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The Dispossessed: Bayview Homeowners Fight Foreclosures 

Wednesday, May 2 2012
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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."

About The Author

Albert Samaha

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