Many residents believe that they were manipulated into taking bad loans, targeted because of their skin color. Over the past couple of years, well-publicized evidence has supported this notion.
In 2009, a federal lawsuit accused Wells Fargo of targeting working-class black people for subprime mortgages, loans with higher interest rates and less favorable terms to compensate for a borrower's perceived financial insecurity. One loan officer testified that employees called them "mud people" and described the mortgages as "ghetto loans." In November 2011, former banker James Theckston explained to the New York Times that some account executives "targeted less savvy borrowers — those with less education, without previous mortgage experience, or without fluent English — and nudged them toward subprime loans," because they earned a higher commission for those transactions. A 2010 study by Princeton's Woodrow Wilson School of Public and International Affairs concluded that black homeowners with similar credit profiles and down payment ratios to white borrowers were more likely to receive subprime loans. And in December 2011, Bank of America agreed to pay a $335 million settlement after the Justice Department alleged that the bank's Countrywide Financial unit charged higher rates and fees to minority borrowers than to financially comparable white borrowers.
"They dangled a carrot in front of people that didn't know a lot of what they were doing," says Rhodes. "'You can send your children to college! Buy a new car! Go on a vacation! When was the last time you went on a vacation? All you gotta do is pull some money out of your house, all you have to do is refi!'"
"That's all we want," he adds, "to send our kids to college. Get a new car. Go on a family vacation. We want that apple pie we see on TV."
A nagging knee injury put Brown's wife on disability in 2008. So when the recession hit and Brown's business slowed, the household didn't have the second income to balance the budget. It was around this time that the mortgage payment jumped to $2,800. This surprised Brown, who had been under the impression that he was locked into the original rate.
"I should have read and understood what they were doing," he says. "I should have read the fine print about the percentage rate on the loan, and how long that was supposed to last. I didn't think about the economy. I didn't see that far ahead."
Brown began missing payments. Then in early 2010, his wife was diagnosed with pancreatic cancer. He didn't want to worry her about the financial matters, so he kept the urgency of the mortgage situation to himself. He sold one of his big rigs and laid off most of his employees. With fewer drivers but higher mortgage payments, Brown gave himself more trucking shifts. The infrastructure projects spurred by the federal stimulus package, he says, opened up much-needed work for him. He spent most days on the road.
Brown was scraping together enough to meet payments, but not enough to cover the months he had missed. In November 2010, he paid American Home Financing, a foreclosure assistance service, $3,500 to help get him a loan modification. The company told him to stop paying his mortgage until a representative got back to him, he says (American Home Financing did not answer several calls from SF Weekly). This was a common piece of advice: In many cases, banks only considered modification once a homeowner proved hardship. But American Home Finance never got back to him. (The Better Business Bureau has given the company an "F" rating.) Brown missed six straight payments.
Bank of America says that around this time Brown was offered a trial modification program, where borrowers must complete three monthly payments at the modified rate before being considered for a permanent modification. The bank claims he missed the trial payments. Brown says he doesn't remember getting this offer.
He continued to seek a loan modification. Bank of America continued to decline. After all, the bank no longer owned the mortgage — like many loans, Brown's had been bundled with others and sold to investors. So the bank was looking out for the investors' interest. From that perspective, the math is simple: Usually for a bank to modify a loan, says Bank of America spokesman Rick Simon, the modification must yield the investor more profit (or less loss) than the foreclosure sale would.
"In the end, the loss taken by the investor to modify a loan, including lost interest income over the average life of a mortgage, must be less than the expected loss incurred if the loan goes to foreclosure," Simon explains.
On Sept. 6, Harborview Mortgage Loan Trust, the investment group that purchased Brown's loan from Bank of America, became the owner of Brown's deed. Two months later, the bank offered Brown $5,000 to leave the house. He considered it. "But I put too much into that house," he says, before adding with a chuckle, "How 'bout I give you $5,000 and I keep the house?"
By January the bank had put the house up for auction. The property was appraised at $252,191. In February, Brown's wife died.
Weekdays at 2 p.m. investors gather at the City Hall steps for an auction of foreclosed property. The size of the group varies, depending on the number and appeal of the day's products. On this day in April, about a dozen are in attendance. No one is willing to give a name on the record, and no one sees much financial promise in Bayview properties.
This is but another back door way that the city is getting most of the low middle income black community out of San Francisco.
Oink....if they wont to blame some body then thank all the radical communist agenda's that controled the city's political machine during the mid 1990's and up to the present.
What a shame when will people wake the hell up from this communist bastard's death grip !!!
This article is a crock.
I'd feel a hell of a lot more sympathy if any of these foreclosed people were actually victims of circumstances beyond their control (e.g. loss of a job, death of a family breadwinner, debilitating disease, etc.). Those are the awful twists of fate that no one can control. I would have no problem helping out people like that or feeling anger towards a predatory bank that swoops in to take the family home.
But that's not what's going on here. As far as I see it, we have an entire neighborhood full of greedy people who made some really stupid decisions. Everyone in the story was middle-class. No one was "trapped" in poverty. Most likely every thing that was purchased by these folks with refinance money could have been purchased with cash in time. Problem is, these people wanted the toys NOW! And the re-fi money was the "get rich quick" way to do it.
And I'm sorry, but why were these people so naive to think that these lending institutions had only the best interests of the borrowers in mind? That's just crazy! And if you're borrowing that much money ($400,000+), why wouldn't you read the fine print???? This is only the most important financial transaction of your life!!!!
I also find it incredibly offensive that other posters believe these people should be coddled and made to be victims. Isn't this only because these folks are people of color? If they were white, everyone would say "well, they got what they deserved!" Why don't you hold non-white people to the same standards? Is there some sort of unwritten truth that blacks and latinos are these excitable, mentally deficient, and child-like people who are incapable of acting like rational, mature adults? Talk about the soft bigotry of low expectations...
Historically Black neighborhoods like the Bayview are changing because of a reignited interest by those with money to live closer to the urban core. The market affordable rental housing, once found in abundance close in, is moving to the suburbs. With the suburbs inflated by Metro's artificial shortage of land, inner city is inflated even more. People's interest drive the market as well. I believe that interest is what's inflated much housing nationwide. Not just buildable land. That is the standard line the planners feed people all over the USA after they destroy affordable housing for the poor in this housing struggle the Black homeowners in the Bayview the Dispossesed. .
The author has no support for his claim that this is the "free market" and not racism. The bank bailout is proof that we don't have a free market in this country. I want to echo earlier comments by reminding everyone that our country has a history of government-sponsored racist housing policies. I think it's supremely unfair of the author here to leave that information out, or worse, actively deny it, with no evidence to back that up!
The history of mortgage lending is rooted in racism. Goggle search the "The Federal Home Loan Corporation" where you will find that it was federal gov't that started the practice of redlining, which was later adopted by the banks. Just think 40 years ago black folks couldn't get a loan because they were deemed to "risky" but, with asset securitization the banks found other unsuspecting goofs to "sell" the risk to so, that they could simply collect the fees. Now that they have drove the economy off a cliff with their unscrupulous practices everyone wants to blame the victim!
Finally, if you had $500K to lend would you feel compelled to loan to someone that didn't have the income? Of course not since you would do your due diligence to verify everything on the loan application. Basically, no one held a gun to head of the banks to force them to make the type of loan you currently find in the black community. In fact, the banks made loans in the black communities because they knew this is where folks had the most equity due to the pent up demand from redlining. In the end, this will go down as the biggest transfer of wealth in the history of America!
"Well thought out greed couple with unintended ignorance"
This guy pulled $280,000 of cash out of his house, didn’t repay, and HE IS THE VICTIM? On the other hand, the bankers who approved these loans should have been fired.
There are a number of very real truths here. Banks did in fact lend out money to people who could not within reason pay it back over the long term, with the premise that they were ultimately covered and would profit by the notion that real estate is always a positive investment, and by investing at the same time that lenders would default. At the same time many a Bayview resident took money with shortsighted visions of "free cash" and future sales or future easy refinances. Ultimately both sides took huge gambles that blew up in their faces, the difference being that the large banks had the benefit of a government bailout and a task of clearing balance sheets and underwater assets while homeowners who werent prudent found themselves in a hole, one that government stimulus was only marginally meant to help them out of. Trickle down has never really trickled down, and history was bound to repeat itself.
I am a Bayview resident, and i know many like those mentioned in this article. Many of which were my FORMER neighbors. Gentrification is a fact of life in the Bayview, and it see it with the changing faces of my neighbors, and changes to the neighborhood, but gentrification isnt the root cause of what happened, but rather gentrification is the effect. With informed and thought out fiscal responsibility nobody can force you out of your home, and nobody is unfairly throwing anyone out. Choices were in fact made, and poor ones at that at times, but for some things there is not a do-over and certainly not a requirement to give someone a helping hand and when it comes to a financial bottom line such an occurrence is often non-existent. What has happened in the Bayview is the same thing that happened all across the central valley, all across the country, it just happens to be magnified in the Bayview because of the deep ethnic core shift that is the result of the bubble burst. Too many saw the opportunity of "free money" and lived easy, and what seemed like a dream quickly became a nightmare, and not gentrification as system nor a bank made people believe it was a dream.
In 2006 my home in the Bayview appraised for $850k in 2009 it appraised for $600k today it sits around $475k, and if i had jumped at the money in 2006 i would without a doubt been just like those in this article, and exactly like my neighbors to my left and across the street who are now my former neighbors for the exact reason, because they did take the money. And with that money they had new cars, took trips, lived it up, and talked about refinancing when their ARM ended, as if it was given...well nothing is given. We know that as indisputable fact now. Every morning on my way to work i drive past no less than 6 homes that have been bought as foreclosures and are being flipped (yes flipping is alive and well in the Bayview) and while it isnt part of cunning gentrification the result will look like a cleansing as it were of one socio-economic group for another.
In the end, the development of Mission Bay will eventually continue to march its way past Dogpatch and up Third Street and when it comes around the corner of Islais Creek, property owners are going to see the $$'s and sell, and old buildings will give way to new developments (5800 Third, 5600 Third) with more to come and then you will see a very marked poplulation shift. For all those who do not know the T-line was NOT built for the current residents of the Bayview (Despite anything Willie L. Brown Jr. said) but for the future residents of the Bayview and there is your gentrification plan. To suddenly incorporate a historically unicorporated part of San Francisco, with mass transportation, and development, and partnership with mega builder, there is your gentrification plan. The construction of all the senior housing to encourage homeowners to sell property they cannot maintain, thats your gentrification. The replacement of Alice Griffith and other public housing, thats your gentrification actively at work and I will freely admit, some aspects of gentrification of the Bayview are much in demand and even needed, but the financial crisis wasnt part of the plan, it just made it that much easier when it seduced peoples greed with the promise of money dreams without working for it. Too many took to that dream, and in the working class Bayview where many have long lived earning 50% of the median income in San Francisco (even today average income is only 29k) dreams are all there are, but this was the ultimate ill-conceived dream too tempting to resist, but with a steep price to pay for being a dreamer.
The Bayview as a "Black" neighborhood is undoubtedly on its final countdown, and it is sad to see, for what might have been, of a thriving incorporated ethnic neighborhood. But even before this financial crisis took hold there was a need for the neighborhood to open up, socioeconomically, to not continue to be stuck in the time warp where the "hustle" was more celebrated than the professional, and where it was more vogue to complain about what you dont got, and who wont help you get it, than to do the work to do for self. For those who want to stay in the Bayview...stay, your house may no longer be your home, but stay, continue to take pride in staying. Walking away to say you were kicked out, pushed out doesnt tell the full story, at least not the same as with the Fillmore, nor does it honor the generations who did work so hard with arms and legs in the shipyards, etc. to create the Bayview as it has existed for so long.
When one writes about the "free market" doing something nowadays, the implication is that it is inevitable, could not be stopped. But the housing bubble and bust of the 2000s was not inevitable. The Federal Reserve, under the (then) sainted Alan Greenspan, consistently worked to keep credit cheap and easily available. Greenspan was repeatedly warned about financial and housing market bubbles (and scams) and was given explicit authority to regulate them, authority he refused to use. He was sure that the markets would self-correct, that bankers would act rationally and responsibly. But bankers didn't act rationally and responsibly, and the result was a global financial crisis.
So homeowners in the Bayview were offered loans that were too good to be true. That was happening everywhere, but there seems to be some evidence that it happened more in heavily Black neighborhoods like the Bayview. No doubt some owners signed up for apparently easy cash without reading every word of a long documents written in deliberately obscure language (language that some states are now making banks simplify). It was morally (and perhaps legally) incumbent on the sophisticated bankers and brokers who sold these loans to homeowners, some of them not very sophisticated, to provide clear explanation of the potential risks. Doing that would approach some more decent version of capitalism, rather than the predatory capitalism of recent decades.
It could have been different. It might be that the Bayview would have turned over to higher income families in the long run, that is a powerful dynamic in San Francisco (and subject for a different discussion). But it needn't have been so catastrophic and so wrenching for ordinary peoples' lives.
This is what happens when you use an adjustable rate short term loan to finance a long term investment. The rate increases were right there in the loan papers. It's not the banks fault that the borrowers committed to a loan that they could not afford. They gambled on the real estate market. Sometimes when you gamble you win, sometimes you lose. No guarantees.
I agree the city would love to have diversity be gone...I've seen it to be true my whole life in SF. BUT having purchased a home in Ingleside district in 1998, I know firsthand the many flyers stuffed in my mailbox and I was wise enough (thank goodness) to know that it was a scam! Every flyer sent to me went in the trash...I still have my home, I can afford my payment and that's with a couple refi's over the years to lower my interest rate. It's true people were preyed upon, but homeowners go greedy too. If you refi to start a biz that's a big risk and you should be ready to deal with the fallout.
No one forced anyone to sign these mortgages. Sorry, but there are people all over losing their homes because they can't pay.
Hey Don, yeah, a whole bunch of people are losing their homes because they cant pay. Actually, millions of people are losing their homes because they cant pay. On top of that, mortgage back securities, mortgages that weren't secure at all, all messed up a crap load of investments, retirements and pension funds and now, those people can't pay. Oh, let's not mention the crashed economy because the market was flooded with these loans. Now all these people, that had jobs and were paying, we're laid off and now they can't pay. And how about those cuts to education? Well, there's alot of people in the future that wont be paying anything because they don't have a education that would put them in a position for a career job that would allow them to pay.
And hey, the banks!!! No one put a gun to their head to push and incentives toxic loans into working class and middle class communities. But they sure as hell aren't paying.
Good looking out, though Don. You're simplistic view on things just inspired me to participate in any event that helps educates people like you and help people that are in this article fight to get their homes back.
ps. did someone pay you to post to this article? because I'm sure no one forced you to post what you posted.
Great article, thank you for seeing through glitzy hype and pandering deception of big money. They seem to be very satisfied with themselves while Pushing the Poor and Needy into the streets and lining their pockets with bigger bonuses.
This is leftist garbage. When you don't pay your mortgage you are properly evicted. Anyone with a brain could see the problem with balloon mortgages. The Feds were wrong to encourage so many irresponsible people to take out mortgages. Of course capitalism is always to blame ! I stopped reading Big Fat Bruce's Bay Guardian four years ago because of this type of slanted rubbish. Why should I tolerate it here ?
Uh, in case you haven't noticed, sfweekly has also been an alternative newspaper. You have it backwards about whether you should "tolerate" it because you apparently have never read this site or the paper until today, or you would know that.
You can always watch Fox News to find coverage that agrees with your view of the world.
You can't either read or think straight. I've been familiar with SF Weekly since the 80s.Just because it's a so-called alternative paper doesn't mean it has to have a braindead left view like the BG.Don't watch regular TV. Never watched Fox News because I'm a libertarian, not a neocon.Sorry I don't fit your stupid stereotype.
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