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Predatory Lending Housing Crisis

Recently homeowners in my corner of Harlem held a soiree in someone's garden. We form a warm group of 130 people who represent the changing neighborhood -- black old-timers with a growing number of whites. Everyone brought a dish or bottle and the talk over the macaroni was cheerful. Did anyone know a good contractor? How did the Little League do this summer? A door prize, a box of Godiva chocolates, was awarded to the longest resident -- Dina Morrison, 93, who has lived with her older sister in the same place for 67 years.  No one mentioned foreclosures.

Foreclosure crisis? What crisis? Not in Harlem.

Harlem is full of the sort of people who are losing their properties all over New York City, namely little old ladies and working-class African-American families. But the nation's black capital has been insulated from the sub-prime meltdown by the very thing usually blamed for destroying communities of color -- gentrification.

While the dreaded G word has priced some residents out of the 'hood, we've seen a paradoxical upside. The house values that have skyrocketed over the past 15 years in Harlem scared off many predatory lenders who targeted other black areas. These $1-million-plus price tags have also given homeowners who are struggling to keep apace with mortgage payments the option of selling out before the bank closes in.

"There tends to be a tight connection between property values and foreclosures," explains Josiah Madar, from the Furman Center for Real Estate and Urban Policy at New York University.

He and other experts understand little about the mechanisms of abusive lending, other than the stark racial component.  Eight of the ten top neighborhoods hit by foreclosures in the city are overwhelmingly non-white. A map representing the worst afflicted areas -- among them Bedford-Stuyvesant, East New York, North Bronx, South Jamaica -- says it all. Each filing is a dot, and the aforementioned areas resemble solid metastasizing cancers, with several hundred foreclosures each.

Yet the area comprising Hamilton Heights, which claims some of Harlem's most prized Victorian brownstones, had just eight foreclosure notices, so few one can discern the individual specks.

It appears that the conmen who besieged other black neighborhoods steered away from Harlem, wagering that anyone who lived in a valuable townhouse would be too financially sophisticated for their tricks. Unlike in the outer boroughs where the racial demographic is similar but house values lower, Harlem residents didn't report a barrage of flyers pushed through mail slots that promised zero interest rates. The scam artists who solicited people to over-borrow just didn't approach Harlem as aggressively. Take a look at the numbers. Only 0.8 percent of all home-purchases mortgages in the Hamilton Heights area in 2006 were sub-prime, versus 34 percent in Bedford-Stuyvesant and 39 percent in East New York. (EDITORS -- These are the latest available figures.) Refinancing loans from risky lenders were likewise lower here.

"It was all a matter of the assumptions of the predators," said Dwayne Jones, lending director of the Parodneck Foundation, a housing advocacy group. "They did not come to Harlem." He credits the large concentration of organizations like his, as well as social networks like our homeowners' association, for raising awareness among less savvy member of the community.

Those Harlemites who did borrow more than they actually owned could take the money and run. That's what our next-door neighbor did. Literally a week before the bank jumped to possess her 1888 row house, she sold the property for a nice packet to a white family and found something cheaper. Granted, it's disruptive to move but she was spared financial ruin.

The added positive effect is that properties like hers do not sit vacant during New York's long foreclosure process. We see a vicious cycle in foreclosure-hit areas, where empty houses sink the cost of those nearby. As anyone who lived through Harlem's dark ghetto days knows, no one wants to live next to a boarded up building that tempts drug dealers to loiter. Moreover, few people want to buy a boarded up building with a leaking roof, which is often the case as banks rarely maintain the properties they seize.

This is not to say that gentrification is great for everyone. Of course it has a bad side. Most Harlemites rent apartments and do not dwell in fancy mansions. The locale is losing its status as the last outpost of affordability in Manhattan. Those suffering are victims not of the white professionals who buy shells and fix them up. No, the destructive forces are the big developers who scoop up rent-stabilized apartment buildings and then try to force out tenants by doing improvements and jacking up the price. Some of these investors borrowed more than the value of their properties, and now risk default. Then what happens to the residents living on the premises?

For the time being, though, homeowners like Dina Morrison are in a good place. There's talk among the homeowners of a jolly Christmas party, just like every year of plenty.

©2008 Judith Matloff

About the Author:

Judith Matloff is the author of Home Girl -- Building a Dream House on a Lawless Block (Random House.)

Article Source: ArticlesBase.com - How Gentrification Saved Harlem

Remarks on predatory lending

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Predatory Lending Lawyers

Question: where do you go to file a lawsuit without a lawyer?

i want to know how do i file a lawsuit without a lawyer? for predatory lending practices an harressment an diress

Answer: You can go to your local county court house and tell them you wish to file a civil suit; a legal aid will give you the proper paperwork and send you in the right direction. With this type of civil suit you'll most likely want an attorney to do it for you, they'll have a better chance at getting a judgement in your favor; the lending companies lawyers will rip you apart.

Joplin, Missouri Predatory Lending Lawyers - The Hershewe Law Firm

Predatory Lending Legislation

Question: Does anyone else find this curious?

Here is a link to an article from the NY Times... dated September 30,1999.

http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&pagewanted=1

Bill Clinton was still President.

Please note who is "applying pressure" in the third paragraph.

But that isn't the best part...

Take a look at the eighth paragraph. Here we have Peter Wallison already talking about how a bailout will be necessary when the subprime market inevitably collapses.

I know the Bush administration proposed legislation to fix the predatory lending situation, but was stopped by the Dems in Congress. Although I admit I don't have all the details on that particular issue.

Thoughts? Does anyone have any more information on this?
Artguurl: What about the talk of the bailout in 1999? That is the part I'm more interested in.

Answer: The Bush administration never proposed legislation to fix the predatory lending situation. He never did anything to stop it. He supported it by helping deregulation the business even more. You're right, you don't have the details on that particular issue. You don't even have the facts.

February 23, 2004: Instead of heeding warnings, Federal Reserve leadership promotes non-traditional mortgages over fixed rate products in a speech to the Credit Union National Association annual conference. "American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage.the traditional fixed-rate mortgage may be an expensive method of financing a home." [Remarks By Federal Reserve Chairman Alan Greenspan, 2/23/04]

October 8, 2003: Bush administration objected to a proposal to have an independent regulator of Fannie Mae and Freddie Mac be an independent unit of Treasury, much like financial regulators housed in the agency that oversee banks and thrifts. The Bush administration also objected to a proposal to have the Department of Housing and Urban Development have oversight over the companies' business activities. The independence provision has broad support from committee Democrats and Republicans. The HUD provision was pushed mostly by Democrats but had been accepted by Oxley and Baker as a compromise needed to move the bill forward. [Washington Post, 10/8/03]

February 24, 2004: At a Senate Banking Committee hearing, Norman Rice, President and CEO of the Federal Home Loan Bank of Seattle questioned having low-income Americans use ARM's to finance their homes. In addition, Senator Sarbanes questioned the Federal Reserve's promotion of alternative mortgage products over traditional fixed rate mortgages:

* Norman Rice: "Particularly if you're talking about serving an underserved constituency. Adjustable rate mortgages for a low income constituency is a nightmare."

* Senator Sarbanes: "[The Federal Reserve] is pushing adjustable rate mortgages.and throwing this risk back on the consumer." [Senate Banking Committee Transcript, 2/25/04]

June 30, 2004: After encouraging the use of non-traditional mortgages, many of which re-set with rising interest rates, the Federal Reserve begins to raise rates-17 consecutive, 25 basis point increases that take the Federal Reserve Funds rate from a 46-year low of 1 percent in June 2004 to 5.25 percent in June 2006. [Market News International, 4/29/08]

October 26, 2005: House of Representatives passed regulation reforming the GSE's. The bill passed the House 331-90 (Republicans: 209-15; Democrats: 122-74), and would have given the new regulator broad authority over setting capital requirements and limiting portfolio size. Senate Democrats picked that bill up and offered it, but the Administration opposed that legislation. According to Mr. Oxley, the White House gave Congress and the GSE reform legislation "a one-finger salute."

* "We missed a golden opportunity that would have avoided a lot of the problems we're facing now, if we hadn't had such a firm ideological position at the White House and the Treasury and the Fed," Mr. Oxley says." [Financial Times, 9/11/08]

February 7, 2007: Federal banking regulators released their voluntary Guidance on Nontraditional Mortgage Products for mortgage lenders. However, the guidance did not apply to subprime mortgages. [Senate Banking Committee Transcipt, Prepared Statement of Martin Eakes, 2/7/07]

March 22, 2007: Senator Dodd laid out how the Federal Reserve was responsible for the "perfect storm" sweeping over American homeowners. At a Banking committee hearing Dodd said, "By May of 2005, the press was reporting that economists were warning about the risks of these new mortgages. In June of that year, Chairman Greenspan was talking about "froth" in the mortgage market and testified before the Joint Economic Committee that he was troubled by the surge in exotic mortgages." [Senate Banking Committee Transcript, 3/22/07]

August 6, 2007: At a White House morning press briefing, in response to a question whether the housing market is correcting or in crisis, President Bush says that the economy is stable: "[I]t looks we're headed for a soft landing." [Remarks By President Bush, 8/9/07]

November 15, 2007: Senator Reid asked unanimous consent to pass the FHA Modernization Act, but Republicans objected. [Congressional Record, 11/15/08]

December 4, 2007: In response to a question about whether the Administration was too slow to recognize the subprime problem, President Bush said: "We've been working on this since August." [Remarks By President Bush, 12/4/07]

December 6, 2007: Senator Reid asked unanimous consent to pass the FHA Modernization Act, but Republicans objected. [Congressional Record, 12/6/08]

October 4, 2007: At a news conference on Wednesday, House and Senate Democrats outlined a plan to help low- and middle-income families keep their homes." [New York Times

Congressman Kanjorski on Anti-Predatory Lending Legislation on House Floor