Tag Archives: gentrification

BALTIMORE MAY SELL HOMES FOR $1 TO REVIVE NEGLECTED NEIGHBORHOODS

In order to revitalize distressed neighborhoods in Maryland, councilmembers and local community advocates are pushing for a government program that would sell thousands of vacant buildings in Baltimore for $1 each. In turn, buyers would have to promise to refurbish and live in the properties for a certain period of time.

 

Baltimore

 

According to a bill adopted by the Baltimore City Council last month, the program would revitalize “marginal neighborhoods by matching construction ability at the grass roots of Baltimore to production of affordable housing for workers’ families and neighbors.” The idea is modeled after the 1973 “Dollar House” program, which sold rundown, city-owned houses for $1 and helped rebuild ravaged neighborhoods in the city throughout the 1980s. The original program also granted buyers low-interest loans to rehabilitate the properties as long as they lived in the homes for a certain amount of time.

Now, advocates want to restore the program to curb the city’s blight epidemic and prevent more homes from becoming vacant. The program would also create construction jobs, say advocates.

On the other hand, the housing commissioner argues that the program is outdated and that there is not enough government funding to address the estimated 16,000 to 46,000 vacant homes in Baltimore, reports The Baltimore Sun. That’s triple the amount in the ’80s. Plus, about 250,000 fewer people live in the city compared to when the program first started.

Nonetheless, real estate agent and affordable housing specialist Mable Ivory applauded the idea, arguing that city governments have implemented similar programs to revitalize distressed areas in Detroit and Harlem. “It has been proven that when home ownership increased among residents in neighborhoods like Harlem and Detroit, which were once plagued by urban blight and flight, crime declined and the communities became more beautiful as owners took pride in their neighborhoods and took better care of them,” she said in an email. “Baltimore seeks to mirror the success that has been experienced in Harlem and Detroit by creating a similar, discount homeownership program.”

Whether interested in buying a vacant property in Baltimore or purchasing an affordable home elsewhere, Ivory advises potential purchasers to “do their due diligence and research” before taking on the cost of homeownership. “If possible, before bidding on the properties, homeowners should do a property inspection with licensed professionals, such as contractors, architects, and engineers, to have a clear and full understanding of all the repairs needed to make the home inhabitable; the cost of the repairs; as well as the time it will take to complete the entire renovation. The good news is that there are mortgage loan programs available like the FHA 203(k) mortgage loan program, which provide financing for the total renovation of a home.”

Selena Hill   

by April 13, 2018 Editor’s Note: This post originally published on December 27, 2017

Advertisements
Tagged , , , ,

For people of color, banks are shutting the door to homeownership

Fifty years after the federal Fair Housing Act banned racial discrimination in lending, African Americans and Latinos continue to be routinely denied conventional mortgage loans at rates far higher than their white counterparts.

This modern-day redlining persisted in 61 metro areas even when controlling for applicants’ income, loan amount and neighborhood, according to a mountain of Home Mortgage Disclosure Act records analyzed by Reveal from The Center for Investigative Reporting.

The yearlong analysis, based on 31 million records, relied on techniques used by leading academics, the Federal Reserve and Department of Justice to identify lending disparities.

It found a pattern of troubling denials for people of color across the country, including in major metropolitan areas such as Atlanta, Detroit, Philadelphia, St. Louis and San Antonio. African Americans faced the most resistance in Southern cities – Mobile, Alabama; Greenville, North Carolina; and Gainesville, Florida – and Latinos in Iowa City, Iowa.

MODERN-DAY REDLINING

No matter their location, loan applicants told similar stories, describing an uphill battle with loan officers who they said seemed to be fishing for a reason to say no.

“I had a fair amount of savings and still had so much trouble just left and right,” said Rachelle Faroul, a 33-year-old black woman who was rejected twice by lenders when she tried to buy a brick row house close to Malcolm X Park in Philadelphia, where Reveal found African Americans were 2.7 times as likely as whites to be denied a conventional mortgage.

The analysis – independently reviewed and confirmed by The Associated Press – showed black applicants were turned away at significantly higher rates than whites in 48 cities, Latinos in 25, Asians in nine and Native Americans in three. In Washington, D.C., the nation’s capital, Reveal found all four groups were significantly more likely to be denied a home loan than whites.

“It’s not acceptable from the standpoint of what we want as a nation: to make sure that everyone shares in economic prosperity,” said Thomas Curry, who served as America’s top bank regulator, the comptroller of the currency, from 2012 until he stepped down in May.

Yet Curry’s agency was part of the problem, deeming 99 percent of banks satisfactory or outstanding based on inspections administered under the Community Reinvestment Act, a 40-year-old law designed to reverse rampant redlining. And the Justice Department has sued only a handful of financial institutions for failing to lend to people of color in the decade since the housing bust. Curry argued that the law shares part of the blame; it needs to be updated and strengthened.

“The Community Reinvestment Act has aged a lot in 40 years,” he said.

Since Curry departed nine months ago, the Trump administration has gone the other way, weakening the standards banks must meet to pass a Community Reinvestment Act exam. During President Donald Trump’s first year in office, the Justice Department did not sue a single lender for racial discrimination.

The disproportionate denials and limited anti-discrimination enforcement help explain why the homeownership gap between whites and African Americans, which had been shrinking since the 1970s, has exploded since the housing bust. It is now wider than it was during the Jim Crow era.

This gap has far-reaching consequences. In the United States, “wealth and financial stability are inextricably linked to housing opportunity and homeownership,” said Lisa Rice, executive vice president of the National Fair Housing Alliance, an advocacy group. “For a typical family, the largest share of their wealth emanates from homeownership and home equity.”

The latest figures from the U.S. Census Bureau show the median net worth for an African American family is $9,000, compared with $132,000 for a white family. Latino families did not fare much better at $12,000.

What lenders keep secret

Lenders and their trade organizations do not dispute the fact that they turn away people of color at rates far greater than whites. But they maintain that the disparity can be explained by factors the industry has fought to keep hidden, including the prospective borrowers’ credit history and overall debt-to-income ratio. They singled out the three-digit credit score – which banks use to determine whether a borrower is likely to repay a loan – as especially important in lending decisions.

“While quite informative regarding the state of the lending market,” the records analyzed by Reveal do “not include sufficient data to make a determination regarding fair lending,” the Mortgage Bankers Association’s chief economist, Mike Fratantoni, said in a statement.

The American Bankers Association said the lack of federal enforcement proves discrimination is not rampant, and individual lenders told Reveal that they had hired outside auditing firms, which found they treated loan applicants fairly regardless of race.

KEPT OUT

“We are committed to fair lending and continually review our compliance programs to ensure that all loan applicants are receiving fair treatment,” Boston-based Santander Bank said in a statement.

New Jersey-based TD Bank, which denied a higher proportion of black and Latino applicants than any other major lender, said it “makes credit decisions based on each customer’s credit profile, not on factors such as race or ethnicity.”

Reveal’s analysis included all records publicly available under the Home Mortgage Disclosure Act, covering nearly every time an American tried to buy a home with a conventional mortgage in 2015 and 2016. It controlled for nine economic and social factors, including an applicant’s income, the amount of the loan, the ratio of the size of the loan to the applicant’s income and the type of lender, as well as the racial makeup and median income of the neighborhood where the person wanted to buy property.

Credit score was not included because that information is not publicly available. That’s because lenders have deflected attempts to force them to report that data to the government, arguing it would not be useful in identifying discrimination.  

In an April policy paper, the American Bankers Association said reporting credit scores would be expensive and “cloud any focus” the disclosure law has in identifying discrimination. America’s largest bank, JPMorgan Chase & Co., has argued that the data should remain closed off even to academics, citing privacy concerns.

At the same time, studies have found proprietary credit score algorithms to have a discriminatory impact on borrowers of color.

The “decades-old credit scoring model” currently used “does not take into account consumer data on rent, utility, and cell phone bill payments,” Republican Sen. Tim Scott of South Carolina wrote in August, when he unveiled a bill to require the federal government to vet credit standards used for residential mortgages. “This exclusion disproportionately hurts African-Americans, Latinos, and young people who are otherwise creditworthy.”

A case study: Philadelphia

Philadelphia was one of the largest cities in America where African Americans were disproportionately turned away when they tried to buy a home. About the same number of African Americans and non-Hispanic whites live in the City of Brotherly Love, but the data showed whites received 10 times as many conventional mortgage loans in 2015 and 2016.

Banks also focused on serving the white parts of town, placing nearly three-quarters of their branches in white-majority neighborhoods. Reveal’s analysis also showed that the greater the number of African Americans or Latinos in a neighborhood, the more likely a loan application would be denied there – even after accounting for income and other factors.

When Faroul applied for a loan in April 2016, she thought she was an ideal candidate. She holds a degree from Northwestern University, had a good credit score and estimates she was making $60,000 a year while teaching computer programming as a contractor for Rutgers University. Still, her initial loan application was denied by Philadelphia Mortgage Advisors, an independent broker that made nearly 90 percent of its loans to whites in 2015 and 2016.

“I’m sorry,” broker Angela Tobin wrote to Faroul in an email. Faroul’s contract income wasn’t consistent enough, she said. So Faroul got a full-time job at the University of Pennsylvania managing a million-dollar grant.

But that still wasn’t enough. When she tried again a year later, this time at Santander Bank, a Spanish firm with U.S. headquarters in Boston, the process dragged on for months. Her loan officer kept asking for new information, she said – or sometimes the same information again.

By this time, Faroul had been trying to get a mortgage for over a year, and the process itself was damaging her credit. Every time a lender pulls a hard inquiry on a credit report, the score goes down to guard against people who are trying to take on a lot of debt.

“They had done so many hard pulls that my credit score had dropped to 635,” she said.

Then, an unpaid $284 electric bill appeared on Faroul’s credit report. It was for an apartment she didn’t live in anymore. She paid the bill right away, but the bank said it couldn’t move forward.

Civil rights groups and real estate professionals said Faroul’s experience follows a familiar pattern of discrimination by banks and mortgage lenders that has kept people of color from building wealth.

“It’s one thing after another. It’s like pulling layers off an onion,” said Arlene Wayns-Thomas, president of the Philadelphia chapter of the National Association of Real Estate Brokers, which represents African American real estate professionals.

Wayns-Thomas, who has been selling real estate for 30 years, said her black clients are treated differently by lenders.

“They may not like what happened between the last time you were working on this particular job to this one. They may see there was a gap,” she said. “I have seen situations where they’ve asked people for the children’s birth records.”

“The things that happen behind the scenes is what’s disturbing,” she said.

A change of tune from lenders

For Faroul, things suddenly took a turn for the better after her partner, Hanako Franz, agreed to sign on to her loan application. At the time, Franz – who is half white, half Japanese – was working part time for a grocery store. Her most recent pay stub showed she was making $144.65 every two weeks. Faroul was paying for her health insurance.

The loan officer had “completely stopped answering Rachelle’s phone calls, just ignored all of them,” said Franz, 32. “And then I called, and he answered almost immediately. And is so friendly.”

A few weeks later, the couple got the loan from Santander and bought a three-bedroom fixer-upper. But Faroul remains bitter.

“It was humiliating,” she said. “I was made to feel like nothing that I was contributing was of value, like I didn’t matter.”

Contacted by Reveal, the lenders defended their records. Tobin, who turned down Faroul on her first application, said race played no role in the rejection.

“That’s not what happened,” she said and abruptly hung up. A statementfollowed from Philadelphia Mortgage Advisors’ chief operating officer, Jill Quinn.

“We treat every applicant equally,” the statement said, “and promote homeownership throughout our entire lending area.”

Faroul’s loan officer at Santander, Dennis McNichol, referred Reveal to the company’s public affairs wing, which issued a statement: “While we are sympathetic with her situation, … we are confident that the loan application was managed fairly.”

Reveal’s analysis of lending data shows that nationally, Santander turned away African American homebuyers at nearly three times the rate of white ones. The company did not address that disparity in its statement but said it was more likely to grant a loan application from an African American borrower than five of its competitors.

Redlining history repeating

Lending patterns in Philadelphia today resemble redlining maps drawn across the country by government officials in the 1930s, when lending discrimination was legal.

Back then, surveyors with the federal Home Owners’ Loan Corporation drew lines on maps and colored some neighborhoods red, deeming them “hazardous” for bank lending. Leading causes of risk, according to government officials, included the presence of African Americans or immigrants.

This practice has been outlawed for half a century. And for the last 40 years, banks have had a legal obligation under the Community Reinvestment Act to solicit clients – borrowers and depositors – from all segments of their communities.

But in many places, the law hasn’t made much difference. When you combine home purchase loans, refinancing and home equity lines of credit, banks were more likely to deny a conventional loan application than grant it in more than 40 percent of Philadelphia. People of color were the majority in nearly all those neighborhoods.

“You’re killing us here,” said Cindy Bass, a member of the Philadelphia City Council, who worked for a mortgage company before entering politics. The data shows banks have frozen out borrowers in much of her district – including Nicetown, a North Philadelphia neighborhood where boarded-up row houses dot the landscape.

“We need dollars. We need investment,” Bass said, “like every neighborhood needs investment.”

Nicetown is among the neighborhoods redlined in the 1930s. In his assessment, government surveyor W.R. Hutzel said the hazardous neighborhood had some positives, including “new industry – good transportation” and a high school. On the other hand, he wrote, it had a “heavy concentration of negro.”

Today, the economic recovery largely has bypassed Nicetown. Blight is a major concern. Some of the vacant homes, empty for years, have attracted squatters. Although it’s just a few blocks from Temple University Hospital, banks and mortgage brokers largely stay away. Lenders have been particularly stingy when it comes to home improvement loans. From 2012 to 2016, they made 67 home improvement loans here and denied 315.

“It creates this cycle where properties fall into dilapidation for a long period of time,” said contractor Eric Marsh Sr., 48, whose family has lived in Nicetown for three generations.

Marsh started his own construction business “because I saw dilapidation and empty houses,” he said, and wanted to help. But because banks rarely lend here, there’s no capital to improve the neighborhood. So Marsh gets most of his jobs in more affluent sections near the center of town.

“I was wondering why people weren’t purchasing these houses or renovating them,” he said. “As I’ve gotten older and talked to people, I’ve found out that a big part of it is the lack of lending in neighborhoods like this.”

‘It’s like a glass ceiling’

It’s not only historically redlined areas that suffer from a lack of credit. Some neighborhoods that were predominantly African American decades ago have since gentrified and are now majority white. Today, they benefit from a large number of home mortgages from banks.

LISTEN TO THIS STORY

Other neighborhoods that experienced white flight after World War II have become home to a substantial black middle class. And in those neighborhoods, banks are more likely to turn away borrowers.

Four miles from Nicetown, toward the suburbs near the Awbury Arboretum, the homes of Germantown are set back from the street behind garden patios and beautiful stone facades.

This area wasn’t redlined in the 1930s. Government officials colored it green – “the best” – and blue, which meant “still desirable,” and told banks to lend here. Back then, most residents of Germantown were white.

Today, this part of Philadelphia is majority African American, and the homes are occupied by middle-class workers – teachers, nurses and union craftsmen. Yet in every year from 2012 to 2016, banks denied more conventional loans of all types than they made in Germantown.

“It’s like a glass ceiling,” said Angela McIver, CEO of the Fair Housing Rights Center in Southeastern Pennsylvania. “OK, we’ll allow you to go this far, but … you’re not going to go any further.”

 Source: RevealNews.org – By  and  / February 15, 2018
Tagged , , , , ,

Hamilton housing sales to soar through 2016

This will see the Hamilton housing market continue outperforming other locations, according to economists and other industry observers.

Figures from realtors’ organizations stated that as much as 16,000 properties have been sold in Hamilton and Burlington last year, amounting to around 9 per cent more homes sold between January and November 2015 than in the same period in 2014.

This momentum is projected to see Hamilton retain double-digit growth well into 2016, according to Diana Petramala of TD Economics.

While such a rate would be unsustainable in other areas, Hamilton currently enjoys a healthy market fuelled by stable prices and a relatively high per capita purchasing power, Petramala added.

Economists also cited the historically low interest rates as a primary driver of the increased purchase volume in 2015.

Analysts warned that this frenetic growth rate is not beneficial for everyone, though. Especially affected are first-time buyers who get the short end of the stick in bidding wars and lower-income households who might face added pressure in the form of possible price spikes in 2016.

This is seen as a major contributor to the rising popularity of rentals, since those living beneath the region’s income average tend to gravitate towards more affordable options. However, even Hamilton rentals have not proven immune to price increases. In fact, rents rose as sharply as 3.8 per cent last year, mostly due to gentrification.

Source: MortgageBrokerNews.ca by Ephraim Vecina | 14 Jan 2016

Tagged , , , ,

Is Hamilton the Canadian Brooklyn?

After years of downturn, Brooklyn made a huge turnaround. Is Hamilton following its lead?

Two cities go under the microscope Monday to find an answer to a burning question of identity: is Hamilton actually Canada’s answer to Brooklyn?

It’s all part of an Ambitious City event hosted by the Hamilton Chamber of Commerce that explores the cultural identity and economic heartbeat between the two.

Considering resurgent Brooklyn has been on an upswing for years and is often considered one of the coolest places in America, Hamilton and its chamber would be positively giddy at that comparison bearing fruit.

But can you really compare Hamilton to a bustling metropolis of 2.6 million people?

Let’s try it out.

Industry downfall and finding an identity

Once part of the industrial heart of the U.S., manufacturing in Brooklyn dropped by about half from the 50s to the 90s.

Things were gloomy for quite a while, until neighbourhoods like Williamsburg and Bushwick sprang back to life starting in the late 90s – mostly fuelled by artistic types fleeing high rents in Manhattan.

Sound familiar?

There is a caveat here, though. Brooklyn’s revival started much earlier than Hamilton’s, so they are way further along in the process. If Hamilton is really lucky, the city could be where Brooklyn is now in about a decade.

Do they have LRT?

Public transit in Brooklyn destroys Hamilton. Full stop.

Sure, LRT is coming, and that will radically change how people get around in Hamilton. For some, it’s a beacon of modern transit that will haul Hamilton into the future (or at least to the present).

But the New York subway system is one of the best in the world. Daily ridership numbers are in the millions – meanwhile in Hamilton, we’re still waiting for HSR to get on Twitter. (But at least we got Presto on buses before Toronto did!) Edge: Brooklyn.

Is Manhattan Brooklyn’s Toronto?

Hamilton’s Toronto complex is so deeply ingrained that “Argos suck!” could be a Balsam Avenue baby’s first words.

There’s a definite rift between Brooklyn and Manhattan, too – and a deluge of people have moved out of there because they can’t afford rent.

Take this “luxury” Manhattan two-bedroom, listed at a startling $5,895:

Brooklyn apartment

Two beds, two baths, and almost $6,000 in Manhattan. (Streeteasy.com)

You aren’t living in Manhattan these days without a heavy cash flow. There’s some definite disdain in Brooklyn for its high-priced neighbour. Edge: Tie, different scales but clear parallel.

Rents

So if Brooklyn is a haven for young people and artists fleeing the rest of New York City, are the rents comparable to Hamilton?

Yes and no. A two-bedroom in trendy Williamsburg can run you over $4,000, which is a rarity on local equivalents like James Street North or Locke Street. Keep in mind that New York is one of the most expensive cities in the world, behind only places like London and Monaco.

In some more far-flung neighborhoods and artist enclaves, you can share a two-bedroom for maybe $1,400. That makes it a steal by New York standards and an analogue to Hamilton compared to Toronto’s higher rents. Edge: Hamilton

But can I get a decent cup of coffee?

You can tell a lot about a place by its coffee – and as the birthplace of Tim Hortons, Hamilton has a special claim to the fuel that keeps Canada going at hockey rinks on weekends at 6 a.m. There is also a burgeoning coffee culture in many areas for those who like their brew a little more upscale.

In Hamilton, a cup off coffee will run you around $2 to $3 on average. In Brooklyn, you can get a coffee cart cup for a buck, or go to Blue Bottle Roasters and shell out $10 for a cup. Edge: Brooklyn, but only because of the carts.

Do they have any famous musicians?

Musicians: Brooklyn has Busta Rhymes, Jay-Z, The Notorious B.I.G. and Peter Criss. Hamilton has Teenage Head, Daniel Lanois, Arkells and Tom Wilson. Tough call – but nobody likes Peter Criss, so edge: Hamilton.

Their bridge vs. our bridge

The Brooklyn Bridge is one of the most iconic bridges on earth. A guy drove a dump truck into the Skyway one time. Edge: Brooklyn.

Are there any famous Brooklyn comedians?

Brooklyn has Jerry Seinfield, Hamilton has Martin Short. That’s gold Jerry, gold! Edge: Brooklyn.

Their teams, our teams

The Ticats are deeply entrenched in Hamilton’s soul, and the now-OHL Bulldogs are keeping hockey alive in the city. Brooklyn has two major franchises: the NBA’s Brooklyn Nets and the NHL’s New York Islanders but both are fairly new to the city. It’s been a long time since the Brooklyn Dodgers. Edge: Hamilton (because we’re worried Angelo Mosca will come after us otherwise).

What about parks?

Hamilton’s most famous park is probably Gage Park (it’s more “park-ish” than Gore Park, which is still arguably the heart of the city). Brooklyn has the iconic prospect park, which was built by the same designers as Central Park. Edge: Brooklyn.

Their view, our view.

We love our escarpment, our waterfalls. The views from Sam Lawrence Park or the Dundas Peak are sweet. Their view however, is sunset of the Manhattan skyline. Edge Brooklyn.

Brooklyn skyline

This is the view from the Brooklyn Promenade. (Rick Hughes/CBC)

Source:  Adam Carter, CBC News Posted: Nov 14, 2015

Tagged , , , ,