Marcia is not
in the holiday mood this year. She is not putting any Santas, reindeer or
lights outside her house. She is probably not going to have many presents
inside. There will be no home improvements anywhere. The fact is, she does
not know how long she can even call the place hers.
A little more
than a year since she bought her Bronx home for $535,000 with no cash down,
she is facing foreclosure. Even if she could scrape together the $7,500 to
catch up on her overdue mortgage payments, other calamities await: an interest
rate that will rise in coming months and a huge balloon payment hovering in
the distance like a financial Hindenburg.
“I’m
not doing anything to fix up the house,” said Marcia, a nursing home
aide who declined to give her last name during an interview at a community
agency that offers counseling on preventing foreclosure. “I just work,
eat, sleep and hope they don’t take my home. This is the worst Christmas
I ever had.”
She is not alone
in her stress and fears among the boxy brick houses that line the streets
of her Williamsbridge neighborhood. The binge of subprime loans that flooded
this area a few years ago has now given way to foreclosures and forced sales
by homeowners saddled with onerous mortgages they could never repay. The effects
of this free-for-all are increasingly felt even among those who did not take
on risky loans. Longtime neighborhood residents worry that their property
values will be sunk by the double whammy of poorly maintained homes and revolving-door
neighbors, while shopkeepers on the nearby commercial strip on Boston Road
— especially those who sell hardware or home furnishings — say business
has plummeted by 50 percent or more, as strapped homeowners cut costs.
“Everybody’s
scared,” said Khemraj Ramprasad, the owner of K & R Paint and Hardware.
“People are not repairing their homes as much. They’re not painting.
People are taking every penny they have and putting it into paying the mortgage.”
His sales have
been off for much of the year, he said. Despite his store’s name, he
has not restocked his paint inventory, since people are hardly buying any.
Business has slacked off so much, he spends his days remodeling the store,
building new wooden display shelves in hopes of generating more sales from
those customers who do venture inside.
“This is
affecting everybody,” he said. “Ask anybody around here: Business
is very bad.”
Housing advocates
have been too busy trying to deal with the ever-growing numbers of panicked
homeowners to gauge the collateral damage from the lending crisis. But many
of them are not surprised that it is beginning to take a toll on the larger
community.
“On the
street level, there are signs of deferred maintenance,” said Sarah Gerecke,
the chief executive of Neighborhood Housing Services of New York City, a nonprofit
group that counsels homeowners. “People can’t afford to fix screen
doors, keep up their roof or yards. Neighborhoods that used to be spotless
now show signs that owners can’t afford to keep up their homes.”
In some cases
they cannot even work up the money to furnish their homes. Few customers have
visited Boston Road Furniture, despite a handwritten come-on taped to the
window that promises anyone can “Get Up to $3,000 Instantly No Job No
Credit Check.”
Marcus St. Marie,
the store’s owner, remembers when West Indian immigrants like him would
flock to local stores.
“You come
to this country, and what is the first thing you look for?” he asked.
“A home. And then the furniture.”
Sales have been
so bad since March, he said, that he has laid off four of his store’s
five employees. He has no idea how much longer he can hang on.
“We need
a government loan,” he said. “This country is falling apart. We
need customers. We need some help. So many ‘For Sale’ signs in this
neighborhood. People just have to leave their homes and run.”
About the only
place that has a steady stream of clients is the local office of Neighborhood
Housing Services, where Theresa Ortiz offers advice on how to prevent foreclosure
or soften its blow. The calls begin pretty much when the office opens, and
everyone pitches in, regardless of job title.
Her office sits
amid a strip of storefronts, some recent casualties of the loan debacle. On
one side is a shuttered furniture store. On the other is a vacant office topped
by a sign advertising easy mortgages and houses with no money down.
This is not
an easy time of year, as people trudge into Ms. Ortiz’s office carrying
sheaves of financial documents. Sometimes the tears come before the words.
Often, the story is the same: A friend from church or work suggested they
refinance their home, or insisted they could help them buy their first home.
Within a few years, they are facing Ms. Ortiz, frantic and frightened.
The luckiest
ones are able to work out a deal with the lenders and save their homes. Others,
she said, are lucky if they can sell their houses and retain what little equity
they have left.
In the rush
of cases in recent years, she has seen parents juggle two or three jobs in
an attempt to keep their homes. One woman, she said, sent her 10-year-old
son to live with relatives in Jamaica while she worked two jobs to stave off
foreclosure.
“She did
not want to leave him at home while she worked, because then child welfare
would have stepped in,” Ms. Ortiz said. “This is interfering with
the quality of people’s lives and the nuclear family. Who wants that
kind of life in order to keep a roof over your head?”
Other housing
advocates asking the same questions have begun to look toward Wall Street
for part of the answer. They note how investment banks made tidy profits and
bonuses in recent years by scooping up batches of subprime loans to back lucrative
securities.
“They were
telling lenders what kinds of loans to make,” said Kevin Connor, the
author of a recent report on Wall Street’s role in the subprime crisis,
sponsored by a coalition of housing advocacy groups. “They built this
house of cards on the backs of homeowners.”
Despite the
losses taken by investments banks in recent months, housing advocates say
that banking executives will still get their bonuses this year, and even chief
executives who lost their jobs because of the mortgage losses walked away
with multimillion-dollar severance packages.
So some have
proposed a new investment for Wall Street bonuses: an emergency fund that
would help homeowners in distress. James Mumm, a housing advocate from the
Bronx, said $10,000 could help one homeowner refinance to an affordable, fixed-rate
mortgage.
“These
guys made millions in bonuses, so they go off and buy Rolexes or real estate
while people are being put out on the street,” said Mr. Mumm, who is
the executive director of the Northwest Bronx Community and Clergy Coalition.
“Now the homeowners are asking for their money back. This is about reparations.”
Despite the
warnings and the horror stories — or even bitter personal experience
— some homeowners find themselves still being courted by mortgage brokers
eager to get them to refinance.
“You should
see my answering machine,” said Israel Vazquez, a Police Department employee
who has already refinanced his home once since he bought it two years ago.
“All these mortgage companies are still leaving me messages. They all
say they can get a deal for me. I don’t trust any of them.”
For good reason.
When a financial squeeze forced him to refinance last year, he traded a $505,000
30-year fixed mortgage at 5.6 percent for two subprime loans totaling more
than $600,000 with adjustable interest rates that will go up to 10 percent
or more next year. He has not missed any payments, but the monthly installments
he can afford to pay are so low that he now owes more than when he began.
Though he was
a lifelong renter, his wife always dreamed of having a house. She died 11
years ago, of asthma.
“She died
in my arms,” he said. “She was the best thing that ever happened
to me. You know what, she was too good for me.”
Ms. Ortiz shushed
him.
“Don’t
ever say that,” she insisted.
His children,
he said, persuaded him to buy the house, to honor his wife’s wishes.
“This is
sinking me,” he admitted. “I just want to get it together.”
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