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NARR: Canarsie is a low-rise, mostly residential neighborhood where many streets are lined with single or two family houses, and most of the residents are African American. Rebeca Gamez, a fair-lending advocate who works for the Neighborhood Economic Development Advocacy Project, or NEDAP [NEE-dap], says minority neighborhoods have a disproportionate share of subprime loans.
ACT: GAMEZ1: Unfortunately there is a lot of abuse in the subprime lending market, and especially in communities of color and low income neighborhoods there is a correlation between high cost subprime loans and foreclosure and race. [0:11]
NARR: Canarsie is not a low-income neighborhood. Its median income is actually higher than Brooklyn's as a whole. But Gamez says in the past, many banks did not do business in minority neighborhoods—this is called redlining. As a result, many residents could not get mortgages. When the subprime boom began, lenders swooped into the area to offer the new loans. Gamez says the way these mortgages came into the neighborhood was almost redlining in reverse.
ACT: GAMEZ2: So, instead of financial institutions coming in and making good loans, you have these predatory lenders and predatory mortgage brokers who are preying on the fact that the individuals have been starved of traditional financial services. [0:13]
NARR: A subprime loan often starts out with a low "teaser" rate that shoots up after a year or two. What's happening now, as rates re-adjust for many borrowers, is that they are facing steeper payments and end up falling behind. Some cash-strapped homeowners then try to sell their houses for less than the purchase price. In some cases, they even offer to sell their homes for less than what they still owe their lenders. Canarsie real estate broker Darryl Connor says that 80 percent of the sellers he represents in the neighborhood are in this predicament.
ACT: CONNOR1: when they come to us, they're pretty fed up at that point. They just want to get out. They come in and say Mr. Connor, let's just get this done with. Let's get this house on the market, I'll take an apartment. They're actually looking for relief because they're being hounded by debt collection, bank is calling them. It's hard for them to live in that house in peace at this point. [0:20]
NARR: Connor opened his real estate office in Canarsie two years ago, when the market was still thriving. Houses were selling for between 500 thousand and 700 thousand dollars, and there were more buyers than houses for sale. Now it's the other way around. Connor has trouble closing deals on houses. The number of foreclosures has also risen. In 2004 and five, there were around 230 foreclosures in the neighborhood. After that, says NEDAP's Rebeca Gamez, the number went up sharply.
ACT: GAMEZ3: In 06 that jumped to 315. And one can imagine now that we're in 08 that number has increased substantially. I think that Canarsie is a community that is going to be affected by the high rate of foreclosure now or in the near future. [0:15]
NARR: Real estate agent Darryl Connor says banks are waiting longer than they used to before foreclosing, in hopes of recouping more of the money they lent. He says he will have a better idea whether home prices will continue to fall in Canarsie during the spring, when most people shop for homes.
SOC: Annie Lok, Columbia Radio News.