In the Fairwood subdivision, dreams of black wealth were dashed by the housing crisis

[Street Knowledge]

http://www.washingtonpost.com/sf/in...-wealth-foundered-amid-the-mortgage-meltdown/

It's a lot of stuff(can't post all of it) but a great read

Fairwood homes

airwood is a sprawling 1,800-home subdivision in Prince George’s County built on a former slave plantation that was once owned by the state’s 34th governor, Oden Bowie. It should have been a success story for black Americans.

The decade-old neighborhood is 73 percent black and its residents have a median household income of more than $170,000, according to the census. Some houses there once sold for more than $1 million.

But half the loans on newly constructed homes in Fairwood during the housing boom in 2006 and 2007 wound up in foreclosure — 723 of 1,441 so far, according to a Washington Post analysis of private and public mort

On some blocks in Fairwood, nearly every house went under. On Burkes Promise Drive, an arcing street of broad lawns, 20 of the 34 homes fell into foreclosure. Neighbors awoke each day to the tell-tale signs: rental trucks in driveways and piles of old furniture, strollers and garbage bags dumped on the curbs. A neighborhood security guard papered hundreds of houses with notices that homeowners were being sued for outstanding association dues and would soon be locked out of the pool.

Nationwide, the disproportionate impact of the mortgage crisis on African Americans has been well documented.

Less understood is how the crisis played out block by block and continues to reverberate in Prince George’s, the wealthiest majority-black county in the United States. It was also the epicenter for mortgage failures in Maryland. Today, far fewer blacks are getting home loans in the county, foreclosures are on the rise again and the African American share of the population has started to decline there for the first time since the civil rights movement

Fairwood, one of the nation’s most aspirational black communities, is a symbol of what blacks lost in the crisis. For all its wealth its communities, is a symbol of what blacks lost in the crisis. For all its wealth, the community had the second-highest foreclosure rate in the county for a neighborhood with more than 100 loans, behind only one in Adelphi, which had a much-lower median income of $64,398.

 

[Street Knowledge]

A Washington Post analysis reveals what a drive through the neighborhood’s stately houses might not: the effect of subprime lending on the community. Of the 1,441 loans made in Fairwood between 2006 and 2007, 416 were subprime, which are riskier loans that carry higher fees and interest rates that adjust frequently, according to federal home mortgage data.

In the lead-up to the crisis, borrowers in Prince George’s earning more than $200,000 per year received subprime loans 31 percent of the time, the highest rate in the nation for a county where 750 or more subprime loans were made.

The data also reveals a crisis within the crisis: African immigrants, who make up 5 percent of the population of Prince George’s, accounted for nearly one-third of the families affected by foreclosure in Fairwood, according to a Post analysis of mortgage data provided by Lender Processing Services.

Billy Okoye, a real estate agent who lives in Fairwood, said that during the boom the neighborhood was very attractive to immigrants from West Africa, who favor new construction.

31% of borrowers in Prince George’s County with incomes higher than $200,000 a year received subprime loans.

 

[Street Knowledge]

He said home buyers did not see what was coming.

“They had lots of programs at the time back in 2004 and 2005. And they figured, why not? If this is where we can get it, why not?” Okoye said. “When the downturn happened, reality set in. The balloon burst, and mortgages started to go up.”

That reality is apparent to those who live in Fairwood now.


Solon Phillips, a 41-year-old lawyer and Fairwood resident, bought his 6,000-square-foot home in February 2009 for $460,000. The home originally sold for more than $600,000 in 2005.

“The crisis, I believe, has changed the face of Fairwood,” said Phillips, a Brooklyn-born Trinidadian. “Once the housing crisis hit, the value and prices of the homes in Fairwood dropped. This drop opened the door for less affluent homeowners to purchase and move into the community.”

Fairwood resident and real estate agent Anthony Thomas, 40, bought there with his wife, Germaine, 37, in the early days of the neighborhood, before the crisis.

“I know that a lot of families were displaced, neighborhoods shaken, and economies placed in turmoil,” he said.

But Thomas sees Fairwood’s new diversity as a virtue. “As the region continues to grow as a melting pot of ethnicities, Fairwood now serves as one of Prince George’s County’s brightest stars that exemplifies diversity in a planned community,” he said.


“As a resident, I welcome and celebrate the socioeconomic and family type of diversity present in Fairwood,” she said in an e-mail to The Post. “As a sociologist and demographer, I am troubled that Fairwood was hit hard in the housing crisis, especially given the number of black Fairwood residents. It begs the hypothetical yet sociological question: Would the same magnitude of predatory lending have taken place in Fairwood if it were a predominantly white middle-class area?”

 

[Street Knowledge]

Subprime loans were largely prohibited until Congress in 1980 passed legislation lifting state interest rate controls on out-of-state banks.

At first, just a handful of small lenders made subprime loans. But as investors in the 1990s sought more mortgage-backed securities, which bundled subprime loans with other loans, demand grew. The high rates of return on the securities quickly made subprime loans the darlings of Wall Street.

Advocates and regulators soon began to point out that minorities were being harmed by the aggressive loan terms. In 1999, the four major federal banking regulators issued warnings that the elements were in place for predatory practices.

In 2006, Sheila Bair, who was appointed by President George W. Bush to run the Federal Deposit Insurance Corporation, had her staff look closely at subprime loans. She was distressed by what she found.

“These were absolutely predatory loans,” Bair, who now works at the Pew Charitable Trusts, said in a recent interview.

 

[Street Knowledge]

Zooming in on the affected area

 

[88m3]

it's crazy the way they put guns to their heads and forced them to get mortgages they couldn't afford

 

[Family Man]

I see 700+ comments on this story. I don't even want to read it but I bet it's mostly CACs CACing.

 

[wheywhey]

Today, far fewer blacks are getting home loans in the county, foreclosures are on the rise again and the African American share of the population has started to decline there for the first time since the civil rights movement

Why are foreclosures back on the rise?

The data also reveals a crisis within the crisis: African immigrants, who make up 5 percent of the population of Prince George’s, accounted for nearly one-third of the families affected by foreclosure in Fairwood, according to a Post analysis of mortgage data provided by Lender Processing Services.

I guarantee you African immigrants were being hustled by other Africans in the mortgage business. Black people see loans as miracles, favors from God. No research on loan rates, income to debt ratio, or mortgage types, just sign here. You had veterans getting subprime loans when they could have gotten a safe VA loan.

This drop opened the door for less affluent homeowners to purchase and move into the community.” [...]

But Thomas sees Fairwood’s new diversity as a virtue. “As the region continues to grow as a melting pot of ethnicities, Fairwood now serves as one of Prince George’s County’s brightest stars that exemplifies diversity in a planned community,” he said.

“As a resident, I welcome and celebrate the socioeconomic and family type of diversity present in Fairwood,” she said in an e-mail to The Post. “

Hmmm. The neighborhood is seeing foreclosures again, less affluent homeowners, diversity and no mention of gentrification. Did Hispanics move in?

 

[wheywhey]

A lot of old black people lost their mortgage-free homes during the crisis. Mortgage people would call them several times a day unsolicited or drop by the house with cookies and convince the old people to get a loan for home repairs or something.

This old woman wanted a $700 car and ended up losing her house. The video does a good job of explaining everything that went wrong.



A different woman.