the borough’s poorer neighborhoods like Bed Stuy and East New York particularly hard. I wish I could say that the worst is over but…
Former FT scribe and Bed Stuy resident James Doran has a powerful piece on WNYC this morning about how the combination of lending abuse and outright fraud are combining to hit the borough’s poorer neighborhoods like Bed Stuy and East New York particularly hard. I wish I could say that the worst is over but the projections for NYC are not good,”says Sarah Ludwig, director of Neighborhood Economic Development Advocacy Project (NEDAP). “What you see is that the foreclosure actions filed are overwhelmingly concentrated in New York’s neighborhoods of color.” Doran reports that the number of mortgage fraud cases on the FBI’s plate quadrupled over the past year. One victim is James LeSure, who’s on the verge of losing the building he’s owned on Bushwich Avenue since 1969. After paying off his mortgage completely, LeSure refinanced a few years ago when, with medical bills starting to pile up, he received a cold-call from a mortgage broker promising to solve all his problems with an expensive ARM that would, the broker said, be refinanced into a fixed-rate loan within a few months. That never happened, and now LeSure is in the process of having his one asset taken away from him. New York Neighborhood Housing Services (NHS) did one study of Bed Stuy that “almost every other house on the block had risky loans that were likely to default.” Update: The transcript and audio are now available on the link.
Housing Crisis Hits City Hard [WNYC]
NEDAP: Foreclosure Map [WNYC]
I think the situation has to be divided up into more than just a lump sum of foreclosures.
On the one hand, you have people who recently bought over their means, some of whom were fine until disaster struck, in the form of medical emergency, layoff, etc while others foolishly bought into slick scams promising low monthly payments without reading the fine print.
The case of Mr. LaSure above represents the other kind of foreclosure – involving elderly people who paid off their homes, only to refi, and get screwed.
Mr.Joist, you, and probably most of the posters here, just do not understand something that unscrupulous criminals do – the lack of financial education, especially among the senior citizens, in black and Latino neighborhoods. It is very hard to be educated in something you never had.
Mr. LaSure’s life story is repeated over and over again in our communities – he came up from the South during a well documented migration pattern dating from the Depression to the 1960’s. If he got any education at all in the segregated South, it was just enough to get by. He came to New York, worked like a dog in menial jobs that didn’t require any education, and saved and bought a building. More than likely, Bushwick was redlined, so he didn’t have Citibank and Chase offering him favorable terms, he probably had a private mortgage with higher interest rates than his white counterpart in Bay Ridge. Yet he paid it all off, by working hard his entire life, and now his building is really worth something. When did he have time to go to Wharton?
We younger and better educated folk, of all backgrounds, cannot imagine what it is like for someone in his shoes. Reading refi agreements is tough enough with a college education. Calling up a lawyer is not something he would necessarily be familiar with, especially since these mortgage people assure you that you don’t need one. You read about wealthy senior citizens with plenty of education getting fleeced by grifters everyday, so why should we blame many undereducated senior citizens for falling for these refi schemes?
We need an all out assault by city law enforcement, housing and senior citizen advocates, and non-profits to educate as many as possible, especially in minority neighborhoods, to educate, educate, and educate.
These people are not stupid. To have survived and thrived all these years without the benefits many take for granted means they are deserving of our respect and help. Prosecution of mortgage crooks, and education are the only things that will bring these numbers down.
While I feel for a lot of these people and many were led down the path by predatory scumbags, they did sign a legal document acknowledging the terms of the agreement. Can’t understand how ignorance became a valid defense.
11:02:
No. You’re a complete idiot.
ooohhh, heeelp! Somebody protect me from myself!
I just took out a $300,000 ARM Refi and spent it all on a new car and a flat screen TV.
Now they want me to pay it back! Heeelp, it’s just not fair.
I need Big Brother Big Government to protect me from myself and tell me how to be responsible.
I need race-baiting NEDAP maps to show how I was exploited. It’s not my fault … I’m the VICTIM!
This is wildly deceptive.
Each dot on this map is almost the size of a city block. Each block of brownstones is roughly 100+ different properties. Assuming a benign rate of 1-2% defaults, the map should be red.
The reason that manhattan and bklyn heights are not red is that most of those properties are commercial properties which don’t have mortgages in the same system — there are very few owner occupied 1-4 family homes in midtown.
Well I don’t believe it. Mr B talking about the root causes of this Mutant Real Estate Bubble. Good for you!
“I want a story that asks a few hundred people in foreclosure as a result of refinancing what they did with the PROCEEDS from their refi’s. And asks how many were laid off or had medical emergencies, etc. versus how many were irresponsible with their finances, took some “easy” money, spent it on stuff and wound up in trouble.”
This has kept the American economy propped up. The consumer is running on fumes now. The banks are trying to cover this mess up.
There is NO good news on Real Estate in Main Stream Media. This winds up as a depression.
Here read this story about dumped Mortgage files.
Dumped Mortgage Files Invite Identity Theft
http://online.wsj.com/article/SB119309606825767724.html?mod=PageOne_1
The What
Someday this war is gonna end…….
Compassion would allow you to see that not all of us have a level of sophistication to understand when a scam is being pulled on us. can you not see that a former “dirt farmer” is out of his depth dealing with a slick talking shit merchant of a mortgage broker? Who is protecting the little guys from slime like them? That poor man was ripped off by scumbags after working his entire life to have a home. Medical bills (which we should be ashamed of in the country) forced him to look for money in the only asset he had. Also, why assume that everyone squandered their money, when here we have a story without even a hint of that. In addition, how would that make these loans any better? The money and how it is spent is not the problem.
i’m getting antsy with all the innuendo surrounding the mortgage crisis, in which people keep juxtaposing race and mortgage woes. it’s like that other article that even admitted it didn’t track usable data. now nedap has this map (which by the way, does NOT show foreclosures, it shows mortgages in ‘default’ which is not the same thing) with hash marks showing ‘neighborhoods of color’ and while not making any conclusions is like having some guy nudge you with raised eyebrows and go “Hmmmm…”
i’m not saying it’s not true but please, you gotta get the hard data before you start protesting conspiracy theories, it just weakens the argument.
Wow- “homes owned by poor people should not be worth 800K..”
Why not? Many of those “poor” people have lived in, cared for and worked hard to pay off their mortgage for those homes and if the market and their value is fairly appraised at such then so be it..regardless of how “poor” we may see them to be.
Anyway- my heart does go out to Bedsty- I have lived and loved this community all of my life (even upon my relocation to Atlanta in search of a neighborhood with a “Brooklyn” feel but more affordable housing)..
While I agree that the prices should return back to being a bit more realistic I do hope neighborhoods of color rebound and finally received the recognition and value appreciation they deserve.