Short sale specialists

From Buzzfeed:

On a bustling block in the Rego Park neighborhood of Queens, above a pharmacy and a bagel shop, sits the unmarked office of My Ideal Property. The long blocks outside are punctuated with Russian Cyrillic signs. Rego Park and nearby Forest Hills are home to a tight-knit community of Bukharians, first- and second-generation Jewish immigrants from Central Asia who migrated to the area after the Soviet Union collapsed.

The men, who called Serhant in 2015 with a deal, grew up in this diaspora. One of them, Isaac Aronov, graduated from Forest Hills High school in 2004. Public records show he landed a job as a mortgage broker at an office in Rego Park. It was the heyday of the boom. Housing prices were higher than they’d ever been. But the frothy market he entered was already heading toward disaster.

After the crash, Aronov, like Wall Street, was nimble enough to recognize that there was opportunity in distress. In 2008, he started My Ideal Property with some friends from the neighborhood. They were young, ambitious, and willing to work hard. With what one former partner described on his website as “zero experience or financial support,” they began buying homes in some stage of foreclosure.

They gravitated toward the majority black and Latino neighborhoods that were hubs of subprime lending before the crash, and later accounted for over three-quarters of New York City’s foreclosure filings. Taking out short-term, high-interest private loans from wealthy backers in Manhattan and Long Island, they bought fast.

It was a lucrative time to be buying, and investors across the city were busy. A recent analysis by the nonprofit Center for NYC Neighborhoods found that, between 2014 and 2016, more than 5,800 homes were “flipped,” or bought and sold within a year. Half of them were in some stage of foreclosure. Within this rush, the men behind My Ideal Property carved out a significant niche. By 2016, the company had done more than $250 million in deals and employed over 100 people, according one founder's website.

But that aggressive move into troubled neighborhoods has come at a cost for their inhabitants.

Underwater homes that have nothing to do with climate change

From DNA Info:

While much of the city has recovered from the 2008 housing crisis, a disproportionate number black homeowners in southeast Queens are still struggling, according to data analyzed by the Center for New York City Neighborhoods.

“Black homeowners in particular are facing a crushing reality: many often owe more on their mortgages than their property is worth,” the report said.

"For home-owners who bought in the early 2000s, white home values have recovered while black home-owners have lost net wealth in that time," said Leo Goldberg, a senior policy analyst at the Center for New York City Neighborhoods.

The hardest hit area of all is southeast Queens, particularly Jamaica.

“Jamaica is one of the only parts of the city where home values are lower than they were before the recession,” Goldberg said.

The data focuses on areas of the city where the majority of homeowners are black and where more than 10 percent of homes with a mortgage are underwater, meaning value of the loan exceeds the market value of the house. Large swaths of the Bronx and Queens, as well as parts of Staten Island are highlighted.

Council Members want foreclosures condemned

From the Observer:

Council members Donovan Richards, Daneek Miller and Mark Levine rallied with activists and academics on the steps of City Hall today to call on the city to use eminent domain to stop home foreclosures.

They discussed a new report by the left-leaning New York Communities for Change (N.Y.C.C.), which revealed that thousands of African-American and Latino homeowners were still at risk of losing their homes due to foreclosures and underwater mortgages.

Mr. Richards, who represents areas like southeast Queens and the Rockaways that were hard-hit by the foreclosure crisis and Hurricane Sandy, went straight to the point.

“I’m here because I think the people need their bailout. Didn’t the banks get their bailout? So why can’t the people get a bailout?” Mr. Richards said. “Today I stand with N.Y.C.C. to call on New York City to use eminent domain to really seize these mortgages and make a difference in the lives of New Yorkers.”

Financial institutions have aggressively opposed the usage of eminent domain in this instance and questioned its legality–it remains unlikely, observers say, that it will be implemented in New York City. Mr. Levine, however, said the tactic could be viable.

Foreclosures double in southeastern Queens

From the NY Post:

A new wave of foreclosures is hammering middle-class homeowners in Queens.

Southeastern Queens neighborhoods such as St. Albans have been reeling since 2008, when the first wave of the foreclosure crisis hit, ensnaring many low-income homeowners with subprime loans.

Filings fell in 2011, but a dramatic spike in the 2012 foreclosure rate is spreading the pain to middle-class residents with higher-quality loans.

These homeowners should be the backbone of a stable middle class in Queens, but they’ve been undone by high unemployment and unyielding bankers.

The new face of foreclosures includes couples of whom one spouse loses a job — and the only replacement is part-time work for lower pay. Many owners of two-family homes are falling behind on mortgage payments after their tenants become unemployed.

Foreclosures jumped 19 percent in New York City and 164 percent in Queens in 2012 versus 2011, as The Post reported last week. Four of the hardest-hit sections of Queens — St. Albans, Rosedale, Cambria Heights and Queens Village — saw foreclosure rates more than double, according to RealtyTrac. More than 2 percent of housing units in those areas are in foreclosure, outstripping the national average of 1.39 percent.

Mexicans having a hard time

From the NY Times:

About 43 percent of all Mexican immigrant households are overcrowded, compared with an average of 15 percent of all immigrant households and 9 percent of households in the general population, according to the report, titled “Housing the City of Immigrants.” The study also finds that about 35 percent of Mexican households spend more than half their income on rent, compared with 26 percent of all immigrant households and 24 percent of all households combined.

The report suggests that the relatively poor housing experience of many Mexicans is a function in part of the population’s newness to New York and their low income levels.

Those immigrant groups that have been in the city for a longer period of time tend to have better access to subsidized and public housing, the report said. In addition, Mexicans, particularly men who have immigrated alone to the United States for work, will crowd apartments to save money, especially if they live in neighborhoods where affordable housing is scarce, scholars say.

Among its other intriguing observations, the report noted that while home ownership rose from one generation to the next — to 44 percent of all second-generation immigrant households from 31 percent of first-generation households — the increase was even sharper among low-income immigrants, rising to 34 percent among second-generation households from 17 percent among first-generation households.

While the authors did not suggest a reason for this difference, David Dyssegaard Kallick, director of the Immigration Research Initiative at the Fiscal Policy Institute, said it could partly reflect the fact that some low-income immigrants were “pushed prematurely into home ownership by predatory lending.”

Yes, he's certainly a knucklehead...

From the Daily News:

City Councilman James Sanders of Queens wants New Yorkers to believe he was tricked - practically forced! - into taking out an enormous mortgage he cannot, or will not, pay back.

Identified by the Daily News I-Team as delinquent on his payments, Sanders countered that he was a victim of predatory lending rather than a plain old deadbeat.

It was the bank that lured him into a $588,000 mortgage on a Far Rockaway home in 2006.

It was the bank that made him believe he could afford $3,000-a-month payments.

It was the bank that got annoyed when he stopped sending in checks.

It was the bank that has insisted on foreclosing.

It was the bank that doesn't understand why he should be allowed to stay in the house payment-free after two years.

As Sanders pleaded in court, "My family and I were likely the victims of dishonest, deceitful and ... corrupt lending practices."

So here we have an elected official who purports to be smart enough to write laws while pleading that he was bamboozled into borrowing half a million dollars he could not afford.

How dumb is that?

New York Knucklehead dumb.

How much of this mess is Cuomo's fault?

From the NY Times:

Mr. Cuomo was housing secretary at a critical moment for the nation, just as its subprime mortgage fever was beginning to spike. It was during his tenure that the banking industry began to embrace predatory loans, and these creations led to a housing bubble that badly damaged America’s banks and nearly toppled its financial system.

An examination of Mr. Cuomo’s tenure atop the agency shows he was quick to warn about Wall Street’s dangerous hunger for predatory subprime loans — generally more expensive mortgages sold to people with poor credit. He counseled caution when many influential players, including the Federal Reserve and Congress, resisted any suggestion that they slow the country’s stampede to home ownership.

He also called attention to a pernicious mortgage-broker incentive payment that drove up interest rates for borrowers — secretly, in many cases — and that helped put many home buyers into loans they later found they could not afford.

And, in an effort to reverse decades of discrimination against blacks and Latinos, Mr. Cuomo pushed the government-sponsored banks, Fannie Mae and Freddie Mac, to buy more home loans taken out by poor and working-class borrowers.

But when presented with chances to throttle back on the exploding subprime market, guard against predatory lending and reel in mortgage brokers and lenders, Mr. Cuomo several times faltered and backed down, interviews and records show.

He did not heed local officials and others who wanted him to make Fannie and Freddie publicly report details about the loans they bought.

And he chose not to impose penalties and other deterrents to ensure that the giant public banks did not promote dangerous lending.

He also reversed himself, under heavy lobbying pressure from mortgage brokers and bankers, on the arcane but costly mortgage-broker payments known as yield spread premiums. These were lucrative bounties that banks paid to brokers who found new clients; the unwitting borrowers paid higher-than-market interest rates as a result.

Yield spread premiums fueled the subprime frenzy, according to official post-mortems on the crisis.

Jamaica is ground zero for U.S. foreclosures

From the Daily News:

Forget Las Vegas. Forget Miami. The No. 1 neighborhood in the U.S. for mortgage fraud is in the heart of Queens.

A new study says a section of South Jamaica has the highest concentration of bogus loans in the nation, with zip code 11436 the absolute worst.

First American CoreLogic, a mortgage and real estate data company, analyzed 80 million loans from Maine to Malibu from 2004 through last year.

The firm says the fraudulent loan rate in the 9 square miles of blue-collar Jamaica is four times the national level and tops other hotbeds of lousy loans like Orlando, Atlanta and Detroit.

The zip code the bank singled out includes the four-block area highlighted by the Daily News in 2008 as "Ground Zero" for foreclosures in New York.

The fraud included lying about nonexistent income, inflating the value of homes by selling and reselling to co-conspirators, bribing appraisers and stealing deeds and identities.

Please don't interfere with honest graft

From the NY Times:

As chairman of the House Committee on Oversight and Government Reform, Representative Edolphus Towns has not been shy about criticizing the excesses of the financial services industry, from executive bonuses to Wall Street profits, as well as the spotty track record of some bond-rating agencies.

But his refusal to subpoena records involving Countrywide Financial, a company blamed for lending practices that contributed to the subprime mortgage crisis, has made Mr. Towns himself the target of criticism.

For months, Mr. Towns, a Brooklyn Democrat, has rebuffed Republican efforts to subpoena documents concerning Countrywide’s V.I.P. program, which gave special treatment to high-profile customers, including federal mortgage regulators and at least two United States senators. The standoff took on a more personal tone last month, when a published report said that two loans issued through the program were given to Mr. Towns.

$35B for HFA mortgages

From the Wall Street Journal:

The Obama administration is close to committing as much as $35 billion to help beleaguered state and local housing agencies continue to provide mortgages to low- and moderate-income families, according to administration officials.

The move would further cement the government's role in propping up the housing market even as some lawmakers push to curb spending at a time of rising debt.

The effort, which could be announced as early as this week, is aimed at relieving pressure on government-operated housing finance agencies, which have been struggling to find funding amid the downturn. These agencies, or HFAs, are a small part of the housing market but are critical to many first-time and low-income home buyers, who can get lower-rate mortgages through an HFA than they could through a private-sector lender. Rates are typically 0.5 to one percentage point lower than commercial lenders.

Isn't this how we got in trouble in the first place?

Foreclosures killing parts of Queens

(Photo: Brenda Ann Kenneally)

From NY Magazine:

Like so many residential roads in America, Beach 70th Street has become a battleground. On this one-block street in Arverne, Queens, partway down the Rockaway Peninsula, nearly half the homeowners have found themselves at war, each with a different opponent: HSBC, IndyMac, Wells Fargo, Bank of New York, Long Beach Mortgage. Every time a bank or mortgage company prevails, another neighbor disappears. And then there’s Jacqueline Tamaklo, who lives in a two-family house near the end of this dead-end street. In a neighborhood with one of the highest foreclosure rates in the city, Jackie at times seems to be the last one standing.

If New York has a foreclosure capital, it’s some eight miles north of Jackie’s house, in Jamaica. Every day, desperate homeowners file into an office on 162nd Street, beneath a modest blue awning: NEIGHBORHOOD HOUSING SERVICES OF JAMAICA. The original mission of this nonprofit was to help people buy and fix up homes; these days, the agency is focused more on what it calls “homeownership stabilization” — or helping people hold on to what they’ve already got. Recent visitors include an 82-year-old widow who unwittingly signed over the deed to her house; a Spanish-speaking waiter who refinanced twice and now has a $513,000 interest-only loan; and a nurse who got injured, fell behind on her mortgage, and nearly lost her house.

Most of the homeowners who walk in are African-American; the rest are mainly immigrants. There are bus drivers and home health aides, teachers and sanitation workers. Everybody shows up with an armload of documents: mortgages, deeds, tax returns, pay stubs, bank letters. Some carry their papers in manila envelopes; others stuff them into shopping bags; one woman filled an entire laundry cart and wheeled it in. In the waiting room, they slump in their chairs. One woman refuses to take off her sunglasses lest anyone see her cry. Nobody needs to tell these people they are “losers” — as Rick Santelli did in his infamous CNBC rant. They appear to have gotten the message already.

By now, the counselors here have seen every variation on the foreclosure saga: People who purchased houses they could not afford; people who got mortgages they could afford at the time but then lost their jobs; people who took out a second mortgage only to watch their monthly payments jump out of reach; people who were tricked into signing loans with terrible terms. While each story is different, there are certain themes: Of the first-time homebuyers, most got their houses through “one-stop shops” in which all the players work together—the real-estate agent, mortgage broker, lawyer, and appraiser. This approach certainly simplifies the home-buying process, but the buyer usually winds up with a horrible deal: a dilapidated house with a jacked-up price tag and a lousy mortgage.

United Homes a giant scam

From WNYC:

We’ve heard a lot of stories about predatory lenders and unscrupulous practices in the real estate business. But amid all these stories, one company stands out: it’s called United Homes. They’ve boasted they’ve sold thousands of homes in the poorest sections of New York City in the past 15 years. Huge numbers have gone into foreclosure, and now lawyers allege the company suckered people into buying defective homes for way more than they were worth. WNYC’s Ailsa Chang reports on the story of one victim who’s fighting back.

Where's Charles Barron when you need him?

Since he was very upset when a bunch of fried chicken places exploited the image of our 44th president, maybe he'll be equally as outraged when he sees Obama advertising "short sales," "foreclosures" and "mortgage relief" not just above the awning, but also in the window. This is right next door to Lemon Ice King of Corona on 108th Street.

Subprime bailout #2 in our future

From the Wall Street Journal:

Everyone knows how loose mortgage underwriting led to the go-go days of multitrillion-dollar subprime lending. What isn't well known is that a parallel subprime market has emerged over the past year -- all made possible by the Federal Housing Administration. This also won't end happily for taxpayers or the housing market.

Last year banks issued $180 billion of new mortgages insured by the FHA, which means they carry a 100% taxpayer guarantee. Many of these have the same characteristics as subprime loans: low downpayment requirements, high-risk borrowers, and in many cases shady mortgage originators. FHA now insures nearly one of every three new mortgages, up from 2% in 2006.

The financial results so far are not as dire as those created by the subprime frenzy of 2004-2007, but taxpayer losses are mounting on its $562 billion portfolio. According to Mortgage Bankers Association data, more than one in eight FHA loans is now delinquent -- nearly triple the rate on conventional, nonsubprime loan portfolios. Another 7.5% of recent FHA loans are in "serious delinquency," which means at least three months overdue.

The FHA is almost certainly going to need a taxpayer bailout in the months ahead. The only debate is how much it will cost. By law FHA must carry a 2% reserve (or a 50 to 1 leverage rate), and it is now 3% and falling. Some experts see bailout costs from $50 billion to $100 billion or more, depending on how long the recession lasts.