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From the Orange County [CA] Register:

Hispennials? Hispanic millennials called the future of home buying

By MARGOT ROOSEVELT | | Orange County Register
PUBLISHED: December 22, 2017 at 5:45 am | UPDATED: December 29, 2017 at 12:23 pm

… Real estate professionals call them “Hispennials.” The label, a mash-up of Hispanics and millennials, defines a group of consumers, aged 20 to 36, which the housing industry is eagerly courting.

“If you look at the Latino population, their demographic is younger and they are just starting to buy homes,” said Rick Arvielo, CEO of Tustin-based New American Funding, a fast-growing lender with 35 offices in Southern California.

“Millennials and Hispennials are the biggest waves in home buying.”

Today, just 45 percent of Latinos in the U.S. own homes, 20 percentage points lower than the home ownership rate of non-Hispanic whites.

But that’s changing quickly. Last year, Latinos accounted for 75 percent of the net growth in overall home ownership. Their numbers grew by 209,000 to a total of 7.3 million, according to the National Association of Hispanic Real Estate Professionals.

“The Hispanic market has outgrown the ‘niche’ segment designation,” the San Diego-based trade group asserted in its annual report.

And a study by the Housing Policy Finance Center of the Urban Institute, a Washington, D.C.-based think tank, makes this prediction: By 2030, Latino families will comprise 56 percent of all new homeowners.

For Hispennials, who generally have lower credit scores than non-Hispanic whites, and less help from prosperous relatives for down payments, buying a home is far from easy. And the Urban Institute warns that for the overall housing market to remain prosperous, Latinos must gain more access to credit.

“The face of the nation is changing, and our housing market will inevitably change with it,” they wrote.

“It will either do so by contracting, because it cannot accommodate a larger and larger percentage of our citizens, or it will do so by becoming more inclusive because we have found ways to bring a more diverse profile of borrower into the system.”

Big banks are stepping up.

In 2015, Wells Fargo, the nation’s largest mortgage originator, pledged to lend $125 billion to Latinos over 10 years and grow the number of Hispanics on its sales teams.

This is exactly what George W. Bush, Henry Cisneros, Angelo Mozilo of Countrywide Financial, and Kerry Killinger of Washington Mutual were exulting about Hispanics and homebuying fifteen years ago.

How’d that work out anyway?

But who can remember back that far?

Remembering is racist.

• Tags: Mortgage, Real Estate 
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From the CBS station in Richmond, VA:

Millions will be spent to help black homeowners after investigation revealed inequity
POSTED 12:32 PM, JULY 17, 2017, BY SCOTT WISE,

Millions will be spent to help black homeowners after investigation revealed inequity

RICHMOND, Va. — Millions of dollars will soon be spent in Richmond to help increase the number of African-Americans homeowners. A newly announced partnership between Housing Opportunities Made Equal of Virginia, Inc. (HOME) and Wells Fargo will provide $4 million to help close the racial home ownership gap.

“Differences in homeownership between African Americans and white Americans are the foundation of wealth inequality in Richmond and across the country,” HOME president and CEO Heather Crislip said. “HOME is committed to rooting out these differences in opportunity to reduce racial gaps and inequities and build a strong middle class.”

The partnership between HOME and Wells Fargo was created after HOME investigated mortgage lending activity and had concerns about under-service in minority communities by Wells Fargo in Richmond.

A 2015 study HOME did on lending discrimination for the City of Richmond found the following:

1. White borrowers comprised the largest segment of home purchase and refinance loan activity in the city.

Between 2010 and 2013, white borrowers accounted for 1,243 home purchase loan originations; black borrowers accounted for 112 loan originations; and Hispanic borrowers of any race accounted for just 24 home purchase loan originations.

White borrowers also comprised the largest share of the refinance loan market, accounting for 2,720 loan originations.

Black borrowers accounted for 382 refinance loan originations, and Hispanic borrowers accounted for 46 originations.

The vast majority (1,464) of refinance loans went to upperincome white borrowers; this group accounted for 53.8 percent of all loan originations to white borrowers.

2. Significant disparities exist in the origination and denial rates of all loan types based on the race/ethnicity of the applicant. For home purchase loans, white borrowers exhibited a 48.2 percent origination and 13.7 percent denial rate, while black borrowers exhibited a 25.8 percent origination rate and 34.6 percent denial rate.

For refinance loans, white borrowers exhibited an origination rate of 40 percent and denial rate of 32 percent. The rates for African-American borrowers were the inverse; the origination rate was 24 percent and denial rate 52 percent.

3. Borrower income does not account for the disparities in loan outcomes exhibited by applicant race/ethnicity. The disparity in home purchase loan origination rates between black and white applicants increased from 9.9 points for low-income borrowers to 27.5 points for upper-income borrowers.

Black applicants, regardless of income, were less likely to receive a home purchase loan.

The disparity in origination rates for refinance loans between black and white borrowers increased from 9.3 percentage points to 23.9 percentage points among upper-income borrowers. Black applicants, regardless of income, were less likely to receive a refinance loan.

Hence, disparate impact.

Of course, blacks and Hispanics have, all else being equal, much higher default rates during crises. But you aren’t supposed to know that.

Some things I discovered back in 2008:

- There are a gigantic number of these type of “fair housing” NGOs across the country. One national association of them had over 600 organizations as members.

- A lot of these NGOs fighting white racism in mortgage lending are run by white people like Ms. Crislip.

- A $4 million payoff is a lot to an NGO, but is a minor cost of doing business to one of the Four Big Banks like Wells Fargo. The mortgage market is so big that the word “trillions” comes up: for example, in January 2005, Countrywide Financial launched the metastasization of the Housing Bubble when Angelo Mozillo, having attained agreement from Fannie Mae to buy his dubious mortgages, announced his plan to lend One … Trillion … Dollars to minority and lower income borrowers by 2010.

- The Obama Administration had lots of schemes to rake off mortgage money to its allies in these kind of NGOs that search out examples of disparate impact and trumpet them until they get paid off.

- Of course, the real problem is when all the control systems in society are set up to nudge lender decisionmaking to the left by blocking any errors or even corrections to the right. Eventually, as happened during the housing bubble, years of prodding by the Bush Administration, the NGOs, the media, etc. to lend more to blacks and Hispanics left a lending industry that actually believed that it could Get Rich Quick by cutting traditional down payment and documentation standards that had disparate impact on blacks and Hispanics.

- The long term problem is that because Diversity is our Sacredest Cow, nobody can allow themselves to even notice what happened a decade ago. How many Americans are conceptually equipped so that they can make sense of what is behind this kind of article?

• Tags: Mortgage, Real Estate 
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Economist Robert J. Shiller writes in the NYT:

How Tales of ‘Flippers’ Led to a Housing Bubble
Economic View

There is still no consensus on why the last housing boom and bust happened. That is troubling, because that violent housing cycle helped to produce the Great Recession and financial crisis of 2007 to 2009. We need to understand it all if we are going to be able to avoid ordeals like that in the future.

But the explanations for what happened in housing are not, I think, to be found in the conventional data favored by economists but rather in sociologically important narratives — like tales of getting rich through “flipping” houses and shares of initial public offerings — that constitute the shifting mentality of the era.

I don’t doubt that shows on TV about flipping houses played a role. But isn’t it striking that after almost a decade: “There is still no consensus on why the last housing boom and bust happened”? It was the biggest news story since 9/11, and yet Dr. Shiller himself, perhaps the leading housing economist, is still pretty hazy on how it happened.

I would suggest that one reason economists are still so baffled by what happened is because one obvious partial contributor to the fiasco — immigration / diversity — is a Sacred Cow. So without grappling with things like the Bush Administration’s Ownership Society and anti-downpayment, anti-documentation Increasing Minority Homeownership initiatives, you can’t get close to the full story.

But it’s safer, careerwise, to remain puzzled, so they do.

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Los Angeles, with its lovely climate, offers perhaps the the largest single gentrification opportunity of the 21st Century.

Boyle Heights, the old Jewish neighborhood just east of Downtown L.A. that was taken over by Mexicans about a century ago, would be an obvious candidate. But ethnic violence is always a temptation to fight back against gentrifiers. (Oakland, CA, for example, has retarded gentrification via politicized black violence since the days of the Black Panthers.) From The Guardian:

‘Hope everyone pukes on your artisanal treats’: fighting gentrification, LA-style

Hardline tactics succeed in keeping outsiders away from Boyle Heights, the Latino community that is the last holdout to Los Angeles gentrification

Rory Carroll in Los Angeles
Tuesday 19 April 2016 12.00 EDT

A realtor who invited clients to tour the neighbourhood for bargain properties and enjoy “artisanal treats” felt the backlash within hours.

“I can’t help but hope that your 60-minute bike ride is a total disaster and that everyone who eats your artisanal treats pukes immediately,” said one message. “Stay outta my f****** hood,” said another.

Fearing violence, the realtor cancelled the event.

An opera company which tried to stage a performance at the park was drowned out by shouts, whistles and a brass band.

I almost went to that experimental opera. (By the way, the Pacific Opera Project has a few tickets left for Friday and Sunday of their very funny show Mozart vs. Salieri at the main library in lovely South Pasadena.)

Students from across town who attempted an educational walking tour of the area encountered masked activists who shadowed them and ordered them to leave.

Welcome to Boyle Heights – or not, depending on how locals view you.

This hardscrabble Latino community, just across the Los Angeles river from the lofts and skyscrapers of downtown, is waging a vigorous and in many ways effective campaign against gentrification.

Where Brooklyn, San Francisco, Oakland and other parts of LA have yielded to and often embraced moneyed outsiders, Boyle Heights has dug a metaphorical moat.

An eclectic coalition of residents, business owners, feminists, Maoists and other activists stands guard, working the levers of local government, deploying zoning and legal arguments – and occasionally intimidating perceived interlopers.

The goal is to avoid a flood of money and outsiders which it fears would drive up rents, drive out residents and erase a cradle of Chicano identity.

“Gentrification is a violent threat. When we feel it we may react in an angry way, through fear,” said Xochitl Palomera, an activist with the group Corazón Del Pueblo. “Boyle Heights is not going down without a fight. We know what we’re up against and we’re not afraid. Our roots run deep here.”

… Bold words given that developers are investing billions of dollars a five-minute bike ride away in downtown LA, transforming the skyline with gleaming towers and the streets with boutique bars, restaurants, cafes and galleries.

With rents soaring to Manhattan levels, eyes have turned to the community of 92,000 souls packed into six square miles just across the 6th Street bridge.

Known for low-income housing, mom-and-pop stores, taco stands, service workers and mariachis, Boyle Heights may appear ripe for transformation. Most residents rent, and many are poor. Other Latino enclaves in east LA, after all, have morphed into trendy areas where whites now walk their dogs.

Not so Boyle Heights, at least not yet, as some outsiders have discovered to their cost.

Bana Haffar, a realtor with Adaptive Realty in Beverly Boulevard, five miles west, distributed a flyer in May 2014 titled “Why rent downtown when you could own in Boyle Heights?” She invited clients to join her on a bike ride in this “charming, historic, walkable and bikeable neighbourhood”.

Overnight it went viral. Activists organised a protest against the “gentriflyer”.

“I think I was a little naive,” Haffar said last week. “I didn’t know gentrification was such a sensitive topic. Perhaps in retrospect it was not in the best taste. I was pretty shocked at the threatening and violent responses from some people. Some of it was way too much.” Fearing violence, she cancelled the tour.

Last November Hopscotch, an experimental opera performed in limousines and different locations around downtown, tried to stage a segment in Hollenbeck Park, near Boyle Avenue. Critics had raved about the production, a brainchild of the Industry, LA’s premier avant garde opera company.

Protesters in Hollenbeck Park felt otherwise and barracked the performers. “I made efforts to speak to a woman who appeared to be in charge but was always ignored and often shouted over,” recalled Marc Lowenstein, the company’s music director. “Some of the things she said were: ‘This park is for brown people’ and ‘This is not a park for white people. You are white people.’”

Things escalated on the show’s final day when members of the Roosevelt high school band used saxophones, trombones and trumpets to drown out the opera. Performers moved to another side of the bandshell but the high school band followed them, urged on, according to Lowenstein, by activists from a group called Serve the People LA (STPLA).

“I asked our own musicians to play along with the high school players, to engage them. The Serve the People members, though, encouraged the high school players to become physically intimidating and they themselves became physically intimidating.”

The opera fled. “We were all pretty shaken by two things: one, the physical intimidation, and secondly, the use and manipulation of the schoolchildren,” said Lowenstein. …

In general, Southern California doesn’t have a lot of organized leftist muscle in the Oakland style. But Boyle Heights was once Jewish, so it has a certain appeal to romantic Marxists:

Rebellion is in the area’s DNA. Yiddish-speaking Jewish immigrants with liberal, socialist and communist ideals stamped their identity here before the second world war. Mexican immigrants who followed helped forge the Chicano civil rights movement in the 1960s, a heritage emblazoned in murals around Mariachi Plaza. Posters of Bernie Sanders as Pancho Villa adorn some store windows.

What Southern California now has a lot of, in contrast, are affluent, hard-nosed, 100% white guilt-free immigrants — Armenians, Israelis, Vietnamese, Persians, Russians, Koreans, Uzbekis, Chinese, Arabs, etc. — who don’t see much reason why they should take any guff from Mexicans, who have the numbers but not the money.

So the real estate future of Southern California will, no doubt, be full of interest.

• Tags: Real Estate 
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We can ask this question about life expectancy first for people in the bottom quarter of the income distribution and then for people in the top quarter of affluence.

According to Stanford economist Raj Chetty’s paper, the poor live longest where there is massive economic inequality, lots and lots of cops, and unaffordable housing: e.g., New York City. Health care access doesn’t much matter to the poor’s life expectancy. Social conservatism and social capital doesn’t matter either. In other words, the poor appear to do best in some kind of plutocratic Giuliani-ville. Ayn Rand would feel vindicated (if she cared about the poor).

(I don’t actually believe this is true in terms of policy advice: I think Chetty’s result may well be an artifact of churn of his populations: healthy young poor immigrants move to ultra-expensive cities like NYC until they are used up, at which point they leave for some place cheaper.)

In contrast, the top quarter of income Americans live longest in economically more equal and socially conservative places, with broad health care access, fewer immigrants, and non-supercharged economies: kind of like Denmark.

From Raj Chetty’s new paper based on your confidential tax returns, The Association Between Income and Life Expectancy in the United States, 2001-2014, here are the correlations between life expectancies for people in the bottom 25% of national income on their 1040s and various characteristics of their “commuting zones” (e.g. extra-large metro areas). The highest life expectancy metro for people in the bottom quarter of income is New York, followed by Santa Barbara, San Jose (Silicon Valley), Miami, Los Angeles, San Diego, and San Francisco. In other words, the poor live longest in super expensive cities with lots of rich people, lots of economic inequality, and lots of cops.

The shortest life expectancy metros for bottom quartile individuals are Gary, Las Vegas, Oklahoma City, Indianapolis, Tulsa, and Detroit.

For example, unsurprisingly, there’s a strong negative correlation between the % of residents who smoke and the life expectancy of lower income residents. (Keep in mind, though, that these are not individual-level correlations. Chetty has individual-level data from 1040s on income and whether or not the individual died in the last year. He doesn’t have data on whether the individual taxpayer smokes, is obese, exercises, or what not. So, he’s correlating individual level data on income and age at death with local averages, such as smoking.)

Screenshot 2016-04-11 16.53.07

In summary, local customs regarding health behaviors (smoking, obesity, exercise) are very important for the poor’s life expectancy. Measures of access to health care don’t correlate well with life expectancy.

Income inequality and income segregation by neighborhood are modestly good for the life expectancy of poor people.

Prosperity and population growth aren’t very important.

The unimportance of the % Black Adults figure is an artifact of Chetty presenting to us race/ethnicity adjusted figures. Blacks have shorter life expectancies than, say, Asians, but Chetty has already adjusted life expectancy in each metro area for its racial makeup. (But there are racial interaction effects that he’s missing, which drive some of his outliers.)

Black life expectancy, fortunately, has been improving since NWA broke up, with fewer black on black homicides and fewer deaths from AIDS. Asian life expectancy is expectedly high, while Mexican life expectancy is unexpectedly high. White and American Indian life expectancy has been doing poorly in this century, especially working class and/or Scots-Irish whites.

The Other Factors section at the bottom give away what’s going on in driving local areas’ life expectancies among bottom quartile income individuals. Places with high median home values, which correlate with having lots of college graduates, attract lots of immigrants who come to work hard for the relatively high wages available to people willing to sacrifice living space or short commutes for some period of years. These “sojourners” tend to be healthy and live a long time. Like the man said, if they can make it there they can make it anywhere.

If they can’t make it in an ultra-expensive city, such as because they are in poor health, they tend to leave for some place cheaper. Less expensive cities tend to fill up with people either shed from expensive cities or daunted from even trying.

That’s one reason the Charles Murray / Robert D. Putnam community virtues don’t matter much in this graph: poor people appear to live longer if there is a lot of dynamic churn in the economy, which disrupts community social capital and makes life more economically unequal.

But, we don’t know if that’s a genuine treatment effect or if it’s just an artifact of churn in the population: if somebody moves from Mexico to New York City and sleeps in a bunk bed while hustling at two busboy jobs, they’re probably in vigorous health. But if their health breaks down in NYC and they move to relatively short-lived San Antonio for an easier life, where they die early there, how does Chetty count that?

In contrast, for people in the upper quarter of the national income distribution, the contributory factors for longer life expectancies (other than smoking, obesity, and exercise work) work quite differently.

The longest lived people in the top quarter of income (already adjusted for race) are found in the region around tee-totaling Salt Lake City (no surprise), hardy Portland in Maine, Spokane, Santa Barbara, Denver, Minneapolis, and quite Dutch Grand Rapids: the more conservative part of a Stuff White People Like list of places to live.

For the well-to-do, the worst life expectancy cities are Las Vegas, which you’ll be Leaving a half year earlier than anywhere else, Gary, Honolulu, Brownsville, El Paso, Bakersfield, Miami, Lakeland in FL, and Los Angeles: very Stuff White People Don’t Like.

Screenshot 2016-04-11 17.26.08

So, looking at correlations, a culture of non-smoking, non-obese, and exercise helps the affluent as well as the poor.

After that however, things diverge: Health care access measures matter more for affluent than the poor, paradoxically.

The well to do benefit health-wise from Murray-Putnam socially conservative social capital and greater economic equality. The well to do don’t last long in boom towns. Having a lot of immigrants around isn’t good for the upper quarter, but having a lot of college graduates around is good.

In other words, white people tend to do best in the more unfashionable SWPL places like Salt Lake City and the other Portland. Perhaps that shouldn’t be surprising.

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From my movie review in Taki’s Magazine:

The Bubble, Hollywood-Style
by Steve Sailer

December 16, 2015

The Big Short, a comedy starring Christian Bale, Steve Carell, Ryan Gosling, and Brad Pitt as finance-industry renegades betting against the Housing Bubble in 2005–08, is another in the rather improbable new genre of nonfiction feature films that display the business world with more complexity than Hollywood dared before this decade. Based on the 2010 best-seller by Michael Lewis, the king of Frequent Flyer books (e.g., Moneyball and The Blind Side), The Big Short pushes the envelope of just how many acronyms for abstract financial instruments (such as MBS and CDO) a popcorn-eating audience can digest.

Read the whole thing there.

• Tags: Mortgage, Movies, Real Estate 
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From the Business Section of the New York Times:

Study Strongly Links Baltimore Mortgage Denials to Race
By PETER EAVIS NOV. 16, 2015

The black population of Baltimore is double that of the white population. Yet in 2013, banks made more than twice as many mortgage loans to whites in the city as they did to blacks.

Baltimore blacks were long dogged by malicious stereotypes spread by The Wire, but their behavior in 2015 — first rioting, then murdering each other in large numbers — has demonstrated their financial trustworthiness. How delusionally racist are lenders to not see that houses in Baltimore black neighborhoods are sure bets?

The stark difference in mortgage lending, derived from the most recent government mortgage data, is the focus of a new study that will be released on Tuesday by the National Community Reinvestment Coalition, a consumer advocacy group.

Given that the government does not collect certain important types of data on borrowers, researchers have long found it difficult to determine the degree to which race affects mortgage lending.

Still, the coalition says its analysis shows that the racial makeup of a neighborhood — and not income, for instance — is the most significant predictor of whether a loan gets made in Baltimore.

Exploring the causes of the economic differences between blacks and whites in Baltimore has taken on an added urgency after the protests and riots in the city this year. The unrest followed the death in April of Freddie Gray, who died after suffering a spinal cord injury in police custody. Unemployment is higher than the national average in Baltimore, and particularly so among younger blacks in the city.

“If lenders are not making loans in a community, the opportunities for people to work their way out of poverty is pretty slim,” said John Taylor, the coalition’s president. “In Baltimore, the prevailing factor behind who gets a mortgage is the racial composition of the neighborhood.”

… Still, it has long been the case that the rate at which blacks get denied a mortgage is higher than that for whites. In 2013, for instance, blacks were denied on 25.5 percent of their applications for mortgages to purchase a home, compared with 12.2 percent for whites, according to an analysis of the government mortgage data by the Federal Reserve. The higher denial rate for blacks might, for instance, be explained by differences in credit history and the amount of money that borrowers can put down as a deposit.

Indeed, according to the Fed’s analysis of the government mortgage data from 2013, banks said credit history was the reason behind 30 percent of their denials of black borrowers. For whites, banks said it was the cause in 22.5 percent of the cases.

Still, the reasons for the high rate of denials remain murky.

Here’s a suggestion: the high rate of defaults by blacks.

As a result, questions will continue to hang over the high denial rate for blacks and the low level of lending in neighborhoods where blacks or other minorities are the majority. And these questions were in part behind the coalition’s analysis of Baltimore, a city that has in the past suffered from redlining — the term given to policies and practices that made it very difficult for blacks to obtain mortgages or take out home loans at the same terms as whites.

I’m fascinated by the lack of cognitive integration apparent these days. For example, like everybody else who reads the NYT, I watched The Wire. One obvious implication of the celebrated TV show is that you ought to be very cautious about lending money to homebuyers in that violent place. But nobody seems anymore able to perform elementary acts of mental integration of knowledge.

Likewise, everybody knows that the Foreclosure Crisis was hard on blacks. But nobody seems to know that that’s just another way of saying blacks defaulted on their debts a lot.

• Tags: Mortgage, Real Estate 
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In the last few years, New Deal era “redlining” has come to be seen as one of America’s most horrific historic sins, on par with slavery, due to the profound research of America’s foremost public intellectual, Genius T. Coates, who made FHA redlining central to his argument for massive reparations to blacks.

Not surprisingly, there exists a symbiotic relationship between the obsessions of the Obama Administration and of Coates.

From the New York Times:

‘Redlining’ Home Loan Discrimination Re-emerges as Concern for Regulators

NEWARK — The green welcome sign hangs in the front door of the downtown branch of Hudson City Savings Bank, New Jersey’s largest savings bank. But for years, federal regulators said, its executives did what they could to keep certain customers out.

They steered clear of black and Hispanic neighborhoods as they opened branches across New York and Connecticut, federal officials said. They focused on marketing mortgages in predominantly white sections of suburban New Jersey and Long Island, not here or in Bridgeport, Conn.

Screenshot 2015-10-30 14.32.49

Apple Stores

In complete contrast to, say, Apple Stores, which can be found all over the South Bronx and the ungentrified parts of Brooklyn.

Oh, wait, sorry, no, Apple Stores can’t actually be found in poor neighborhoods in New York. It’s fine for Apple, the richest company in the world with something like $200 billion in unused cash sitting around, to do business where it thinks best, but banks are subject to federal regulatory oversight.

(By the way, it looks as if there are seven Apple Stores in Manhattan south of 76th street and about two or three in the Outer Boroughs, even though the Outer Boroughs have about 80% of NYC’s population. That’s actually a sizable convenience issue since Apple customers typically get their products serviced under warranty by taking them to the “Genius Bar” at the Apple Store. No doubt there are people mulling over right now how they can get their hands on some Apple Store Diversity rake-off, but Apple is smart, so it’s not that easy.)

Seriously, the moral theory of the 1977 Community Reinvestment Act was that banks that open branches in black neighborhoods to take deposits should also lend in the same neighborhoods. It wasn’t about forcing banks to lend in geographical areas where they don’t do business.

(One unexpected side effect of the CRA was that it hurt small black-owned banks, which traditionally tended to diversify their risks by taking deposits in black neighborhoods and lending in white neighborhoods.)

The results were stark. In 2014, Hudson approved 1,886 mortgages in the market that includes New Jersey and sections of New York and Connecticut, federal mortgage data show. Only 25 of those loans went to black borrowers.

Hudson, while denying wrongdoing, agreed last month to pay nearly $33 million to settle a lawsuit filed by the Consumer Financial Protection Bureau and the Justice Department. Federal officials said it was the largest settlement in the history of both departments for redlining, the practice in which banks choke off lending to minority communities.

Outlawed decades ago, redlining has re-emerged as a serious concern among regulators as banks have sharply retreated from providing home loans to African-Americans in the wake of the financial crisis.

Over just the past 12 months, federal, state and city officials have successfully required banks to expand minority lending programs and, in some instances, to pay penalties as part of redlining settlements in Buffalo; Milwaukee; Providence, R.I.; Rochester; and St. Louis. And more banks are facing scrutiny. The Justice Department now has more active redlining investigations underway than at any other time in the past seven years, officials said.

“Redlining is not a vestige of the past,” Vanita Gupta, the principal deputy assistant attorney general of the Justice Department’s civil rights division, said last month in a conference call with reporters.

The effect on minority communities can be profound. Homeownership is a cornerstone of economic mobility, and without a stable group of homeowners, neighborhoods can be left vulnerable to blight and disrepair.

The recent cases illustrate how redlining has evolved. Bankers no longer talk openly about denying loans to black people. Instead, officials said, some banks have quietly institutionalized bias in their operations, deliberately placing branches, brokers and mortgage services outside minority communities, even as other banks find and serve borrowers in those neighborhoods.

The intent of such management decisions is typically left unspoken, officials said. But in interviews with federal bank examiners, Hudson executives made their reluctance to venture into minority neighborhoods plain.

It is “like a whole other world,” one lending executive told examiners from the Consumer Financial Protection Bureau, explaining why the bank failed to generate any mortgage applications from a minority neighborhood here.

Fallout from the excesses of the subprime era in mortgage lending has, in some ways, set the stage for the discriminatory practices of today. As banks have tightened their credit lending standards to avoid risky loans, the percentage of blacks and Hispanics getting approved for mortgages has plunged.

Grappling with foreclosures, job losses and battered credit scores, many minority borrowers have found it difficult to qualify for mortgages under the more stringent rules.

Banks normally try to avoid borrowers who seem likely to default on their loans, but some stepped over the line, officials say, excluding entire communities and the creditworthy people who live in them.

In 2014, black people held 5.2 percent of the nation’s home loans, compared with 8.7 percent in 2006, according to the Federal Reserve Bank. Hispanics have struggled to regain lost ground as well, accounting for 7.9 percent of home loans in 2014, compared with 11.7 percent in 2006.

Obviously, 2006 should stand as our benchmark of prudent lending.

Federal and state officials said it was impossible to determine how widespread discriminatory lending had become. They believe a vast majority of banks are operating legally, but recent lawsuits have revealed striking disparities.

In Missouri, where Eagle Bank settled a redlining lawsuit with the Justice Department last month, the bank’s competitors generated five times as many mortgage applications from predominantly black neighborhoods in the St. Louis area as Eagle did, Justice Department officials said. The bank, which said it disagreed with the government’s findings, promised to set aside $975,000 to provide services for black residents and businesses.

And in Buffalo, Evans Bancorp settled a redlining lawsuit filed by Eric T. Schneiderman, the attorney general of New York, last month. The suit alleged that the bank focused its mortgage lending in communities that appeared on its “trade area” map, which excluded the predominantly black neighborhoods on the city’s East Side. Evans, which described the allegations as “unsubstantiated,” agreed to pay nearly $1 million to settle the suit. …

The issue is also achingly familiar. Until the 1960s, banks openly starved minority communities of home loans with the full backing of the federal government.

And the 1960s were only, what, five or ten years ago?

For decades, the Federal Housing Administration relied on so-called residential security maps to help decide which mortgages it would insure. The maps ranked and color-coded neighborhoods in cities across the country according to their perceived investment risk.

Affluent white neighborhoods that were “in demand” were typically shaded green. Black neighborhoods were shaded red and shut out of the conventional loan market. Here in Newark, for instance, every black neighborhood was deemed “hazardous” for investment in 1939, according to Kenneth T. Jackson, a historian at Columbia University.

And 1939 was, I don’t know, only 20 years ago.

With conventional loans so difficult to secure, many black people found themselves sidelined from the homeownership boom after World War II. Others were forced to turn to an underground economy that offered overpriced, predatory loans.

Even after the passage of laws that banned discriminatory lending in the late 1960s and ’70s, redlining persisted. Its modern-day form, though, is far less overt.

New Jersey banks no longer respond explicitly, as some did in the late 1930s, when asked, “Are there any areas in which loans will not be made?” (“Newark,” some said.)

Most of Hudson’s customers would have had no idea that the bank was excluding blacks and Hispanics, officials said.

A spokeswoman for Hudson did not respond to several requests for comment. But in a statement, Denis J. Salamone, the chief executive, said the bank believed it was meeting its fair lending obligations by buying loans originating in minority communities on the secondary market …

Founded by immigrants in 1868, Hudson was a darling of Wall Street for a time in the 2000s. Forbes magazine called it the “best managed bank of 2007” for steering clear of the subprime loans that sank other financial institutions.

Now the nation’s seventh-largest savings bank, it built its business on traditional mortgages and prided itself on its old-fashioned feel.

All the while, federal officials said, the bank was systematically avoiding minority communities as it expanded beyond its New Jersey roots into New York and Connecticut.

Of the 54 branches that Hudson acquired or opened from 2004 to 2010, only three were in predominantly black or Hispanic neighborhoods, according to the lawsuit filed by the Consumer Financial Protection Bureau and the Justice Department.

Okay, but wasn’t a resistance to dive into the minority lending business in 2004-2007 a key to Hudson not going bankrupt in 2008?

Predominantly black and Hispanic communities accounted for more than a third of its market in the region that included North Jersey and parts of New York, but the bank stationed only 12 of its 162 mortgage brokers in those communities. Last year, blacks accounted for just over 1 percent of Hudson’s mortgage approvals in the market that includes New Jersey and sections of New York and Connecticut; Hispanics accounted for 4 percent.

The government’s analysis of the bank’s lending data shows that Hudson’s competitors generated nearly three times as many home loan applications from predominantly black and Hispanic communities as Hudson did in a region that includes New York City, Westchester County and North Jersey, and more than 10 times as many home loan applications from black and Hispanic communities in the market that includes Camden, N.J. …

As part of the redlining settlement, Mr. Salamone, the bank’s current chief executive, has agreed to open two full-service branches in minority neighborhoods, to increase outreach to those neighborhoods, and to invest $25 million in a loan-subsidy fund to increase the amount of credit extended to black and Hispanic borrowers.

Hudson, which is expected to merge in November with M&T Bank Corporation, the nation’s 25th-largest bank, also agreed to pay a $5.5 million penalty. M&T recently settled its own federal lawsuit relating to accusations that it steered black borrowers to higher-cost mortgages than their white counterparts, among other concerns. In his statement, Mr. Salamone said M&T had reviewed and consented to Hudson’s agreement with the federal government.

This is actually the feds’ chokehold: approval of mergers and acquisitions. The fines are chump change, but the federal government’s ability to block lenders from mergers and acquisitions if the feds don’t like their level of minority lending is a key selection effect that determines who can get big and who must stay small.

Consider Washington Mutual and its CEO Kerry Killinger, which became the biggest mortgage lender bank in the 2000s and then went bottoms-up in the fall of 2008. Killinger got federal approval for acquisitions of 29 competitors over a couple of decades, including two historically catastrophic acquisitions in Southern California in which WaMu outbid rival suitors for federal approval by topping the other bidders’ promises of lower income and minority lending.

Back in 2009 in VDARE I figured out how the CRA’s chokehold on M&A approvals has a selection effect on the entire culture of the mortgage industry. Almost nobody else has figured this out, so it’s worth repeating at length. The following analysis helps explain one of the huge economic events of the prior decade, but it’s almost totally off the intellectual radar in 2015.

Consider Washington Mutual’s promise in 2001 that if it got federal permission to buy Dime Bank it would lend $375 billion to lower income and minority homebuyers. I asked in VDARE:

“How could the government hold a gun to the financial institutions’ heads and force them to make hundreds of billions in stupid loans? Sure, giving out $375 million in stupid loans to get the government off your back, that would make sense. $3.75 billion, maybe. $37.5 billion, conceivably. But $375 billion, no way. Nobody would promise to give away $375 billion to dubious borrowers unless they thought it was a great idea. They’d leave the industry before they’d promise to hand out $375 billion to people whom they doubted would pay it back.”

… Okay–but how does a bank get more market share and revenue growth?

One major way: by buying other banks. And to do that, you have to pass through the CRA gauntlet. If you aren’t willing to lend to people the government wanted you to lend to, then you were out of luck at mergers and acquisitions game.

So, the CRA implicitly selected for Kool-Aid Drinkers, such as WaMu’s Killinger. They’re the ones whom the government allows to build empires. …

I missed understanding the impact of the CRA because I kept asking myself: “How could the CRA force a banker who thinks lending more to minorities is a bad idea to lend more to minorities?” I kept trying to imagine the CRA’s effect on the already crazy-stupid WaMu, and how that couldn’t have been all that significant.

But I should have been thinking about the other side of the coin: all the sane-smart banks that didn’t get to get big like WaMu did because the government rigged the acquisition process so that crazy-stupid banks were more likely to get merger approval. WaMu got permission from the government to make 29 acquisitions from 1990 onward. A smart-sane bank wouldn’t.

That WaMu sincerely believed that it was going to make a fortune handing big mortgages to mariachi singers, illegal immigrants, and Department of Motor Vehicle clerks etc. etc. seems clear. After all, WaMu not only originated about one out of every eight mortgages in the U.S., but it also held on to a fair number of them instead of securitizing them and dumping them on Wall Street.

WaMu explained its minority-oriented strategy over and over again.

Why was WaMu, with its derisible strategy, able to buy out so many big lenders? To understand it, think about it the other way around: why didn’t more prudent financial institutions outbid WaMu for acquisitions?

Say there are two banks, WaMu and Scrooge-Potter BanCorp. The latter is owned by Ebenezer Scrooge of Charles Dickens’ A Christmas Carol and Mister Potter of Frank Capra’s It’s a Wonderful Life. While WaMu is beloved for lending to anybody with a pulse, Scrooge-Potter BanCorp is widely loathed for taking a dim view of lending money to likely deadbeats.

They both would like to buy George Bailey’s Bailey Building and Loan Association. ACORN and the National Community Reinvestment Coalition announce they will protest vociferously against regulatory approval of the merger unless the winner pledges to make $50 billion in minority and low income loans.

Fearing a debacle of defaults, Scrooge-Potter BanCorp issues a two-word press release: “Bah, humbug”. And it drops out of the bidding.

WaMu announces: “Well, heck, we’ll promise to lend $55 billion.”

In fact, because Scrooge-Potter realized its quest was hopeless, WaMu got Bailey Building and Loan for less than it would have paid if the government wasn’t biased in favor of imprudent bankers. This gives WaMu more money to pursue more targets.

Lather, rinse, and repeat. The CRA means that WaMu gets big while Scrooge-Potter stays small.

Consider the indirect effects on Scrooge-Potter BanCorp. Who would want to go to work for a bank that can’t make acquisitions because it won’t play nice with the government on CRA? Scrooge-Potter can’t buy anybody, it can only be bought. So, how’s your job security at Scrooge-Potter looking? Wouldn’t it make more sense to go work for WaMu instead?

The CRA drives the climate of opinion in the entire mortgage industry. If you wanted to be able to buy other banks, you had to play ball.

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I like to collect academic studies documenting the interaction of America’s love affair with Diversity and Immigration with the Housing Bubble/Bust of the 2000s. From the The Annals of the American Academy of Political and Social Science, July 2015:

Variations in Housing Foreclosures by Race and Place, 2005–2012

Matthew Hall
Kyle Crowder
Amy Spring


This study describes the spatial and racial variations in housing foreclosure during the recent housing crisis. Using data on the 9.5 million visible foreclosures (public auctions and bank repossessions) occurring between 2005 and 2012, we show that the timing and depth of the foreclosure crisis differed considerably across regions and metropolitan areas, with those located in the Mountain and Pacific West regions experiencing the highest foreclosure risks. The crisis was patterned sharply along racial/ethnic lines, with metros and neighborhoods with large black and Latino populations—as well as racially mixed neighborhoods—having high rates of foreclosure. Our analysis also highlights the particular vulnerability of Latino households, who not only had very high individual risk of foreclosures but tended to reside in areas hit hardest by the crisis. The race-stratified geographic patterns of foreclosure revealed here are substantially more complicated than a narrative that depicts only the unique disadvantage of black households during the crisis, and likely reflect some level of specific targeting of minority populations and neighborhoods by predatory and subprime lenders.

I haven’t been able to find a copy of this for less than $30, so I haven’t read more than the abstract, but it appears to fit in closely with virtually every detailed study published in the last half year, along with my arguments in 2007-2008.

But what percentage, say, of 2016 Presidential candidates are aware of this connection?

Update: thanks to readers, here are some quotes from the paper:

The popular story of the crisis often includes narratives of foreclosures in white western suburbs (Economist 2011) and minority-heavy central cities in the Midwest (Haughney and Roberts 2009). … while black concentrations were mostly unrelated to average foreclosure rates in cities and suburbs, they were strongly conditioned by Hispanic shares. In both cities and suburbs, foreclosure rates were considerably higher in areas with larger Hispanic populations, with the highest rates being observed in suburban areas that were more than one-fifth Hispanic. …

Average foreclosure rates, however, varied sub- stantially by neighborhood racial composition. In all-white and Asian neighbor- hoods, there were fewer than 5 foreclosures for every 100 homes, and just 1 in 8 of such neighborhoods had foreclosure rates over 10 (“very high”). by contrast, mostly black and mostly Hispanic neighborhoods had foreclosures over 12.9 and 11.4, respectively, and nearly half of these neighborhoods had very high rates. For the most part, most neighborhood types, including a mix of whites and minority groups, fell somewhere between all-white and all-minority neighbor- hoods. the exceptions are Hispanic-white and integrated neighborhoods, which experienced especially high rates of foreclosure (14.0 and 15.1) and were very likely to fall in the “high” or “very high” foreclosure classification. …

Thus, despite media accounts of the crisis primarily targeting suburban white and urban minority neighborhoods, the descriptive patterns in table 3 sug- gest that white neighborhoods were mostly shielded from the worst of the fore- closure crisis, while black, racially mixed, and especially Hispanic neighborhoods were hit especially hard.3

Specifically, in all divisions, the lowest average foreclosure rates are observed in all-white or Asian neighbor- hoods. by contrast, racially mixed and solidly minority neighborhoods—e.g., mostly black and all-minority areas—consistently recorded some of the highest rates. Foreclosure rates among black-white and white-mixed neighborhoods in the Mountain division were in excess of one in four homes over the 2005 to 2012 period. the highest average rates were observed in Southern Atlantic integrated neighborhoods where one foreclosure for every three homes was logged. In all but one division where there were a sufficient number of block groups, mostly black neighborhoods had the highest or second-highest average foreclosure rate, followed by black-white neighborhoods, which ranked second-highest in four divisions. Mostly Hispanic and Hispanic-white neighborhoods also recorded exceptionally high rates of foreclosure in several divisions, including the Mountain west and South. A central point to take away from this analysis is that in each region, neighborhoods containing sizable shares of African American and Latino populations tended to be the most heavily burdened by foreclosures in almost every division of the country.

Basically, this 2015 statistical analysis comes up with a picture of the Bubble/Bust that looks an awful lot like the one I depicted in my 2008 short story “Unreal Estate” about two white brothers-in-law speculating on houses in the high desert exurbs of north Los Angeles County: the big losses tended to be in integrated neighborhoods where people were trying to buy their way out of diversity-related problems elsewhere. It turned out, though, as Buckaroo Banzai liked to say, “Wherever you go, there you are.”

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For the last seven years, academics have been quietly compiling a mountain of evidence that the Housing Bubble and Bust was, like I’ve been saying since 2007, intertwined with contemporary America’s sacred cow of Diversity. For example, from a 2015 issue of Real Estate Economics:

Immigrants and Mortgage Delinquency

Zhenguo Lin
Department of Finance
Mihaylo College of Business and Economics
California State University, Fullerton,

Yingchun Liu
California State University, Fullerton,

Jia Xie
Bank of Canada

… Through the years, administrations touted home owning as a way to put immigrant and low-income families on a path to social and financial stability by promoting a more involved citizenry.1

1Clinton and Bush administrations launched ambitious programs to promote home ownership, especially for low-income households. For instance, President Clinton’s National Homeownership Strategy set a goal of allowing millions of families to own homes, in part by making financing more available, affordable, and flexible. President George W. Bush famously said in 2002 that “We can put light where there’s darkness, and hope where there’s despondency in this country. And part of it is working together as a nation to encourage folks to own their own home,” and in a 2004 speech he said again that “We’re creating … an ownership society in this country, where more Americans than ever will be able to open up their door where they live and say, welcome to my house, welcome to my piece of property.”

Actually, I don’t think Bush’s speeches on Increasing Minority Homeownership are all that famous unless you were in the mortgage industry or read iSteve.

Increased home ownership may not only build wealth for immigrant households, but perhaps equally important, it is a signal of assimilation and achievement of the “American Dream.” As a result, the expansion of housing credit in the United States from the mid-1990s to the mid-2000s was largely cheered, and home ownership by households of immigrants and others reached record-high rates in the mid-2000s. According to the Census, the home ownership rate among immigrant households increased from 46.5 percent in 1995 to 53.3 percent in 2006. Meanwhile, the home ownership rate among native-born Americans increased from 66.1 percent in 1995 to 68.8 percent in 2006. In other words, the gap in home ownership between immigrant and native households dropped from 19.6 percent in 1995 to 15.5 percent in 2006.

As the housing and economic crises developed in 2007-2009, however, immigrants were blamed by the media for the large increase in delinquencies, defaults, and foreclosures in the housing market that helped to trigger the housing crisis and ultimately facilitated the bankruptcies or near-bankruptcies of multiple financial institutions (Malkin, 2008).2

The citation is to a Michelle Malkin column.

Should immigrants really be blamed for the current housing crisis? In particular, are immigrants more likely to be delinquent on mortgages than natives and, if so, why?

Personally, I think those are great questions to ask; but, to be honest, the total number of people in the media who are interested in them consists pretty much of Michelle Malkin, me, and a handful of other disreputable sorts.

To shed light on these and related questions, we investigate the mortgage delinquency behavior of immigrant households by using the 2009 Panel Study of Income Dynamics (PSID) data.

… We use the 2009 wave of the Panel Study of Income Dynamics (PSID), that is collected by the University of Michigan Survey Center. PSID is a longitudinal household survey which started in 1968, with a sample of over 18,000 individuals living in over 5,000 families in the U.S. Individuals in each household were followed annually from 1968 to 1997, and biannually after 1997. …

We should note that all of the immigrant households in the PSID came to the U.S. before 1999. Hence, the duration of their stays ranges from 10 to 40 years …

We restrict the data used in the current study as follows: the sample includes only mortgage-indebted households, i.e., those who own (rather than rent) their primary residences and who have at least one mortgage on their primary residence. After omitting observations with missing values, the final data include information on 2,383 households. Around 6.7 percent (159) of the households are immigrant households, and around 5.6 percent (125) of native-born households are second generation households.

… The difference in the mortgage delinquency rates between immigrants (15.7%) and natives (4.4%) is significant.

It’s also big: the 20th Century immigrants’ self-admitted delinquency rate of 15.7% is over 3.5 times the size of the natives’ rate of 4.4%.

Screenshot 2015-10-12 23.56.28

We find that immigrants are more likely to be delinquent on mortgages than natives, even after controlling for a rich set of household demographic and socioeconomic status and mortgage characteristics. This finding is unlikely to be driven by unobservable financial constraints, local housing market conditions or unobservable characteristics of the metropolitan areas where immigrants tend to cluster. There is evidence of imperfect immigrant integration: the relatively high delinquency rate of immigrants is mainly driven by the relatively recent immigrants who have been in the U.S. for 10 to 20 years.

The paper doesn’t give the raw delinquency rate for the 25% of the immigrants in the sample who arrived from 1989-1999 (keep in mind that no immigrants arriving after 1999 were included in the sample, so these are the most recent ones we’ve got). But I’d guesstimate the delinquency rate for the most recent immigrants in the sample was six to nine times as high as the natives’ delinquency rate.

And the delinquency rate in 2009 for immigrants arriving from 2000 onward was likely even higher than for the highly delinquent cohort that arrived in 1989-1999. My guess would be that immigrant mortgage-holders who arrived in 1989-2009 would have been delinquent about an order of magnitude more often than white native mortgage-holders.

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Screenshot 2015-02-14 21.56.55

Total U.S. data; Key: Green=Hispanic neighborhoods, purple=Asian, orange=black, blue=white

I may have pointed out once or twice that the disastrous home price bubble of a decade ago was closely intertwined, via numerous causal pathways, with decades of Hispanic immigration and diversity ideology. Here’s a new graph from a report by Zillow on different ethnic neighborhoods that makes my point for me: the green line represents the median home value in Hispanic neighborhoods and the blue line white neighborhoods across the country. The green line soared out of control before dropping 46.3% (and still being down 24.2%):

Screenshot 2015-02-14 22.02.44

It’s widely assumed that the Hispanic Tidal Wave we are always hearing about regarding elections couldn’t possibly have had any impact on home prices because Hispanics are so few in number and so poor, but during the bubble, the median home prices in Hispanic neighborhoods was higher than in white neighborhoods, nationally. Here’s median home values in thousands of dollars:

Screenshot 2015-02-14 22.24.44

Total U.S. data; Key: Green=Hispanic, purple=Asian, orange=black, blue=white

You can see the on-going Chinese Money Laundering boom in the purple (Asian) line.

You can look up your own metropolis on Zillow’s handy page.

Here’s the enormous Los Angeles metropolitan area indexed to 2000=100. Versus their peak, white neighborhoods in Greater L.A are currently down 1.6% in median home price, while Hispanic and black neighborhoods are still down over 20%:

Screenshot 2015-02-14 22.36.32

For example, from the Boston Globe, here’s a report on Boston:

Hispanic areas lag in housing recovery

By Katie Johnston GLOBE STAFF FEBRUARY 09, 2015

Hispanic communities were particularly vulnerable to unscrupulous lenders during the last housing boom and the hardest hit by the bust, experiencing the sharpest drop and slowest recovery in home values, according to a study to be released Monday.

The study, by the online real estate company Zillow, found that … Nationwide, Hispanic areas also suffered the biggest declines, with home values still down 24 percent from their peak nearly a decade ago, according to the study.

Hispanic neighborhoods tend to have higher populations of immigrants who were first-time home buyers and were put at risk by lenders who waived credit checks and minimum-income levels, housing specialists said.

Many of these subprime loans were for multifamily homes, which are popular among low-income residents because they can rent out units to generate income.

All of this activity led to an increase in home sales and skyrocketing prices in lower-income neighborhoods. But then the housing bubble burst in the middle of the last decade, the financial crisis followed, and many workers lost jobs.

The result: People who were barely making mortgage payments before the recession went into foreclosure, causing home prices around them to plummet. …

“It’s the old story of what goes up fastest falls fastest,” said Barry Bluestone, director of the Dukakis Center for Urban and Regional Policy at Northeastern University.

Yanko Matias, a native of the Dominican Republic, wanted a house where he and his wife could raise their two young children. So they bought a single-family home in Lynn in 2007, taking out a loan for the entire purchase price of $232,000.

But in early 2009, Matias lost his landscaping job. He found another job at a rental company, but was making considerably less money and called the bank about modifying his loan to reduce the payments. The bank refused, telling him his house was worth only $180,000, less than what he owed on his mortgage.

By the end of the year, he was in foreclosure.

Matias, 39, who now works as a taxi driver and still lives in the house, has been fighting the bank ever since. But he has little hope his home will regain its value and fears he will eventually lose it.

“I worry every day about it,” he said.

To analyze housing values, Zillow used Census data to categorize ZIP codes by racial or ethnic groups that make up a plurality of the population and estimated the median home value within each area. …

Many housing specialists, however, see the uneven housing recovery breaking down not by race, but by immigrant status.

“They were basically the most innocent consumers on the marketplace,” said Eloise Lawrence, a staff attorney at Harvard Legal Aid Bureau who works with struggling Lynn tenants and homeowners. “They knew the least about what was happening, and they were the most eager to climb onto the first rung of the American dream.” …

As disconcerting as it is that Hispanic homeowners were hurt so much by sagging home values, Lawrence, of the Harvard Legal Aid Bureau, said the recovery of home values in white and black communities is almost as worrisome: “We may be in another speculative bubble.”

• Tags: Mortgage, Real Estate 
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From the Washington Post, a story of an African immigrant family who have racked up $1.3 million in debt, even while not paying their mortgage for over six years.

Swamped by an underwater home

After the housing collapse derails the American Dream, a cloud of uncertainty hangs over the Boateng family

Story by Kimbriell Kelly

Published on January 26, 2015

DASHED DREAMS: This is the third part in a series looking at the plight of the black middle class, particularly in Maryland’s Prince George’s County.

Part 1: Residents of Prince George’s, the nation’s highest-income majority-black county, lost far more wealth during the financial crisis than families in neighboring, majority-white suburbs.

Part 2: Half of the loans on newly constructed homes in one Prince George’s County subdivision during the housing boom in 2006 and 2007 wound up in foreclosure.

… A decade ago, Comfort and Kofi [Boateng] were at the apex of an astonishing journey they had made from Ghana in 1997, when they had won a visa lottery to come to America. They did not know it at the time, but they were also at the midpoint in their odyssey from American Dream to American Nightmare.

Today, they struggle under nearly $1 million in debt that they will never be able to repay on the 3,292-square-foot, six-bedroom, red-brick Colonial they bought for $617,055 in 2005. The Boatengs have not made a mortgage payment in 2,322 days — more than six years — according to their most recent mortgage statement. Their plight illustrates how some of the people swallowed up by the easy credit era of the previous decade have yet to reemerge years later.

Is plight exactly the right word to describe somebody who has not had to pay to live in a new 3,292 square foot house for the last six years? And who owns a second home?

When they moved into the house in November 2005, Kofi was earning $82,740 as an IT consultant for a government contractor, and Comfort, then 43, was making $30,000 as an administrative assistant. But in the overheated mortgage market of the time, they said everyone told them that they could buy a $600,000 house.

They made a $60,000 down payment and all their mortgage payments for more than 2½ years — through September 2008. But the house was financed with subprime loans, which reset to higher rates after short time periods, creating what are known as “shock payments.” The Boatengs said they could not make their new higher payment, and, in the middle of the 2008 mortgage crisis, they could not refinance.

“I think the hardest part was the beginning,” said Kofi, now 55. “It was when I realized we really lost something. . . . Initially, we were arguing. But I guess it was because we were blaming each other for a mistake we both made.”

They came from a Ghanaian culture where credit is scarce and people built their houses with cash and lived in them for generations. Deeply religious, they found their real estate agent and mortgage broker at their church, Agape Life Ministries in Laurel.

Research has suggested that the subprime bubble looked in part like an Affinity Group Scam. A lot of the worst loans were made to minorities by co-ethnics who had gotten into the mortgage business as part of the financial world’s enthusiastic Drive for Diversity.

When their money got tight, they borrowed more and refinanced to take on more debt. Caught up in the mind-set of the time, they said, they thought they would be able to continue to refinance.

Prince George’s County had the highest foreclosure rate of any county in Maryland, and Fairwood, despite its $173,000 median income, was the fourth-hardest-hit neighborhood in the county. Fifty percent of the loans made there in 2006 and 2007 went bad, according to an analysis by The Washington Post. Nearly one-third of the foreclosures were among African immigrants such as the Boatengs, even though they made up only 5 percent of the county’s black population.

Wow. About 30% of the foreclosures were on immigrants from Africa. (Is that in the overall county or just the Fairwood neighborhood? Probably the latter, I would guess.)

But it’s fascinating that African immigrants had so much worse default rates than African-Americans.

(I wonder if that’s also true in Houston, another destination for African immigrants. Overall, default were less frequent in Houston because home prices are cheap.)

By the way, Hispanics (mostly immigrants, presumably) had worse foreclosure rates in Prince George’s County than did blacks overall. From a study of foreclosures in Prince George’s County by Katrin B. Anacker, James H. Carr, and Archana Pradhan:

White: 1.91% (372 foreclosures)
Hispanic: 6.42% (3.4X the white rate, 1,091 foreclosures)
Black: 3.62% (1.9X the white rate, 4,219 foreclosures)

That implies that being an immigrant is a risk factor for default. If you head back to the Old Country, can B of A garnish your wages in Africa?

Back to the Post story:

The Boatengs opened up their financial records and provided The Post with hundreds of pages of bank, credit and mortgage documents for review.

Sidebar: A growing debt

How one family went from no debt to owing more than $1 million.
*Debt does not include interest or other fees
July 1997
The Boatengs arrived in the United States
DEBT: $0

Purchased a used Toyota Corolla for $2,000
CARS: $2,000
DEBT: $2,000

May 2000
Took out a mortgage on a three-bedroom town home in Germantown.
CARS: $2,000
MORTGAGE: $128,900
DEBT: $130,900

Purchased a new Nissan Altima for $12,000.
CARS: $14,000
MORTGAGE: $128,900
DEBT: $142,900

Comfort began to take out student loans.
Refinanced their Germantown home several times to fund improvements and to pay off some debt, including the cars.
MORTGAGE: $128,900
CASHOUTS: $95,000
DEBT: $223,900

July 2004
Refinanced their Germantown home to borrow $60,000 for the down payment on a new house in Fairwood, outside of Bowie.
CARS: $14,000
MORTGAGE: $128,900
CASHOUTS: $155,000
DEBT: $283,900

November 2005
Took out two loans to buy the new home in Fairwood.
DEBT: $838,583

September 2006
Refinanced to consolidate the two loans on Fairwood home and some debt.
DEBT: $896,176

Took out personal loans after their tenant in Germantown failed to pay rent. Comfort obtained two $20,000 business loans.
DEBT: $951,176

August 2011
Bank valued the home in Fairwood at $378,216. This was $238,839 less than what they paid.
Comfort completed a master’s degree after taking out roughly $60,000 in student loans.
DEBT: $1,011,176

January 2015
The Boatengs are still living in the Fairwood home. They have not made a mortgage payment in more than six years.

Sources: Post analysis of financial records

Every 90 days since May 31, 2010, they have received a letter threatening to foreclose on their home. They have been able to stay in the house through a confluence of factors: banks wading through a glut of foreclosures, the slow gears of the legal process, bureaucratic negotiations for mortgage modifications and an aversion by lenders to empty homes.

… Seeking better opportunities, they applied online for a lottery administered by the State Department to receive a U.S. permanent resident card.

Everybody knows that a great way to select people is through a random lottery. That’s why Harvard lets in 500 applicants per year at random. Goldman Sachs annually puts all the resumes they receive in a spinning drum and hires the first 200 they grab. Bill Belichick always makes one of his annual NFL draft picks by throwing darts at a list of all the college football players in America.

It was a long shot. Annually, less than 5 percent of the 1 million immigrants granted permanent residency enter the United States through the lottery, according to federal data.

… The Boatengs became citizens in 2003,

Because they love us for our freedoms!

allowing Comfort’s mother to get a green card and move in, eliminating the $300 weekly child-care costs.

Oh, wait, no, it sounds like they had self-interested reasons. But that must be very rare.

But with three bedrooms and two full bathrooms for six people, they needed more room.

Thanks to a booming housing market, their townhouse was worth $355,000. It was time to buy a bigger home.

For advice on neighborhoods, the couple turned to their 300-member church, where Kofi directed the choir. Most of the congregation is from Ghana or Nigeria. The church members suggested Prince George’s County.

… Fairwood had drawn other Ghanaians, as well as Nigerians and Cameroonians who were part of a general influx of West African immigrants into the Washington area, particularly into Prince George’s. The county has the second-highest rate of African immigrants per capita nationwide, behind only Baltimore County, according to recent census estimates.

In 2005, Kofi and Comfort met with one of the home builders in Fairwood, which sits in an unincorporated area of Prince George’s outside of Bowie, and they decided to build a house for a little more than $600,000.

This was more house than they were expecting to buy, but they believed it would be a good investment. They said they thought it would go up in value, like their Germantown house, and they could use that equity to finance their children’s college educations.

“The purpose of getting the house was to get our kids through college,” Comfort said.

Uh …

Their real estate agent told them they could afford it by refinancing the mortgage on the Germantown house — which they were going to keep — and cashing out the $60,000 in equity. That could serve as the down payment for the Fairwood house. At the time, Kofi’s credit score was 748, a superior rating that indicated that they were good at managing their debt.

Working through a mortgage broker, they applied for a loan, which they received from Lehman Brothers Bank under Kofi’s name. They said they were told that, based on their income, they could qualify for an interest-only, adjustable-rate mortgage. They would pay only the interest for the first five years, after which they would be required to make payments on the principal and interest. Such loans are riskier, and borrowers and have been shown to default at higher rates than a traditional 30-year fixed rate mortgage.

The Boatengs ended up borrowing $493,600 from Lehman Brothers, at an initial loan rate of 6.1 percent. In five years, it would reset to at least 8.3 percent. Their payments would start at $3,662 and go up to $4,336.

An 18% increase. In other words, that’s not really the full story of why they’ve gotten six years of free rent in a big new house out of America.

They thought they would be able to refinance to a better rate in the future. In those days, refinancing was easy to get, and the Boatengs went with the tide.

“I don’t think we really understood everything,” Comfort said. “It’s very difficult to deal with everything, especially when you’re dealing with this huge document that you don’t really understand. We didn’t take it too hard that this was going to be a problem. We thought we’d be able to manage it.”

Workers started building the house in June 2005, and the closing was set for October. But in August, Kofi was laid off after his company lost its lucrative government contract with the Army. “The company said, ‘We have no job for you,’ ” Kofi said.

Now, the Boatengs faced a dilemma. Their home was nearly finished, and they had become emotionally attached to it. They were worried they would lose their $20,000 deposit, and they weren’t even sure they could back out of the deal.

“At that time, it’s not like we wanted to back out, too,” Comfort said. “We had already done everything for the house.”

They did not tell the bank that Kofi lost his job.

Details, details, who can keep track of little things like a job loss?

Banks are supposed to verify employment and income prior to approving a loan. Nevertheless, the loan closed, and the Boatengs also received a second loan to complete the financing through their broker’s company, a 30-year fixed-rate mortgage of $61,700 at 8.5 percent. They paid $29,000 in closing costs and put down a total of $73,000 in cash at the closing.

On Nov. 25, 2005, the family moved into their new home in Fairwood. …

Kofi looked for a job and the couple sought a renter for their Germantown home. Their payments on the two houses amounted to $5,550 each month.

“We wanted to sell it,” Comfort said of the townhouse. “But some church members also have rental properties. So they said we shouldn’t, that we should rent it out. And we did it.”

So now they own two houses: the American Double Dream!

In December, they found a tenant, whose rent check would cover the Germantown mortgage. And Kofi was hired by a tech company in Fairfax County, earning $82,000 a year.

But February and March came and went with no rent check. Soon they were in court asking a judge to evict the tenant, a process that takes months. “They couldn’t pay their rent,” Comfort said. “We couldn’t kick them out.”

Kofi went to Bank of America and took out a $5,000 personal loan to cover their mortgages for a month. When the case dragged on, Comfort went to Bank of America and received a personal loan for $10,000.

In subsequent months, with Kofi’s consent, she took out a $20,000 personal loan from Federal Credit Union in Montgomery County to start a home business selling Mary Kay products. The loan carried a 15 percent interest rate over a 10-year term.

That sounds like a plan!

She didn’t see the loan as a risk but as a way to help the family, and she says she believed that she could earn up to $7,000 a month with Mary Kay. …

She said she quickly earned director status and was given the choice of a leased car, a Pontiac Vibe, or the money in cash, $700 a month. The family decided to take the money.

To grow her Mary Kay business, Comfort said she took out another $20,000 loan from the same credit union, under the same terms, but this time she did not tell Kofi. She was sure she would be successful. But now she was juggling selling cosmetics and recruiting people for Mary Kay with a job search in her own field. She fell behind. Cases of merchandise sat in their home.

In late 2006, the couple decided to refinance their Fairwood mortgage and consolidate their debt, including the personal loans and some auto and student loans. They met with another mortgage broker, also a church member.

They eventually took out a $620,000 refinancing loan from Countrywide Home Loans.

You know, if you read any iSteve post long enough, Angelo Mozilo will show up.

It was also an interest-only subprime loan, carrying a 6.29 percent interest rate and adjusting in two years instead of five. Their payment on the Fairwood house would rise to about $5,230 by November 2008.

As the broker walked them through their credit report, Kofi learned about the second $20,000 loan taken out by Comfort.

… The Boatengs made their last Fairwood mortgage payment on Sept. 18, 2008.

… The Boatengs received their first notice of Bank of America’s intent to foreclose on their home on May 31, 2010. The mortgage was 606 days past due.

… Two weeks later, on Aug. 31, 2011, Bank of America sent an unsolicited “short sale agreement” to the Boatengs, which would require the couple to sell their home. The bank offered them $3,000 to assist with moving expenses and told them they had to agree to sell by Christmas Day.

The bank valued the house at $378,216.

… The couple said someone — they do not remember who — referred them to the Brooklyn-based Litvin Law Firm, which specializes in foreclosure defense. The Boatengs said they started paying Litvin $750 monthly. This continued for two years, for a total of $15,000, they said. But then they got a call from an ex-Litvin employee who said the Boatengs should stop paying because the firm was not licensed to conduct business in Maryland.

“After Litvin, we realized we don’t have anybody,” Comfort said.

On Nov. 18, the Litvin Law Firm settled a complaint with the Maryland attorney general’s office that it had charged hundreds of consumers large fees but often did not help them avoid foreclosure or modify their loans.

… During much of this time, Comfort was unemployed or not working full time. In October 2010, she lost her administrative assistant job at Family Health International in Virginia. Her unemployment benefits ran out after eight months.

Beginning in 2003, she had been a part-time student in health-care administration at University of Maryland University College, with a goal of getting a bachelor’s degree and eventually a master’s. To help pay for the schooling, she took out student loans. She had earned two bachelor’s degrees, one in health-care administration in 2009 and another in organizational management in 2010, but by the time she completed her master’s in health-care administration in 2013, the debt had reached $90,000, including interest.

She said she went to school and took out the loans because she thought that was the American way to get ahead and earn more for her family.

“In my country, there’s a proverb that says we use fish to catch fish,” she said. “So before you can catch the fish, you have to use the fish. Before I can get to the money or level where I want to be, it takes money.”

With $257,776 owed on the Germantown house, $969,037 owed on the Fairwood house, $55,000 in personal loans and the student loan debt, the couple who had never owned a credit card before moving to the United States now owe more than $1.3 million.

They currently earn about $100,000 a year.

The couple are also working with Housing Initiative Partnership, a HUD-certified housing counseling agency, for help in getting a loan modification. Their housing counselor, Lee Oliver, said their downfall began with the idea of buying a second home for more than $600,000. They were stunned they could own something like that, she said. “Then they just took a leap of faith,” she said. “Where I’m from, these houses were only for white people.”

Comfort’s mother died last January. Comfort had been working part time at a temporary agency in the home-health-care field but is now looking for full-time work.

“At a point, I was so frustrated that recently I said, ‘Why do I have to keep staying in America then? Why don’t I go back to my country and look for a job there?’ ” Comfort said.

That would be self-deporting and that’s the most evil concept ever. So, please continue to envibrate us with your diversity.

• Tags: Mortgage, Real Estate 
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From the Los Angeles Times:

8 killed, 18 injured in China land dispute

During World War II, Gao Shangpei fought Japanese soldiers invading his hometown. This week, the 85-year-old said he found himself taking up arms again as men wielding steel pipes and knives invaded his village over a land dispute, sparking clashes that left eight people dead and 18 others injured.

The incident in southwest Yunnan province appears to be one of the bloodiest confrontations in recent years between property developers and local villagers.

In a statement Wednesday, the local government said eight people were killed in Fuyou village

Fuyou is a great name.

when staff from a local project developer clashed with villagers. But locals said “thugs” hired by the developer stormed the village and tried to beat up residents who had vowed to protect their land till death.

“Around 2:30 p.m. [Tuesday], a group of over 1,000 thugs hired by the developer came to our village carrying steel pipes and long knives,” Gao said in a phone interview. “When we tried to stop them, they started to beat local villagers, including women and old people, indiscriminately.”

According to Gao, more than 2,000 of his fellow residents joined in the fray. After two villagers were killed, locals got so angry that they captured and killed some of the attackers, he said.

Four of the developers’ staff were burned alive by villagers.

As far as I can tell, the central government owns all the land in the People’s Republic of China, but the current tenants and the local governments assume they have various customary rights to it. So, every so often a property dispute arises. And then it’s: You get your lads together and we’ll get our lads together and then we’ll find out who holds proper title, Seven Samurai / Three Amigos-style.

If this were a movie, the sequel would be called Fuyou 2.

… When the armed men surrounded his village, Gao said, he didn’t bother to call the local police. “They breathe through the same nose with the developers. They’re useless,” he said.

The Chinese language is extremely old and it’s barnacled with these great idioms like “They breathe through the same nose.”

• Tags: Fuyou, Real Estate 
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From the 2011 book Lost Bank by Kirsten Grind about Washington Mutual, which collapsed spectacularly in 2008: In mid-2003, a market researcher named Kevin Jenne is sent to Orange County and Illinois to conduct focus groups on WaMu customers who had recently acquired Option Adjustable Rate Mortgages. These allowed borrowers to choose anything from 15 year fixed repayment to letting them pay only 1% interest for five years while the principal “negatively amortized” (and then the hammer would come down around 2008 when the interest rate reset to the current index and the principal left to be paid off was larger than when they started). Jenne’s assignment was to study these Option ARM borrowers to learn how to persuade more people to get Option ARM mortgages.

The 31 people who attended the dual sessions had two things in common: all of them held Option ARM loans, and few, if any understood what that meant.  

Jenne listened patiently, as, over and over again, the borrowers described what they believed to be their loan terms. They had gleaned startlingly few details about their loans from the mortgage broker or the WaMu loan consultant who had helped them through the process. Most of them knew they held adjustable-rate loans. They also thought the loan was cheaper than a regular mortgage, because they didn’t have to pay as much each month. Approval hadn’t been a hassle, the customers said — WaMu had required little paperwork or income documentation. That’s where their knowledge stopped. “From their perspective, it was a low payment loan, and that’s all it was,” Jenne said. “No one understood the option thing.” 

Some of the borrowers in the focus groups were first-time homebuyers, still awed by their new ability to capture the American Dream. Recently, President George W. Bush had announced plans to increase minority homeownership by 5.5 million people, piggybacking on the goals of his predecessor, President Bill Clinton. “We want people owning something in America,” Bush declared at an expo in New Mexico. “That’s what we want. The great dream about America is, I can own my own home, people say.”

In reading Bush’s minority mortgage speeches denouncing redlining, downpayment requirements, and onerous paperwork requirements such as pay stubs, a recurrent phenomenon is Bush’s Yoda-like reverse syntax. Did Bush always sound like this, or just on the topic of minority mortgages?

The focus group borrowers, some of them members of minorities, were effusive about their buying power. “They had been told by so many people that they couldn’t afford one,” Jenne said. Now they could. 

According to the federal Home Mortgage Disclosure Act database that exists to make sure minorities get enough loans, over half of the dollars lent in Orange County in 2003 by Washington Mutual’s subsidiary Long Beach Mortgage went to Hispanics.

Few of them understood what negative amortization meant, or that it could make their debt grow in the long run. …  

Half an hour into the first session with borrowers in Orange County, Jenne could tell that quizzing these people on their loan terms was futile — they didn’t know their loan terms. He got up, excused himself, and left the room. … Jenne walked into another room at the sterile interrogation facility, behind a two-way mirror, where two mortgage production employees from the Home Loans Group had been observing the discussion. … “I don’t think we’re asking the right questions,” Jenne told them. The questions he had put together seemed useless. But the mortgage employees disagreed. They wanted him to ask about indexing, even though the customers barely understood interest rates. “Find out what the index means to them,” they instructed Jenne. 

… He asked the group of borrowers: “How does your interest rate change?” 

No one responded. 

“It changes, right?” Jenne probed. 

The borrowers looked around the table at one another. Finally one said, “Yeah, it changes.” 

“I think it’s indexed,” offered one woman. 

“Yeah, yeah, indexed!” agreed another. They had answered a question correctly! 

“Well, what’s it indexed to?” Jenne asked. 

Another long awkward pause ensued. 

“My loan is indexed to the Nikkei,” proclaimed one borrower. 

Another long, awkward pause ensued. 

“Your mortgage is based on the Japanese stock market?!” Jenne thought to himself. “Of course I didn’t say that, he said later. “But I’m going, ‘Oh, my heavens.’” Strangely, in another focus group, in Illinois, another borrower also believed his loan was indexed to the Nikkei. Jenned never discovered where borrowers had received that information. “I don’t think they were being told this by someone,” said Jenne. “I think that the only index they had heard of, like on TV or something, was the Nikkei. It was just bizarre.

The borrowers did seem worried about the loan terms. One of them said, “It’s really scary to me what’s going to happen in five years.” Another echoed the same sense of foreboding with a slightly more compressed time frame. “Something terrible happens in three years.” Said a third borrower: “I’m a little nervous about it. I have this feeling of impending doom. It’s almost too good to be true.”

On the other hand, the borrowers seemed comfortable in their ignorance. “Despite their lack of understanding, participants were almost universally happy with their loan choice,” the report noted. …

The Home Loans Group wanted Jenne to recommend ways to market the Option ARM. So, Jenne and his team noted in their follow-up report that the best way to off-load the product onto customers was to tell them little about it. That avoided the problem of complicated loan terms and words that no one understood. “Focusing on the right ‘need to know’ information is critical to developing more Option ARM sales. Participants seemed easily overwhelmed by the product details,” the report concluded.

… Jenne came to believe that the Option ARM wasn’t just a bad idea — it might be evil. “After awhile, I lost that feeling,” Jenne said. “Then I came back to it later on. And then I thought, ‘No, no, this product is definitely evil.’” 

Whether or not [CEO] Kerry Killinger saw Jenne’s research on America’s hot new mortgage product — and it’s likely that he didn’t se it — WaMu doubled its annual Option ARM production to $68 billion in one year. By early 2005, WaMu promoted its loan as its “signature mortgage.” It made up more than 25% of all the mortgages WaMu made or purchased.

A few observations:

The vast Mexican surge into places like Orange County over the last few generations represented basically Fresh Meat to exploit for Newport Beach MBAs with spreadsheets. When you hear the Donor Class of the GOP talking about the need for “immigration reform,” that’s what they mean: more Fresh Meat.

These dialogues capture quite well the happy-go-lucky agreeableness combined with an aversion to hard mental effort that are a trademark of Mexican-Americans in Southern California (and perhaps elsewhere). When Michael Barone talks about Mexicans as the New Italians, he misses a key distinction: Italian-Americans tend to be suspicious and pessimistic. They put a lot of cognitive effort into trying to understand why this too good to be true offer is too good to be true. They save a lot because they expect the worst.

Mexican-Americans tend to spend a lot because they expect the worst, but it would also be too much work to figure out what might happen, so why not have a good time now?

(Republished from iSteve by permission of author or representative)
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Ann odd phenomenon of Southern California are regions of extreme density per room. You’ll be driving through an area of one story houses and two story apartments, when suddenly there are people everywhere, with guys selling oranges on the corners of side streets.

L.A. and Orange counties are an epicenter of overcrowded housing

Sixteen-year-old Monica buried her face in a pillow, trying to rest for school the next day, as the clock ticked past 11 p.m. 

Sleep was a battle in the tiny apartment. Hunched at the other end of the family’s only mattress, two of her brothers played a video game while a third lounged next to her, watching virtual soccer players skitter on screen. Her 2-year-old niece toddled barefoot near the door, toying with a pile of pennies. 

In all, seven people live in this wedge of space in Historic South-Central, including Monica’s mother and the mother of the little girl — the longtime girlfriend of one of her brothers. They squeeze into an apartment roughly the size of a two-car garage, sharing a bathroom, a small kitchen and one common room.
“We’re not comfortable,” Monica’s mother, Josefina Cano, said in Spanish. “But what can we do? It’s better than being on the street.” 

Cano and her family live in one of the most crowded neighborhoods in the country. Nearly 45% of the homes there are considered “crowded” — having more than one person per room, excluding bathrooms, according to an analysis of Census Bureau data spanning 2008 to 2012. Almost one home in six is severely crowded, with more than two people per room. 

Southern California is an epicenter for crowded housing: Out of the most heavily crowded 1% of census tracts across the country, more than half are in Los Angeles and Orange counties, a Times statistical analysis found. They are sprinkled throughout areas such as Westlake and Huntington Park around Los Angeles, and Santa Ana and Anaheim in Orange County. 

From the outside looking in, it is a largely invisible phenomenon. Places such as Maywood and Huntington Park, south of Los Angeles, look little like the high-rises of Chicago or Boston. Yet behind the closed doors of small bungalows or squat apartment buildings, they are home to thousands more people per square mile than those large cities. 

… Around South Gate and Huntington Park, Head Start instructors who visit children at home find they have trouble focusing amid the hubbub. In the Florence-Firestone area, longtime resident Paula Trejo said, street parking is always scarce. 

UCLA and University of North Carolina at Chapel Hill researchers have found that children in crowded homes have poorer health, worse scores on math and reading tests and more behavioral and emotional problems — such as tantrums and depression — even when poverty is taken into account. 

“I don’t think anyone really wants to live in overcrowded conditions,” said Larry Gross, executive director of the Coalition for Economic Survival. “But people will endure it because they have no choice.”

Every inch of the apartment that Cano and her family share is consumed: Bags of clothing are heaped in the only closet. Atop the heater, under a can once used to collect funeral donations, sits a box with the ashes of Cano’s late son, who endured seizures and died in his teens. 

… Experts say building is unusually difficult in Los Angeles, one of the factors contributing to the affordable housing shortage.

The cramped conditions echo an earlier era, when urban reformers railed against teeming tenements. After World War II, bigger homes and better incomes afforded Americans more space, and the shrinking size of families fueled the trend by 1970. But crowding rates began creeping higher again after the immigration wave of the 1980s, census data show. 

In Southern California, “that boom drew in a lot of immigrants who were very poor when they arrived,” USC demographer Dowell Myers said. “And they came into a market of very inflated prices.” 

… Today, Latino households in the Los Angeles area are more than a dozen times more likely to be crowded than white ones. 

Some scholars argue that crowding tends to be higher among Latinos and Asians because it is more accepted in their cultures, providing a survival strategy when workers strain to cover the rent. …

Mexican and Vietnamese Americans tend to have different views than whites or blacks do of what is “crowded,” according to a 2000 study, but they still suffer worsening anxiety and depression as crowding increases. 

Gabriel Guerrero, for instance, complains that the noise is too much. Twelve people crowd the two-bedroom house in South Gate that he bought decades ago. After school, the clamor of the television and the chatter on phones overwhelms him. 

“To go to the bathroom, you have to take a number,” the 60-year-old grandfather said with a sigh. At times, his son heads to the nearby grocery to use its restroom.
Sometimes Guerrero daydreams of selling the house and finding an apartment for just a handful of them. But then he thinks of his grown children, and their growing children, muddling along with meager paychecks or measly hours.
He sets the daydream aside. “They have nowhere to go,” Guerrero said.

You can’t understand the causes of the subprime housing bubble of the 2000s without keeping in mind the density of modern Los Angeles. LA spun off all sorts of people desperate to get away to Las Vegas, Phoenix, and the Inland Empire.
(Republished from iSteve by permission of author or representative)
• Tags: Real Estate 
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Michael Wolf photo of Hong Kong
From Gizmodo

Tall is Good: How a Lack of Building Up is Keeping Our Cities Down

Urbanism — Alissa Walker

Early in Spike Jonze’s new film Her, Joaquin Phoenix’s character gazes out his Los Angeles window. As the camera pans, we see not a squat, sprawling metropolis, but a golden-lit landscape of skyscrapers stretching all the way to the horizon. 

When I saw the film last Friday night, this scene made me gasp. 

It wasn’t just the shock of seeing L.A. rendered as a vertical city. It was because this L.A. of the future looked like a place where I wanted to live. 

This digitally enhanced, metastasized Los Angeles—an L.A. that grew up instead of out—is almost a secondary character in the film. Jonze tapped graphic designer Geoff McFetridge and production designer K.K. Barrett, and also consulted with architect Elizabeth Diller on the look of L.A.’s future, which—for once—was blissfully free of those dystopian stereotypes. Even against the bleak narrative (no spoilers, don’t worry!) the city around the characters is bustling, colorful, vibrant. It’s a gorgeous world of tall buildings, mass transit, and busy sidewalks. 

Dare I say, this movie made density beautiful. 

Beautiful density is, of course, a reality for many cities; some of Her’s most dramatic shots were filmed on the skyways and skyscrapers of Shanghai. But here in L.A.—like many cities that aren’t Shanghai, or Tokyo, or New York—many people are doing everything in their power to suppress this future, citing detrimental side effects from building heights, whether it’s shadows or earthquake danger. Even some already dense cities make it impossible to secure air rights, pass ridiculous parking restrictions, and work hard to incentivize low-rise development. 

But there is a huge problem looming larger than any skyscraper. Many major cities are experiencing a housing shortage which is pricing out large swaths of their populations—the workers, the creators, the young’uns. We need to start thinking big—or, rather, tall. 

In theory, most of us know density is good for us—it allows us to live closer together, share resources, save energy, and stay safe. But we like the idea of skyscrapers right up until the point where one is constructed next door. 

Suddenly, we lament that a tall building might obscure our view, or darken our perfect afternoon sunlight. There is an ongoing sentiment that density should be for someone else. I should be able to keep my car and my yard, while my neighbors get a subway and a public park. 

Anti-skyscraper urbanist Jane Jacobs argued for a “proper density,” which it can be assumed looked a lot like the typical 1960s Greenwich Village street that she canonized through her writing.

Jane Jacobs liked her own neighborhood. Most people grow fond of where they live. I’ve liked every neighborhood I’ve lived in (except the one that had drug addicts shouting all night for their dealer Eddie to buzz them in so they could get their cocaine — that started to get on my nerves). This is not to dismiss Jacobs, a wise woman, but urban planning mostly works by who it attracts and who it repels, not by the re-engineering of souls.

With this reasoning, we’d organize all the residential buildings into neat four-story walkups and go to work in the skyscrapers (an equation which obviously does not work out in today’s cities). Jacobs was fearful of those towers sprouting throughout Manhattan at the time, which she believe took away a neighborhood’s diversity and sense of community.

However, that doesn’t seem to be the case. Hong Kong, which has more buildings over five hundred feet tall than any other city in the world, has been the muse of photographer Michael Wolf, who captures the towers as well as the people living inside them. These photos are shocking at first in their overwhelming scale. But 80 percent of the residents Wolf interviewed said they were happy, thanks to the sense of community. “The important lesson to be learned is that it’s not space which is important for humans,” Wolf told Atlantic Cities. “It’s your neighbors.”


For example, in Chicago, Cabrini Green and Sandburg Village were modernist highrise complexes that were built about a mile apart at about the same time. The former was a public housing project that all the white residents soon fled, while Sandburg was a city-led for-profit project intended to drive out the Puerto Ricans from the neighborhood. It became a proto-yuppie haven. Cabrini Green is gone, but Sandburg Village is still there.

The unmentionable fear, of course, is running out of good neighbors. There are only so many to go around. And the American establishment has had as its policy for decades to make the population less white, more diverse. 

Obviously, immigration policy interacts in all sorts of ways with urbanism policy. America has been testing the diverse future out in ultra-immigrantish Los Angeles for a long time. (You might think that some lessons could be learned, but that’ll never happen.) For example, the nice liberals of Beverly Hills have been resisting building the L.A. subway through Beverly Hills for the last 28 years. And if that mountain is finally climbed, the so-called Subway-to-the-Sea will still stop four miles from the sea because nobody has a clue how to get the People’s Republic of Santa Monica to agree to a subway.

But you aren’t supposed to think about that. Thus, in the movie Her, the population of Future Los Angeles has grown immensely, but almost all the characters are attractive white people.

In reality, Mexicans hate taking public transportation, hate high rises, hate driving Priuses. If they were suddenly renamed South Texans, the New York Times editorial board might even defy Carlos Slim and rethink this whole immigration amnesty project.

Armenian-type white immigrants like driving large expensive new cars really fast.

So, there are urbanist lessons to be learned from L.A.’s experience with immigration, but please don’t mention them.

The other issues with high rises are traffic and that American white people don’t breed in them. They are like zoo creatures — to get them to reproduce, you need to take them out of small cages and put them in big enclosures. In Her, there is only one child and she lives in what appears to be the only single family home with a yard in Future Los Angeles.

L.A. subway map from Her
Also from Gizmodo:

One of the best moments in the new movie Her is watching Joaquin Phoenix ride an elevated train through a Los Angeles of the near-future, dance through a bustling subway station, and emerge at the edge of the Pacific Ocean. 

The scene got a surprised laugh from everyone at the screening I attended. After years of nimby battles and funding shortfalls, director Spike Jonze had just completed the Subway to the Sea!

Of course, it’s the people who have upcoming movies screened for them who have done the most over the decades to keep the LA subway out of the liberal westside of LA. Funny how that works.

By the way, is this Google driverless car thing ever going to happen? If it does, who will take public transit then if you can sit in your own car and watch videos while Jamesbot drives you right to your destination? (Note, I’m not saying it’s going to really happen.)
(Republished from iSteve by permission of author or representative)
• Tags: Movies, Real Estate 
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The Washington Post editorial board has drawn a line in the sand against anti-white black solidarity, at least where it really matters: Washington D.C. city council elections.

Anita Bonds’ misguided focus on race 

By Editorial Board

D.C. COUNCIL member Anita Bonds (D-At Large) is not the first District official, nor sadly is she likely to be the last, to try to use race to her advantage. But her awkward comments about the role that race will play in the city’s upcoming election and voters wanting their “own” should not go unchallenged. 

Ms. Bonds appeared Monday on WAMU-FM’s “Kojo Nnamdi Show” with the five other candidates vying for the citywide seat in the April 23 special election. She was asked about recent comments by a union official endorsing her. The official said there is a strong desire within the black community that the seat be held by an African American. 

“Happy to hear that,” was Ms. Bonds’s response. She said, “People want to have their leadership reflect who they are” and longtime residents “fear” being pushed out by the city’s changing demographics. “The majority of the District of Columbia is African American. .?.?. There is a natural tendency to want your own,” she said.

The horror, the horror. Seriously, that’s a perfectly reasonable thing for any politician to say. But, it’s not okay with the Washington Post editorial board. This stuff’s personal. If they help push blacks out of power in Washington D.C. their lives will be a lot better, so they are going to be as anti-black as they gotta be to get the job done.

Ms. Bonds, The Post’s Tim Craig reported, appears to be trying to rally black voters to her bid by noting that the council, now with seven white and six black members, has never had eight white members. 

But, it will soon, at least in the Washington Post editorial board’s dreams of cashing in big on their real estate investments.

Ms. Bonds told us she is aghast that anyone would interpret her remarks as a plea to vote for her solely because of her race; she said she was merely expressing appreciation about having received the union endorsement. Her spokesman stressed that the campaign has never used race as a basis to garner votes and that the council member was simply responding to a direct question that should not be taken out of context. … 

 But the failure of Ms. Bonds to make clear that a candidate’s skin color should not be the determining factor was disappointing, particularly since the council on which she hopes to continue to serve will have to deal with challenges confronting a city undergoing dramatic demographic change. 

Translation from Editorialese: Challenges to include blacks not letting the doorknob hit them on the butt as they leave D.C. for places where the locals don’t have their hands on The Megaphone like we do here at the Washington Post.

(Republished from iSteve by permission of author or representative)
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From the website of the Noel Coward Society, a story recounted by Sheridan Morley (son of actor Robert Morley):

Morley recalled an occasion in the 1980s when, walking along Piccadilly with John Gielgud, they spotted Margaret Thatcher, then at the height of her powers, coming towards them. As they both knew her slightly, they stopped. Gielgud asked where she was now living. “No 10, Downing Street,” replied the Prime Minister with some surprise. 

“Oh, you women!” exclaimed Gielgud, full of admiration. “Always so clever at buying the right kind of property!”

(Republished from iSteve by permission of author or representative)
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Here’s a graph created by Dr. Carolina Reid of the Federal Reserve Bank of San Francisco tracking foreclosure rates over time on mortgages originated in 2005. This is for the 50 largest metro areas, so it’s reasonably representative of the bulk of the mortgage dollars in the U.S.

In thinking about the Great Recession and foreclosures, we need to conceptually distinguish between later foreclosures caused by the recession versus earlier foreclosures that, more than any other single factor in the U.S., caused the recession. (Obviously, the recession had multiple causes, which can be analyzed on multiple levels, just as World War I can be said to be caused (at the specific level) by both the assassination of the Archduke or (at an abstract level) the system of Great Power rivalries. But for historical events as important as the Great War and the Great Recession, it’s worth taking the trouble to analyze multiple causes at multiple levels. The mortgage meltdown may not have been the ultimate cause of the recent economic unpleasantness, but it deserves close analysis, just as the assassination of the Archduke, the stock market crash of 1929, and the bombing of Pearl Harbor deserve the attention paid to them.)

The foreclosures rates in this graph are for January of each year. Keep in mind that foreclosures lag defaults by some number of months. 

Some recent history: The subprime crisis was first noticed in February 2007 with the failure of subprime lender New Century Financial in Orange County. So, the first two data points, 2006 and 2007, are both before subprime blew up. The Great Recession itself did not become a certainty until mid-September 2008, and unemployment rose in the wake of those memorable fall 2008 events. Not surprisingly, broad unemployment caused numerous foreclosures. 

But, what’s of more interest in figuring out cause and effect are the foreclosures that happened before the country fell into a general recession. This study of 2005 vintage mortgages offers some interesting clues. Here’s Reid’s map of foreclosures as of January 2007:
As you can see, foreclosures were centered around Greater Detroit

Not surprisingly, in those first two years, while the price of houses was still high, blacks had the highest foreclosure rates. The financial cost of these mortgages defaults was low, however, because home prices in the Great Lakes area are not particularly high.

But, by 35 months later, at the end of 2010, the landscape was dominated by the red of the Sand States of California (the Big Kahuna of real estate values), Arizona, Nevada, and Florida, all of which had above-average priced-homes (California exceptionally so):
As the top graph demonstrates and the second map implies, the Hispanic rate skyrocketed between January 2007 and January 2009. By January 2009, the Hispanic foreclosure rate (about 6%) was roughly three times the white rate (about 2% rate), and the Hispanic rate was now significantly higher than the black rate. The Hispanic foreclosure rate accelerated from January 2009 to January 2010 (roughly the second map), reaching about 10.5%, before its rate of growth moderated from January 2010 to 2011.

More than any other ethnic group, Hispanics blew up and then popped the bubble.

Interestingly, the Asian rate grew sharply over the course of 2009, almost catching up to the black rate. The white foreclosure rate lagged the other ethnicities rates, finally closing some of the gap by January 2011, suggesting that white borrowers tended to be less cause than victim of the recession.

The more I look at the recent studies, the more I keep coming back to my initial reaction: Diversity, in the multiple meanings we assign that term, played a major role in the Recent Economic Unpleasantness. You might think that knowing this would be relevant to immigration policy, but that just shows you are a bad person.

(Republished from iSteve by permission of author or representative)
• Tags: Mortgage, Real Estate 
Steve Sailer
About Steve Sailer

Steve Sailer is a journalist, movie critic for Taki's Magazine, columnist, and founder of the Human Biodiversity discussion group for top scientists and public intellectuals.

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