Posts Tagged ‘tenants’

Can the bubble’s wounds be healed?

New from me, in the Jan/Feb American Prospect: A look at why reversing the damage caused by urban real estate speculation in the bubble will be easier said than done.

Short answer: Treasury and the FDIC don’t want to force already-teetering banks to take losses. But that leaves cities like New York littered with buildings their owners can’t afford to maintain (or even finish) – and anyone living in or near these structures watching them decay.

Tuesday, January 12th, 2010 | Tags: , , ,
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New York’s government blockade

The final chapter in Our Lot is devoted to renters, and looks at property owners’ successful efforts to curtail tenant protections through state-level lobbying. Even if you don’t live in New York, by now you’ve surely heard about our state Senate’s shameful breakdown. As Tom Robbins points out in The Village Voice this week, the Senate was jut one day away from voting on a bill that would have made it much more difficult for landlords to pull apartments of out of the state’s rent regulation system when two Democrats defected to the other side of the aisle and brought New York’s legislature to a standstill. The deliberate chaos is also preventing, among much other action, urgently needed gun regulation and a welfare benefit increase in one of the stingiest states in the nation.

It’s perversely heartening: opponents have to resort to undermining democracy because they would never prevail politically on the merits. In the 1990s, when the legislature first tore apart rent regs, 70 percent of New Yorkers were in favor of government protections for tenants. (On the other side: 93 percent of economists polled in 1992 agreed with the statement “a ceiling on rents reduces the quality and quantity of housing.”)

Now that an estimated 200,000+ apartments have been yanked out rent regulation since 1997, does that mean that New Yorkers are hungrier for change, that much more burdened by high rents? Or has the mass deregulation killed a big part of the political constituency that has fiercely supported rent regulation? Someone oughta do a poll, but it’s a good bet that a majority still support rent regulation.

Wednesday, July 1st, 2009 | Tags: , ,
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BookCourt notes

Thank you to everyone who turned out last night to BookCourt in Brooklyn, New York, to hear me read from Our Lot and offer some thoughts on how politics and ideology, along with a program of financial industry deregulation, made the real estate bubble possible.Alyssa at BookCourt

I wrote up some notes for the talk, and they sum up two things prospective readers ought to know. One, why did I write Our Lot? And now that I did, what story does the book tell? Each has a two-part answer:

Why I wrote Our Lot
In the fall of 2005, I asked the Mortgage Bankers Association to send me their quarterly mortgage delinquency report. I was looking to see how Federal Housing Administration-insured loans were doing, in the wake of a fraud scandal. But much uglier numbers leaped out from the columns of data – foreclosure rates in Ohio triple the national average, and a subprime foreclosure rate of 13 percent. I wanted to know what was going on, and why. When I learned that the streets of Cleveland, Dayton and other cities were lined with vacant houses, I wanted to know how it had happened. This was the first time I’d ever heard of a mortgage-backed security. How could investors make money when house after house was going into foreclosure, often after being flipped again and again by real estate speculators at rigged prices? This didn’t make sense. The more questions I kept asking the more nonsensical the answers were, and I resolved to find out the truth.

Why else I wrote Our Lot
That spring a condo conversion of our apartment building pushed my husband and me out of the apartment where I’d lived for eight years, and we decided, rather impulsively, to buy an apartment elsewhere. We did it for one simple reason: continuing to rent meant that we could have to move again at our landlord’s whim as soon as a year’s lease expired. We bought not because we wanted to, but because there was no other way to have a stable housing situation. The upheavals of the real estate bubble became very personal to us. Almost no home or place was untouched by this tsunami of credit that crashed through the economy, and I thought it was urgent to share my story while telling so many others in the book. The real estate and credit bubbles have been a tumultous, transformative national experience and I hope in some small way that the book can chronicle what that felt like to live through, while explaining what exactly it was that infected the economy.

What the book is about
How did homeownership go from being the American dream to the American nightmare? How did we go in barely a generation from having home mortgages very difficult to come by to their being so ubiquitous, and generous, that homeowners could extract cash based on their property’s appraised value – and any home equity they were managing to build was just as quickly siphoned off by lenders?

What the book is also about
At its heart the real estate bubble is as much a political story as a business one. Entrepreneurs will do whatever they can within the law and sometime outside it to make money – that’s their job. It’s government’s duty to set the rules of the road. In Our Lot the most important actors are from government – they’re the regulators and presidents who pushed to make mortgages available to all as generously as possible, in a belief, one very genuinely held, that this would build a better world. This is the story of how that belief emerged and why the world it created was destined to fall apart.

Friday, June 26th, 2009 | Tags: , ,
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How many lied?

One vital question that I had to grapple with in my book, and that is central to decision-making right now by Treasury, banks, and investors as they try to figure out what mortgage backed securities are actually worth, is ridiculously basic, and the answer just as elusive: How many borrowers lied on their mortgage applications? Not just about their incomes or debts, but even whether or not they actually planned to live in the homes?

Some analysts have provided important clues, though so far only on loans that end up failing. Frank McKenna at BasePoint Analytics, for instance, ran tests on samples of mortgages that went into default very quickly and found evidence of “egregious misrepresentations” on anywhere between 30 and 70 percent of them, including widespread false claims about owner occupancy. Now a renters’ group in California, Tenants Together, provides another nugget of insight [PDF]: among the tenants in homes going into foreclosure who’ve called the organization’s help hotline, between half and two-thirds lived in houses whose landlords had claimed on their mortgage applications that they’d be living in the homes, presumably to obtain more favorable mortgage terms. Kudos to Tenants together for taking the trouble to examine the property records.

One huge challenge with Treasury’s “legacy asset” purchase plan is that it’s a moving target – as unemployment rises and property values fall, the likelihood that borrowers will go into default, and therefore diminish the real value of the securities that include their mortgages, grows steadily. But there is much more we don’t know about the fundamentals of the mortgages in the pools — and never find out until they’re already heading into foreclosure. That should rightly scare investors, and us as taxpayers financing the toxic asset plan.

Saturday, April 11th, 2009 | Tags: , , ,
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