Bushwick Is Dying
The mortgage crisis is eating away the wealth of several generations of Hispanics.
El Diario/La Prensa/New America Media, Investigation, , Eva Sanchis Posted: Feb 09, 2010
Editor's Note: This story, which originally appeared in El Diaro/La Prensa, was produced as part of NAM's Stimulus Watch coverage and was funded with a grant from the Open Society Institute. It is part one of a three-part series.
NEW YORK – Ramona Ortiz, 46, looks inside a big black bag of accumulated invoices for an explanation of why she and her family are about to lose the home that has been theirs since 1972.
“Honestly, I didn’t check the papers properly, and who knows what is in there,” she admitted, suspiciously looking at the pile of documents produced by the mortgages the family acquired in the last few years.
That black bag hides a bitter reality: In 1998, Ramona’s father, José Dolores Ortiz, had paid in full the $21,750 cost of the three-story house on 931 Bushwick Avenue. Today, he owes nearly $330,000 for the same house.
During the last 11 months, José, a 78-year-old Puerto Rican retired worker of a watch trading company, who receives a $950 pension, has been unable to make the monthly $1,684 mortgage payments. Now he could lose the house where he lived with his wife until she passed away, and where his four grandchildren were born, two of whom still live with him.
“My father worked all his life, even after retiring,” said Ortiz, who grew up in that house. “My parents always paid their bills on time; they paid their mortgage three or four months ahead… This is something new. I didn’t know what a mortgage was until we started with this”.
Ortiz claims that everything began when her father decided to get another mortgage on the house in 2001 to help her pay a credit card debt.
According to public records, he later refinanced his mortgage five times between 2001 and 2007, which increased the debt from some $29,000 in 2001 to nearly $330,000.
During the years prior to the recent real estate collapse, the predominantly Hispanic Bushwick neighborhood, home to nearly 130,000 people, high-cost loans (subprime) and costly refinancing proliferated, encouraged by brokers and mortgage companies, many of which were based in faraway states.
“There was the start of a phenomenon at one point where brokers would go back to the homeowner every year and get them to refinance,” said Sara Manaugh, an attorney who represents low-income homeowners facing foreclosure at South Brooklyn Legal Services. “People were encouraged to treat their homes as piggy banks, taking the cash out from their refinancing; they were told that their property would continue to appreciate, but they got another bad end of that deal.”
Closing costs should be around 4 percent to 6 percent of a new loan, but with unscrupulous brokers many people ended up paying 8 percent or 10 percent of that loan amount to their brokers, according to housing counselors from the city.
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