Deutsche Bank holds a unique distinction in the Mortgage Loan Servicing business that few can claim; They foreclose on homeowners with speed and precision.
While there are lenders that have the same business practices, none are as effective in protecting their client’s claim to a homeowner’s property when it’s time to exercise the rights defined in the mortgage note.
If any Mortgage Servicer can assert the above facts, they certainly can beyond distortion. According to our proprietary database at Corley Realty Group, Deutsche Bank had 16% of the active foreclosure filings in Brooklyn as of March 2009.
Read carefully, Deutsche Bank asserts that by 2011, 77% of homeowners in New York City will be in a negative equity position. Property owners will be paying a mortgage on a property they own, and in most cases live in, that won’t be worth what they purchased it for.
Said plainly, the majority of New Yorkers will be real estate poor in short order!
Foreclosure Litigation Grows in Brooklyn
Below is a map of Brooklyn, New York that shows the most recent foreclosure filings as of 9/24/2009;
The red ballooned white dots planted in the map represents a new foreclosure filing for September 2009. As you review the map you’ll notice lots of ballooned dots clustering in parts of Central and East Brooklyn.
Neighborhoods in Central and East Brooklyn that red ballooned white dots cluster in are;
- Bedford Stuyvesant
- Crown Heights
- Bushwick
- East New York
- Canarsie
- East Flatbush
- Mapelton
- Wingate, and
- Flatbush
They are also the neighborhoods where buyers who purchased homes over the last 10 years used Sub Prime Loans.
Campaigning on More Affordable Housing (???)
Candidates campaigning for the Nov. 3rd general elections this year have made the term Affordable Housing part of their lexicon in their stump speech, campaign website and media quotes.
But if you ask any candidate to offer specifics on their affordable housing agenda, scary as it sounds, they want to create more affordable home buying opportunities for low income working families.
Isn’t that what got us into the trouble we’re in today?
A little known fact about the foreclosure crisis is that it has its origin in The Clinton Administration. Andrew Cuomo (yes, the NYS Attorney General) was the Secretary of Housing and Urban Development in the 90’s when President Clinton continued the Bush Administration’s financial deregulation in addition to a domestic policy initiative to create home ownership opportunities among minority communities.
Unfortunately, we all know how that turned out.
It’s important to note that when politics leads domestic policy without a mandate, it often leads to getting it half right. Sure you’ll create the direct benefit but fail to plan all the way to the end where all sorts of derivative problems occur.
Status of Affordable Housing projects in NYC?
If you ask Bob Starzecki, he may be in a better position to advise politicians on the present reality of affordable housing in New York City. Mr. Starzecki is the owner of Guy Brewer Development Corporation. His firm, under the direction of the Housing Partnership Development Corporation, built 21 two family homes in Jamaica, Queens.
As per a recent article, Open House in Jamaica Wait for Buyers while Neighborhoods Wait for Revival [NY Daily News], Mr. Starzecki is quoted saying;
I’m just trying to hang on. I’m already in the hole. Usually these homes would have been pre-sold. However The underwriting criteria has gotten so restrictive
As of the publishing of the article (9/20/09) all 21 properties were still unsold.
Are Candidates Afraid of Making Foreclosure an Issue?
Yes, and here’s why. The foreclosure crisis does not allow politicians to be succesful with the current tools available, which are;
- Fund foreclosure education initiatives through Community Based Organizations
- Offer free legal services to homeowners that are victims of predatory lending
- Provide loan modification services to homeowners who can’t afford their current mortgage payment
While all of the above are extremely helpful to all homeowners in need of information and advocacy, it may not end with the outcome most homeowners seek. A politician can ill afford a negative experience had by any of their constituents, especially one that finds them homeless.
The only real measure of success is the number of foreclosure auctions conducted at 360 Adams Street, the jury room of New York State Superior Court in Brooklyn.
It’s here where a politician will realize that all of the money spent on the above individual initiatives may not be yielding the results even they believed were possible.
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{ 3 comments }
Hi Michael,
It is an interesting and complex post, and it is a follow-up / summary of our discussion the other day.
You’re suggesting that the political push for low-income home-ownership – relayed by Community Based Organizations such as the Development Corporation in Queens – have a responsibility in the foreclosure crisis… You mention the strikingly high number of households in situation of negative equity (the Deutsch Bank study), the unsold homes in Queens built by a local CDC, and the moderately efficient “financial literacy” programs in preventing foreclosures.
Is that you think that housing prices in NYC are just too high for realistic and sustainable low-income home-ownership and that politicians are afraid to tell the truth? is it a fair summary of your post?
A lot of academics I have talked to seem to be going in your direction. They all agree that subprime lending produced equity stripping – yet they argue that in the first place home-ownership has been given an undeserved place among low-income families… so the question becomes: what are the alternative ways for poor households to accumulate wealth in a sustainable fashion?
clement
There definitely is an indirect relationship for shared responsibility in the foreclosure crisis amongst Politicians and Community Based Organizations.
We live in an expensive city which traditionally is unfriendly to affordable housing for first time home buyers. Even if you provide cheap land to a developer and build in all sorts of tax incentives, you’ll never overcome the cost of homeownership. And this is where low income families struggle to achieve middle class status.
Raising municipal water/sewer charges, property tax along with the cost of living (food, commute, fuel and utilities) it’s a miracle that a majority of families manage to avoid “Fiscal Foreclosure” [when the cost of ownership grows faster than the income of the property owner]
The right format for affordable housing that should be offered to low income families is Coop homeownership. It allows a family to share in the cost of homeownership while preparing for the larger responsibility of becoming an individual property owner.
It’s important for an urban environment like New York City to plan all the way to bring families into the middle class through the wealth building opportunity that homeownership creates.
If I were an official at NYCHA, I would be drafting plans (even in this market environment) to convert one of the public housing developments (projects) into that form of ownership for the existing tenancy.
One of the residual benefits in doing so would be that those who feel they have a vested stake where they live will utilize the process available to remove the undesirable tenants without contest.
At least we can hope.
Hi Michael,
Thank you for the long answer. I will investigate this idea of co-op ownership for affordable housing. It seems interesting and I know nothing about it.
good luck for your blog’s new outfit. I’m waiting for it.
clement
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