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The "Other" Black and Brown Crisis 

Wednesday, Feb 10 2016

On a sunny morning in early February, Jessie Tello sat in his wheelchair in the front room of his modest home on Newcomb Avenue in the Bayview District, located within sight — but today, thanks to a favorable breeze, not smell — of San Francisco's main wastewater treatment plant.

Through one of the large bay windows, Tello — a former Safeway employee in his 80s, now retired on a medical disability — could see the roughly 30 people gathered in his driveway. On the closed door of his garage hung a huge banner: "Defender Mi Techo Es Mi Derecho," it read, Spanish for "It is my right to defend my home." As a former San Francisco mayoral candidate, a soon-to-be-termed out San Francisco supervisor, and the former Green Party mayor of Richmond, Calif., went over their talking points and a couple of Spanish-language television reporters set up their cameras, Tello's daughter, Juana, put a smaller bumper sticker above the banner: "KEEP HOODS YOURS."

The crowd was gathered in support of keeping the Tellos — Jessie, his daughter, his wife, and 10 other family members — in the house, which is no longer their legal property, and has been on the San Francisco Sheriff Department's eviction list since October.

Working class people, the Tellos achieved their piece of the American Dream when they bought the 1,300-square-foot midcentury box in the late 1990s. Their mortgage was originated by World Savings Bank — which later became famous for writing "pick-a-pay" loans with stupendous rates of default. Soon enough, the Tellos' personal foreclosure crisis began.

Unable to keep up with payments, the family signed another mortgage in 2003. This one was with Encore Credit Corporation, a now-defunct outfit that originated at least $23.3 billion in high-interest loans during the country's subprime meltdown, according to the Center for Public Integrity. (ECC's assets were eventually purchased by JP Morgan Chase; World Savings Bank's, by Wells-Fargo.)

Falling behind, the Tellos signed another mortgage with World Savings Bank. Yet another mortgage followed. By the time they were through, the Tellos owed $520,000 on a house that had originally cost under $300,000, property records show.

The Tellos fared better than most: Fannie Mae took over the mortgage in 2011, and the Tellos held on to the house.

But in the fall, Fannie Mae began marketing "underperforming" loans with big balances like the Tellos' to Wall Street financiers. Fannie Mae still has the house (and has given the Tellos notice to quit) but perhaps not for long. In December, Fannie Mae announced 7,000 such loans had been sold to Goldman Sachs — which, only a few years earlier, had bet heavily that loans like the Tellos' would fail. And by financiers' standards, it had.

Hence the crowd, the cameras, and the banner announcing that the Tellos would stand and fight. (What they would do if armed sheriff's deputies arrived to take possession of the home, no one could say.)

The episode underscores a hard reality for homeowners in the city's still mostly working class southern and southeastern quadrants: The foreclosure crisis has not ended. As many as 3,000 homes in San Francisco were at risk of foreclosure, a city controller's report issued last year found. Half were in Bayview-Hunters Point, Visitacion Valley, and the Excelsior districts.

And many possibly solid loans, modified during the Great Recession under programs like the Home Affordable Modification Program (HAMP), are now returning to original, untenable terms, according to the Alliance of Californians for Community Empowerment (ACCE), the nonprofit which organized the crowd outside Jessie Tello's window.

"It's not over. It never ended," says Supervisor John Avalos, the lone city elected official to show up to the Tellos' home. "And San Francisco has done very little to help distressed homeowners." (Avalos, too, found himself in mortgage trouble: Records show that his underwater Excelsior cottage was eventually sold at a short sale, and he's still paying off the taxes.)

Yet in the age of Black Lives Matter, when cellphone videos and dashboard-camera recordings of police killings capture attention and motivate protests, the foreclosure crisis has taken a backseat. There have been attempts to remix and rebrand — you will occasionally hear "Black Homes Matter" — but the loss of family homes, the kind of wealth that makes or breaks the middle class, hasn't inspired anything like the massive protests following the deaths of Freddie Gray, Mike Brown, Eric Garner, and Mario Woods.

Gwendolyn Woods, Mario's mother, is well aware of this. Eleven months before she lost her son to a police bullet, she lost her home to a banker's pen.

Situated on a corner lot on a hill at the beginning of a cul-de-sac one block from Bayview Park, realtors would call the 942-square-foot home at 994 Le Conte Avenue charming. For Gwendolyn Woods, it was her birthright. The home was bought by her father, a worker for the Navy, which for almost 30 years was one of the biggest employers in the area. With her husband Michael, Gwendolyn Woods raised her three boys there — including Mario, born in 1989.

Her subprime ordeal was even worse than the Tellos'. A veritable who's who of subprime lenders descended on Gwendolyn Woods, public records show: Option One Mortgage Corporation ($64.7 billion in high interest loans), Fremont Investment and Loan ($61.7 billion), and the Tellos' old friend, World Savings Bank. In the end, it was local institution Wells Fargo that owned her mortgage, but that didn't matter much. A few months after Mario Woods was released from a prison stint for a robbery charge, the family home was sold for $580,000 to Nancy and Scott Olson, a couple from Bernal Heights.

Gwendolyn Woods, who currently lives near Sacramento, declined an interview with SF Weekly. Speaking on her behalf, Adante Pointer, one of the attorneys handling the federal lawsuit filed against the city and the San Francisco Police Department following her son's death on Dec. 2, says the two events — the loss of her son and the loss of her home, twin nightmares of living in a low-income community of color in America — are connected. Over-policing and disproportionate arrest rates are poverty problems, and how to better cause poverty than the loss of wealth?

"This was a family beset on all sides — it was just a parade of losses," Pointer says, noting that both Michael Woods, Mario's father, and a later fiancé of Gwendolyn Woods's both died of illnesses before her son was shot. "Losing the house was a big blow to the family... and [for Mario], coming home and not having that home base to rely on caused its own emotional trauma."

Foreclosure is one reason why San Francisco's black population has dipped below 5 percent of the city's total, the lowest since World War II. (Many activists claim it is 3 percent and dropping.)

The graphic way Mario Woods' life ended — 20 bullet wounds, some in the back, all witnessed by a busload of school children and posted to Instagram within hours — explains the city's rapid and decisive response to his death: Mayor Ed Lee and other supervisors called the incident a "firing squad," July 22 was named "Mario Woods Day of Remembrance," and the police department has pledged to review its tactics and use of force policies.

But why wasn't the city there when merely a home ­— and not a life — was at risk?

A common rejoinder to tales of foreclosure woe is that the blame lies not with the mortgage company, but with the mortgage signer. "You should have known what you were signing up for," this argument goes, "if you can't afford it, too bad."

This conveniently ignores the wrongdoing admitted to by the country's financial institutions. And America's banks are not innocent. Last year, Chase Bank admitted to misplacing mortgage payment paperwork and signing off on other vital mortgage documents fraudulently in a $50 million settlement. Countrywide Financial, which was found to have charged blacks and Latinos higher interest rates and higher fees, agreed to a $335 million settlement. And Bank of America, which had acquired Countrywide, was docked a record $16.65 billion by the Justice Department. (That fine must be viewed in context; according to the New York Stock Exchange, BoA had $623 billion in cash on hand at the end of the year.)

Citywide, foreclosures are not a major issue in San Francisco. In 2014, the city's foreclosure rate was 0.15 percent, one-seventh the national rate. "We're not seeing [many] homes underwater," said Brian Cheu, the director of community development at Lee's Office of Housing and Community Development. "Nor are we seeing a large number of homes that need to renegotiate."

But then again, police shootings — there were six fatal officer-involved shootings in San Francisco in 2015 — impact only a small percentage of San Francisco families, too.

And Bayview's foreclosure rate was four times the citywide average.

The same Controller's Report that outlined the crisis offered solutions: The city could reduce a loan's principal amount to help a homeowner get above water. Or the city could create an emergency program to help homeowners in default because of an expected crisis.

The original ballot language that created Mayor Ed Lee's Housing Trust Fund — which promises to eventually dish $50 million a year towards affordable housing, which in San Francisco is typically below-market rate condominiums in otherwise unaffordable condo buildings — stated that the city would spend $18 million by 2018 to help homeowners.

That would be enough to save 30 Tello families, but thus far, none of this has happened. Qualifying for the city's principal reduction program, good for only $50,000, has been very difficult, ACCE's Grace Martinez says. No emergency program ever materialized — and the Housing Trust Fund was modified to read, "up to $18 million," with no concrete goal or accountability.

And even the BMR condos have a catch: There are no controls on a condo building's homeownership association fees. So even if you win the BMR lottery and score a below-market-rate unit, there's a possibility of displacement if your better-heeled neighbors elect to raise the HOA fees beyond what you can afford.

"With the same impunity that police can come into our communities and shoot and kill a young man, banks came into these communities and made predatory loans," says Ed Donaldson, a Bayview native who worked as a loan counselor and is now working at MAAT Community Partners, a community stabilization nonprofit that buys distressed homes and offers terms to the former homeowners can afford.

MAAT has bought seven homes so far in Bayview, Donaldson says; it is one of the few such organizations working in the area.

"Even though the banks have admitted guilt, nobody says anything," he says. "It's, 'Okay, that's just the way life is in America.'"


About The Author

Chris Roberts

Chris Roberts has spent most of his adult life working in San Francisco news media, which is to say he's still a teenager in Middle American years. He has covered marijuana, drug policy, and politics for SF Weekly since 2009.


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