Liars or Clueless

(The information in this post was originally sent out to  THE Real Estate Analyst!!! readers on October 8th 2009. The only changes were the removal of some informal "chit-chat" and, since it was written by me, the usual typos and misspellings.)

It continues to amaze me that, as the world continues to suffer from the effects of the collapse in the country's real estate market, the "Boston Globe" steadfastly refuses to tell the story correctly. Are they liars, are they clueless or, as is more likely, has the liberal bias of the editorial pages  bled to the rest of the paper. Do they "cherry pick" the details they use to present a story the way they want, regardless of ALL the data and how that might paint the story.  It's gotten to the point where, when the "Globe" presents a name or an address in a real estate story, I go to the Registry of Deeds online, look up the data and the story is invariably different from the story the "Globe" presented, not sometimes, not often, not even most of the time, but in just about every case.  I'm writing because of the article that appeared in the "Boston Globe" of September 26th titled "A Move Against Foreclosures" by Jenifer B. McKim.

In this tale of woe and hope we meet Frances Louis who has moved into an empty condominium on Cobden Street in Roxbury that has been vacant since it was foreclosed by Guaranty Bank in Wisconsin. We learn that she, her husband and their children were evicted from their home when her mother lost her home to foreclosure in Mattapan. We're told that Ms Louis, and her father, tried to buy her mother's home but were unsuccessful. But now she is being helped by the do-gooders at "City Life/Vida Urbana" to occupy the condo until a resolution can be reached via various agencies like "Boston Community Capital".  Ah, out of desperation comes hope.

And now for the real story about Ms Louis.

It appears that Ms Louis, etal lived at 27 Duke Street in Mattapan that was foreclosed and the "Foreclosure Deed" was recorded on 01//7/2008. The owner of the home was Yvonne Price (I assume that is her mother).  Ms Price purchased the home on 05/23/2005 for $360,000 with a mortgage loan from Long Beach Mortgage for $324,850.  (Long Beach was a major subprime lender that was owned by Washington Mutual, the country's largest thrift before it collapsed with the real estate crash and is now part of JPMorgan Chase Bank.)  Since she got a loan from a subprime lender we can assume she didn't get the best mortgage rate, but it wasn't one of those villainous adjustable rate mortgages (ARM) .. it was a thirty year fixed mortgage. But she was in financial trouble from the start.

Though she purchased the home in May of 2005, Ms Price was sufficiently in default by November and the "Notice of Intent to Foreclose" was recorded on 11/17/2005, six months after she purchased.  Considering how long it takes to foreclose on a mortgage it's hard to image more than two payments we ever made.  A second "Notice" of a foreclosure was on 12/27/2006 that resulted in the Foreclosure.

I have a possible reason why Ms Louis and her father couldn't buy the home, you see, Frances Louis and her husband, Yves Louis owned the home before her mother purchased it. The "Globe" didn't find it necessary to tell their readers that on 06/29/1999 Frances and Yves Louis purchased the home at 27 Duke Street for $135,000 with an FHA mortgage to First Eastern Mortgage for $134,900.  It turns out that Mr and Ms Louis weren't much better than her mother at paying the mortgage.  On 04/22/2002 a "Notice of Intent" to foreclose was filed against them.  Then ANOTHER notice was filed on 06/20/2003.  In order to stop the foreclosure, the Louis' sold the home to James E Wilson, a real estate investor who's name shows up frequently in "peculiar"   Dorchester and Mattapan transactions, for $214,000.  It was Mr Wilson that sold the property to Frances Louis' mother for $360,000 (pocketing a cool $145,000 for his trouble) .... the mother that then lost the home to foreclosure.

But the story gets even better. The blame for housing bubble and bust has often included charges of "predatory" lending and "easy" credit .... but this is nothing new, it also happened in the 80's real estate bubble and similarly, resulted in waves of foreclosures in largely minority parts of Dorchester and Mattapan.... and Ms Louis' parents, Yvonne and Jerry Price are prime examples.

This sordid tale really begins back on 06/20/1977 when Jerry and Yvonne Price purchased a home at 15 Armandine Street in Dorchester for $24,000 with a mortgage to Home Savings Bank for $21,600. (Hey ... I thought banks didn't write mortgages in Dorchester at the time ... I guess they did)  Things went fairly well for the Yvonne and Jerry for about 5 years before property values started rising making it possible for them to start using their home as an ATM.   First it was a $11,500 second mortgage from "Federal Reserve Bank of Boston Employee Federal Credit Union" on 07/18/1983.   Then they upped the stakes with a $14,600 mortgage to the same Credit Union on 10/20/1986.  Then the borrowing spins out of control.  There is the $55,000 mortgage to Mortgage Management Associates on 10/25/1989, and $77,000 from Suburban Equity Corp. on 07/24/1990, then $84,625 from Lee Funding on 11/25/1992, and soon the death spiral is complete.

Ms McKim's article gives us a victim and people trying to help.  We get Frances Louis claiming that she has "a “moral’’ right to live in the newly renovated building on Cobden Street".  But they didn't seem to feel they had a "moral" or even a legal obligation to pay the bank the money they borrowed.  Ms Louis also tells us that “Now is the time for banks to step up and help families instead of putting them out.’’ and. “There are all these vacant, empty places for no reason.’’  In fact, she and her parents HAD been helped by the banks ...... MANY times, yet always seemed to reneged on their side of the agreement,  you know, the one that says "you'll pay the bank back".   And Ms Louis KNOWS why those buildings on Cobden street are empty. The owners of the condo units were deadbeats .... just like she and her parents.

Is there a reason the "Globe" doesn't tell us the REAL story of multi generational deadbeats?  THAT part of the housing boom and bust the "Globe" doesn't seem to want to write about.  But it also raises another question ..... "Where are the REAL victims?"  If, when you look at the real data instead of what the "Globe" reveals, virtually every "victim" presented is really just a stiff that doesn't do a real good job of paying bills.  How much of the lending was "predatory" and how much was just stupid people making stupid financial decisions and now asking for assistance because they are "victims".

I KNOW there are real people who were taken advantage of ..... incomes inflated, given bad loans when they could have gotten better terms, or the elderly who's families got them to sign mortgages they couldn't possibly pay back.  I've spoken with them.  I know they are there!  So why does the "Globe" give us deadbeats and fails to tell real financial history?   Could it be that the "Globe" doesn't want the real story to get out???