A crowd has gathered around Geary Brown and his letter.
"Look what I got," he says, almost in a whisper.
Heads peer over his shoulder.
They see the Bank of America masthead and the curt, three-sentence paragraph saying that the bank is considering giving him a loan modification. It is the first communication from the bank in three months, since the eviction warning in December.
"Congrats, Geary!" says a woman in a sweatshirt and jeans.
"Bout time they got back to you!" says a man sporting a beat-up 49ers cap.
Brown, a stocky 61-year-old with an amiable demeanor and a buzz cut, nods his head, smiling like a winner at the racetrack. He doesn't say anything more, just looks down at the paper as palms pat his back. Perhaps he doesn't want to gloat. Brown is the fortunate one. Many in this crowd are about to lose their houses and would love to get this letter.
They have congregated on this blue-skied spring Saturday in Bayview to mobilize against the foreclosure crisis that has hit this neighborhood harder than any other in San Francisco. By 3 p.m. there are more than two dozen people standing in front of 1401 Quesada Avenue, Dexter Cato's house. Technically the house belongs to Wells Fargo, because Cato was evicted in February. But two weeks later, Cato returned to the property and "the back door was mysteriously open," he explains with a sly grin. Cato changed the locks again, and hung on his fence and sidings yellow banners that say things like, "An Injury To One Is An Injury To All: Save Our Homes."
Since then, Cato's home has become a rallying point for many other Bayview homeowners facing foreclosure, a manifestation of the residents' will to fight back as eviction notices push them out of their neighborhood. And today he's hosting a barbecue — part block party, part protest against the banking industry.
As the swelling crowd bleeds into the street, passing cars slow down to rubberneck. Many drivers roll down the window to wave, or tap out a light honk-honk in solidarity. Passersby greet familiar faces, detouring for beer and short ribs. Neighbors lounge on plastic chairs by the grill. Two old men have set up a table for chess on the sidewalk. A local band jams on the street corner and several people are dancing.
"This block, man, something about it — we all grew up together, all our kids grew up together, went to the same school," says Cato, a 45-year-old longshoreman. "We looked out for each other."
But now the Bayview residents at this barbecue see their community dissolving. Foreclosures have spread like weeds. On Quesada alone, 11 houses are in foreclosure. Eight more on Palou Avenue, the next block north, and 15 more on Revere Avenue, the next block south. Between 2008 and 2012, according to projections from real estate database RealtyTrac, nearly 1,500 homes in Bayview's zip code will have been foreclosed on — a massive swath for an area with around 10,000 housing units.
To many residents' minds, the foreclosures serve to clear the path for the city's plans to redevelop and gentrify Bayview-Hunters Point, the southeastern neighborhood that both locals and Realtors call the final patch of San Francisco not yet redeveloped.
"Like they did to Fillmore," says James Pace, whose sister used to live across the street from Cato before she was foreclosed on. He leans against the house as he chats with Brown.
"You look at it now, where'd all the people go?" asks Brown.
"Went down to Pittsburg, went down to Antioch," replies Pace.
"It's all about money," deadpans Brown. "They're trying to get us out of here so they can develop."
Most every Bayview old timer remembers the way city leaders and developers in the 1950s and '60s whitewashed the Fillmore, the city's original black epicenter. The locals fear the same thing is happening to Bayview. Old timers have seen the exodus of the neighborhood's black population for decades. In 1980, Bayview was 65 percent black, and nearly two-thirds of that demographic owned a home. By 2010, the neighborhood was 34 percent black, and less than a third of them owned a home. The foreclosure crisis, many residents believe, is enabling the final thrust that pushes black people out of San Francisco.
"It's like they just plotted on us, just preyed on us," says Cato, his voice rising and brow tightening into a scowl. "They been tryna get this hill for the longest. All this new redevelopment — the palm trees, the light rail, Candlestick going down, the condos, the fancy restaurant — we know what they're doing. That ain't for us."
And so the Bayview residents are now trying to hold the line, fighting to keep a house and then a neighborhood. This time, though, it's not city leaders and developers forcing them out. It's the free market.
"I'm mad as hell!"
Rev. Malcolm Byrd stands on the steps of City Hall alongside more than a dozen activists and community leaders of all colors, a group that includes Amos Brown, president of the city's NAACP, and African Orthodox Archbishop Franzo King, the well-known preacher whose Bayview home faces foreclosure.
Byrd scans the crowd of 50 or so people, many of whom are holding signs with messages like No More Evictions & Foreclosures For Profit!, Hold Wall Street Banks Accountable, and Justice for Trayvon.
"You wanna know why I'm mad as hell?"
"Why?!" a handful of folks shout back.
"Because of the idea of the American Dream applying to everybody except black and brown people! You know how I know that? Because we are the ones losing our houses at disproportionate numbers!"
Over the last 40 years, the black population in San Francisco dropped from over 13 percent to 6 percent, the biggest percentage decline in any major American city. Around a quarter of the city's remaining black population lives in Bayview, which has the highest foreclosure rate in San Francisco.
"Because we are the ones who get shot the bad deals at the mortgage table!" Byrd continues. "Because we are the ones walking into banks with our heads up and walking out with our heads down!"
"That's right!" someone in theaudience yells.
Brown lingers at the back. He is a fixture at these anti-foreclosure rallies, which are often organized by Alliance of Californians for Community Empowerment, a nonprofit organization helping people keep their homes. Brown was there when protesters marched through a serene Los Altos neighborhood en route to a rally in front of Wells Fargo board member Nicholas Moore's home. And he emphatically nodded his head as Ross Rhodes, another foreclosed-upon homeowner, spoke into a megaphone about "fighting against the destruction of our communities" and "practices that are disproportionately driving African-Americans, Latinos, and the working class out of San Francisco.... We're Americans just like you."
And on this day at City Hall, he emphatically nods as Byrd likens the foreclosure crisis to Reconstruction.
"What we are facing today is a reign of terror on the black and brown community," he declares. "More than a hundred years ago, a campaign was launched to inflict terror on the minds and hearts of black people so that they would stay in their place."
"Preach, brother!" a man shouts.
"The reign of terror against the black and brown people continues!" Byrd exclaims. "You inflict erroneous mortgage and loan practices to keep us under the glass ceiling!"
To some extent, city leaders appear to agree with Byrd. In April, the Board of Supervisors passed a nonbinding resolution calling for a moratorium on all foreclosures in the city. Assessor-Recorder Phil Ting conducted an audit that found that 84 percent of foreclosure sales involved violations of law. The Sheriff's Department, in charge of carrying out eviction orders, eases the process by contacting residents before the eviction, and provides them with a list of organizations that can help.
As Byrd speaks, Brown spots Vivian Richardson, a small 61-year-old woman with short gray hair. He approaches her and the two embrace. Richardson, who lives a few houses down Quesada Avenue from Cato, was facing eviction just a few months ago. She and advocates blasted her lender, Aurora Bank, with, she estimates, 700 phone calls and 1,400 e-mails. Media outlets covered her plight. Eventually Aurora rescinded the foreclosure and offered Richardson a loan modification. It was a big victory for her, but a small one overall. For every Vivian Richardson, there are dozens more Geary Browns.
"They've done it to the Fillmore and all the other areas and now it's time for the Bayview," says Richardson. "Because too many people in Bayview have been foreclosed on in such a short period of time."
When Byrd finishes speaking, the crowd bursts into cheers. King steps up to lead a chant.
"The banks got bailed out!" he shouts.
"We got sold out!" returns Brown and everyone else.
For the first time in 40 years, black people are not the top homeowners in Bayview-Hunters Point. Asians, who comprise 30 percent of the area's population, own more houses than black people do. To many local residents, the emigration of black people from Bayview follows a direct line of descent from the displacement of black people from the Western Addition neighborhood, also known as the Fillmore.
Through the 1940s San Francisco's black population jumped from under 5,000 to more than 43,000. A third of them lived in the Fillmore, which featured lots of decrepit and cheap Victorian houses that survived the 1906 earthquake and fire. By the beginning of the 1950s, the Fillmore had been christened California's first official "redevelopment district." Over the next three decades, despite concerns from black leaders and neighborhood activists, old flats and office buildings were torn down and new market-priced apartments, co-ops, and senior citizen housing was built in their place. Higher-income people bought up the increasingly en vogue Victorians to live in or rent out.
"Redevelopment was the key to destroying the African-American community," says San Francisco State University geography professor emeritus Mark Kirkeberg, who has studied the evolution of city neighborhoods.
In all, 3,320 "affordable units" were built to replace the more than 12,000 that were destroyed, according to a 1976 study by the city's Redevelopment Agency. A good portion of the displaced black population headed to Bayview, an industrial hub with an established black community that had grown throughout the postwar years.
Black people leaving the South for work and equality in the West came for the area's dock jobs — the International Longshore and Warehouse Union was one of the few integrated unions in the city, explains Bill Issel, professor emeritus of history at SFSU. In the late 1950s Geary Brown's parents arrived from Oklahoma, Dexter Cato's from Louisiana.
In addition to jobs, the industry brought smokestacks, loud machinery, and raw fish and meat smells — all of which kept property values low and, partnered with white flight and redlining, left available plenty of affordable housing for working-class black people looking to become homeowners.
By 1980, Bayview — the only zip code in city history to be predominantly black — had the highest rate of homeownership in San Francisco. But as factories and shipyards closed in the '70s and '80s, unemployment, gang crime, and the drug trade rose, spurring many black residents to leave the neighborhood, and San Francisco. More Asians and Latinos moved into the city, with many settling in the southeastern pocket. By the turn of the millennium, the black population in Bayview had stabilized at around 50 percent.
Then came the housing boom and bust. Hundreds of homes, including many that had been paid off and later refinanced, fell into foreclosure. Second generation residents, whose parents had planted roots in the community, suddenly faced the prospect of leaving town.
"We've reached the point where those who are going to stay have made it clear: 'No I'm not going anywhere,'" says Ed Donaldson, a housing counselor with the nonprofit San Francisco Housing Development Corporation and a Bayview native. "With the foreclosures, those people who would otherwise be able to stay are being pushed out."
Geary and Shirley Brown bought their first home in June 1995. He had built up savings from his years as a trucker and was then making a solid wage as a Muni bus driver. Throw in Shirley's income as a nursing assistant at Laguna Honda Hospital and they could afford the 30-year fixed-rate mortgage for the two-story, three-bedroom, two-bathroom, $194,500 hilltop house in Bayview.
Brown got back into trucking in 1998 when Pac Bell Park construction started up. Soon he was pulling in six figures. By 2005, he wanted to expand his business, so he took advantage of his rapidly appreciating property and refinanced his home for $300,000 with Wilmington Financial — he'd been getting pamphlets in the mail describing how smart and lucrative refinancing was. The way it worked was Wilmington paid off Brown's original mortgage ($194,500), then gave Brown a new home loan for the current appraised value of the house ($300,000), with Brown pocketing most of the $106,000 difference.
Seven months later, property values still rising, he replaced that loan with a $431,550 loan from Equifirst; and then again in January 2007 for $475,000 with Countrywide Home Loans. For all three mortgages, the lenders offered him their "pick-a-payment" program, which allowed homeowners to select how they wanted to pay off the loan. Brown chose the option with the lowest monthly payment: an adjustable-rate mortgage, where monthly payments begin at a certain amount before increasing after a set number of years. For the $475,000 mortgage, he started paying $1,800 a month.
He used the new money to buy a 2000 Peterbilt truck, which got much better gas mileage than his '79 Mac. He hired drivers. Approaching 60, he wanted to ease down his number of shifts, spend more time with Shirley. The rest of the refinance cash paid off his bills.
To Brown, who'd worked hard all his life to earn his house, the refinance felt like a well-deserved reward. He wasn't the only one, of course. Many of the homeowners at that Saturday afternoon barbecue had reason to refinance. Cato and Rhodes each say they had a kid in high school and wanted to be able to afford college. Carolyn Gage, a former San Francisco Sheriff's deputy, says she got injured on the job and needed an extra cash flow to supplement the worker's comp. Josephine Tolbert, a 75-year-old daycare provider who's owned her home for 45 years, says she owed her ex-husband money after a divorce settlement. Romeo Baful, a Filipino who has lived on Quesada for more than 20 years, say he needed to install new walls because the old ones had suffered termite damage.
Whatever the residents' reasons, the loans came with similar ease. Homeowners like Brown and Cato were eager to take advantage of their property's rising value, wanted in on these free-market spoils. And lenders were happy to take advantage of that enthusiasm.
"They sat my family upstairs in that living room and said, 'You know how much money you can save?'" Cato recalls. "All that money that would be going to my kids' college trust fund. It seemed too good to be true. But I was working, my wife was working, why wouldn't it happen to us? We wanted the American Dream, too."
The story is familiar by now: The housing market collapsed, and property values tanked, meaning that many homeowners could no longer pay off the mortgage by selling the house. Compounding the problem for Cato and Brown, their adjustable-rate mortgage payments had increased after two years. Brown's climbed from $1,800 to $2,800, Cato's from $1,700 to $4,200.
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.
"Most people don't wanna take the risk right now," says a man in a green fleece. "Where the prices are at, you're not gonna be able to sell it for much more anytime soon."
While investors are not especially interested in the area now, many agree that it is only a matter of time before the market improves. But that uncertainty is a major drawback. Another regular on the steps, who says he has bought more than a dozen auctioned properties in each of the last two years, including one in Bayview, explains that he is hesitant to buy property there because there is no telling how long it will take for the proposed redevelopment to shoot up market values.
"The Bayview is good value if you're looking for something long-term, but the question is, how long will it take to pop?" he says. "Bayview gets less interest at the auction steps than any other district. The Bayview is hard to sell, and the profit margins aren't any better."
Historically, one reason the area hadn't drawn much interest from developers was its geographic seclusion: Highways 280 and 101 walled off the neighborhood from the north and west, and few main roadways funneled into the rest of the city. Plus, shuttered factories and shipyards had left brownfield along the Mission Bay shoreline. High crime rates scared off buyers as well.
Still, Bayview boasts some of the best weather and vistas in the city. Over the last decade, housing and retail projects have popped up around the area that many investors and Realtors see as the foundation for eventual SOMA-like redevelopment. And, to the benefit of all homeowners in the area, development tends to bring jobs, lower crime rates, and increase home values.
"Is there upside? Long-term there is some upside," says Herb Alston, a Realtor at Coldwell Banker. "In the next three to five years we're gonna see prices go up again in Bayview."
In 2007, a light rail line expanded down Third Street, Bayview's main thoroughfare. In July 2010, the Board of Supervisors tentatively approved Lennar Corporation's proposal to construct a $7 billion dollar residential and commercial complex at the old Hunters Point Naval Shipyard grounds. A month later, city hall adopted a plan for the "Bayview Hunters Point Redevelopment Area." (The proposal has not moved forward since Gov. Jerry Brown froze state redevelopment funds in December.) A library is under construction. A jazz lounge just opened.
"Where in San Francisco do you have 1,000 acres of undeveloped land?" asks Donaldson, the housing counselor. "We're sitting on a gold mine here."
For now the new buyers are still middle-income families who want to live in San Francisco but can't afford anywhere else in the city, says Jim Hurley, a Realtor with Vanguard. A majority of those families are Asian or Latino, whose combined population in Bayview has surpassed that of black people.
Most everyone agrees that a certain level of development is good; most everyone agrees that a certain level of displacement is bad. The challenge is striking the right balance, if such a thing exists.
Concerns over Bayview gentrification may seem premature, but memories of the Fillmore's fate persist. Lessons were learned, mainly: It's too late to fight once the bulldozers roll in. More than 30 years later, history professor Issel writes in his forthcoming book, Church and State in the City, Thomas Fleming, a Fillmore newspaper editor, and Daniel Collins, founder of the city's National Urban League branch, "looked back on the 1940s as a time of lost opportunity, when the African American residents of the Western Addition failed to rouse themselves sufficiently to influence the redevelopment of the district.... As they recalled it, very little community opposition was manifest prior to the actual tearing down of buildings."
Real estate experts believe the foreclosure crisis is only half over. Many more mortgages remain underwater — loan balances higher than property values. Waves of missed payments are likely to continue for the next couple of years with scores of Bayview evictions a near certainty.
"Because of redevelopment, because of gentrification, they've been pushing us out of our communities time and time again," says Carolyn Gage, whose parents first bought her Bayview home 50 years ago after getting displaced from their Fillmore apartment building. "It's like a hurricane, like Katrina — do you wait till the levees break?"
But this time there are no antagonists plotting to drive out residents. Rising market values generated the fickle wealth and false sense of security that tempted homeowners to take out risky mortgages. Recognizing this expanding consumer base, lenders solicited loans with the intent of maximizing the chance for fees and profits. When the market sunk, homeowners lost the money that would have repaid the banks. Because foreclosure can be cheaper than loan modification, lenders kept the collateral, the houses, consequently accelerating the flight. The free market threatens to do to Bayview what city leaders and developers did to the Fillmore.
Geary Brown remembers the Fillmore redevelopment well. He got his first trucking gig transporting equipment and building materials to construction sites in the Western Addition in 1976. On a recent morning, he sits at his dining room table. Papers blanket the glass surface — a Countrywide loan agreement, a receipt for a $3,500 check to American Home Financing, a $100,000 "Brown and Sons Trucking" invoice for work on San Francisco General Hospital renovations.
Brown glances down at the layers of documents. He leans back and exhales.
"If you got money, you could stay here in San Francisco," he says. "If you don't, don't even think of coming back here, 'cause San Francisco is too expensive. You don't like it, you can get with it or you don't. That's the way I see it. It's not gonna change for me or you or anybody. Either you can handle it or you can't. And me right now, I'm just tryna hold on 'cause I love this house, it's me and my wife's house, our first house and I can afford it."
He looks up and smiles.
"And I'm fittin' to push it up a notch," he goes on. "Buy me a few more pieces of property. I'm a rent this out, probably six, seven, eight months down the road. Take up this carpet, do this floor, and probably rent it out, buy me another house."
"The banks got bailed out!"
"We got sold out!"
The chanting continues at the rally on the City Hall steps — around the corner from the steps where the auctions take place. Shuffling through the crowd, Brown runs into another acquaintance, a twentysomething in a blue V-neck. The two shake hands.
Since getting that letter a few weeks ago, Brown has heard again from Bank of America.
"The bank made a judgment," Brown discloses, unprompted.
"They said they're not gonna modify."
He must vacate his house by May 2.