Across neighborhoods in Brooklyn, peaceful dreams are being interrupted. James Nowello is a Brooklyn resident from Bushwick who like most homeowners is dealing with the consequences of a declining housing market.
In the mid-2000s Bushwick, Brooklyn was experiencing a huge foreclosure crisis. As of late 2008, it was one of the highest rated foreclosed neighborhoods in New York City.
James Nowella is an 82-year-old African- American. He has lived in Bushwick for 44 years. His home on Hancock Street is his prize possession. He no longer has to pay a mortgage on his property and even rents a floor out to a tenant. But, even though it may seem like the housing market has not affected him, it has.
“Foreclosures comes from the banks,” Robinson says, the manager at Kanduit Realty. “Once a default is on the loan, the bank contacts lawyers who instruct insurance companies. They then apply for a court hearing. It’s just a long process.” The process may be long but the effects on neighborhoods and homeowners are longer.
In neighborhoods like Bushwick, Brooklyn, once multiple properties begin to get foreclosed, the value of every home goes down. Though Mr. Newallo may be able to remain debt free when it comes to home loans, the value of owning a home has decreased for him dramatically, not just in price but also in meaning.
“Houses stay empty and it doesn’t help the area at all. There are two houses on the other side of the street that have been abandoned for so long that they dry rotted and no one wants to live there. The value on all the homes around goes down,” he says, with a sway of his arm from left to right, in an attempt to point to the numerous houses lining the street. “When you’re young, owning a home means stability. It makes you feel as if you are a part of the community,” he continues. “Yet, the community is slowly deteriorating when debt forces families out of their homes.”
Foreclosures usually start in a variety of different ways; hopeful homeowners and easy lending banks are two of the main causes. Homeowners purchase homes outside of their price range and suffer the consequences of high interest rates and debt and banks suffer the consequences of loans defaulting.
(Photo of a foreclosed home in Bushwick- bushwickbk.com)
“Before you could just come in and get a mortgage,” says Roxana, a Bank of America employee. “You could be a baby sitter, though some people do make a living off of that, and get a mortgage. You did not need proof of income at one point. Now, restrictions are in place to prevent debt because it affects the bank. You have to prove that you can pay back a 30-year or whatever amount of years mortgage. A lot of banks are in trouble and we have to take measures to protect ourselves.”
Banks like Bank of America, to prevent a drastic increase in foreclosures and debt for banks, now require more documentation for home loans. Applicants need to provide proof of income, tax returns and even a higher down payment. This screening helps weed out those who will eventually end up in foreclosure as a result of debt and help homeowners who are in good standing with banks like Mr. Nowella.
“The thing about this neighborhood is you have a lot of multi-family homes. You mostly see foreclosures in single-family homes because there is no extra income from tenants,” Robinson says. “Obama has a new plan in place that will help families refinance their homes. This is a possible solution to foreclosure.”
Obama’s foreclosure prevention plan allows families to refinance. It is for those who do not owe more than 105% on their homes and who are in good standing on their current loans. This $75-billion plan also includes modifications of current loan interest rates which will be changed so that the monthly rate is affordable according to the homeowner’s income. Due to high interest rates, homeowners end up paying just interest rather than the original loan. This solution will make it easier for loans to be paid off each month and the debt from people along with banks will hopefully decrease.
But Mr. Nowella has a different solution in mind–one put together from experience. It involves a decrease in homeowner spending and an increase in rational thinking. “If you have $1,000 and buy a house for $2,000 then you know you are in trouble. People go out and spend money without thinking and end up biting off more than they can chew.”
The local community board did not have provide any suggestions for foreclosure relief. According to the secretary, the community board “does not handle foreclosures. We’re a public organization whereas foreclosure is more of a private issue. Families come in and we refer them to someone who can help.”
Private companies who can provide education on foreclosure prevention are not hard to find in Bushwick. Most realty companies provide foreclosure prevention counselors who are there to assists families who may be at risk of facing foreclosure. A prevention counselor is there to help make a financial plan and negotiate with mortgage lenders. There are also Neighborhood Housing Services set up throughout the city. The closest one to Bushwick is in Bedford Stuyvesant, located on Gates Ave. They provide foreclosure prevention counselors along with home ownership counselors, loan officers and seminars to help families deal with all of their housing issues.
“Fewer people are buying houses because even though the prices are down, they are still unaffordable. Now, you see an increase in businesses buying homes,” says Robinson. Ultimately, even though foreclosures have brought homes prices down, the economy still plays a major factor in homeownership. Unemployment is still on the rise and sadly neighborhoods like Bushwick and homeowners like Mr. Newallo will continue to suffer the consequences of vacant homes.
That is so true, houses around my neighborhood are still for sale and they have been for a couple of months. I think no matter how much the price goes down, most of them will still be unaffordable.
What is really great about the reporting for this article is that you spoke with a Bank rep. from the area. This gives the inside look on the social aspect and on the banking industry. Robinson’s story also fits well in a situation that has been magnified nationally. Although this is just a tiny portion of what is going on in the foreclosure industry, it poses a big problem for Bushwick and should be focused on more often by Metro media coverage, instead of the national crisis as a whole.
I can relate, there are so many houses in my area that are up for sale. People are losing their jobs and homes. Its really sad….
This article has very nice reporting. The quotes are rich and have wonderful detail in them. The writer chose an interesting perspective on a matter that has been covered a lot, foreclosure, that is. As opposed to a person who went through foreclosure, the article exposes an unusual subject- a homeowner who has already paid off his mortgage. He is the keen observer of the neighborhood that has been crippled by foreclosures.
I like that the conflict is covered through the use of different voices (who all have something special to say); and shares the possible solutions to the problem.