potrero view

September 2009

Housing Crisis Dislodges Bayview’s African-American Population

By Andrea de Brito

Over the 20 years Pastor Kenneth Sampson has led the New Home Missionary Baptist Church in Bayview, he’s seen a steady decline in the community’s African-American population.  According to Sampson, upwards of a quarter of black residents cashed out their Bayview homes and relocated to the East Bay during the last decade’s housing boom.  Now that the market has busted, those same suburbs are dotted with foreclosures.       

“The Bayview-Hunters Point had a lot of older black people who owned property.  They died, and turned it over to their children. Children would take the property – now worth $300,000 to $500,000 – and buy these stupid loans and move to Antioch, Pittsburg, Vallejo, Fairfield, and Tracy,” said Sampson. “Now their houses are upside down. Their jobs are not even secure.” A relative of Sampson, who makes “good money,” bought a house in Tracy, in partnership with another family member, but was unable to pay the mortgage after the monthly payments started to rapidly escalate.  One now lives with in-laws in Pinole; the other moved in with a friend in Antioch.  “He went from homeowner to renting a room,” Sampson said. “The loans went up, and because you miss a couple of payments, you don’t qualify for loans. It happened to the majority of the people. It affected the neighborhood.”

According to “Mary,” an Antioch-based real estate agent who preferred not to be named, and who is originally from Bayview-Hunters Point, financial products that are now considered “toxic” – which enabled property owners to cash out their equity, followed by escalating mortgage payments – are the primary reason for the foreclosure crisis.  Recessionary job loss and health problems leading to astronomical medical bills also play a role.  

As housing prices skyrocketed in the last decade, homeowners took advantage of their increasing property values by refinancing their original loans, taking money out of their equity for home improvements or credit card payments.  Or they sold their San Francisco properties and moved to the East Bay to buy a bigger and better “money house.”  “Let’s say I go to a realtor and the realtor says my house is worth $450,000. Do I go buy a $450,000 house? No, I go buy a $650,000 home with a loan,” said Sampson. “And that’s what’s kicking my butt.”   According to Mary, during the run-up of housing prices most prospective homeowners didn’t qualify for government bank or veteran loans, which offered fixed interest rates and down-payments as low as three percent.  To close more deals, banks and finance companies lowered or eliminated their credit standards, offered minimal down-payments, and signed borrowers into loans that carried high fees and inflated as much as three times within a year or two of closing.

 “People used their house as an ATM machine. Some people did home improvements, which would increase the value of the house. They weren’t worried because they thought they would be able to sell their house later and make that money back,” said Mary.  A Bayview property that was purchased by someone’s parents for $30,000 a half-century ago would be worth $260,000 one day, and upwards of a half a million the next, according to Sampson.  East Bay buyers traded their family home for a bigger house with pools and lawns.

“Many of the people who obtained those loans were not qualified,” said “Linda,” another Antioch-based real estate agent who preferred not to be named.  “Mortgage Broker’s padded numbers, and everything was stated income.  There were no verifications made.  Many borrowers took advantage of Washington Mutual’s infamous pick a payment program, which gave the borrower four different options.  Most went into these loans intending to pay the full monthly payment, but wound up choosing the lowest payment.  That meant astronomical numbers in negative amortization.  I know people who added thousands of dollars to their loan balance every single month.  One I know borrowed $700,000 and at the end of the second year, the loan balance was $804,000.  More than $100,000 over what they originally borrowed.  When the market crashed they ended up with a house worth $350,000 and a mortgage of $804,000.  No way to refinance that one.” 

“You get a chance to move out to the suburbs, you get a chance to send your kids to a great school, they’ll be safer, you can buy a house with a lawn; you might as well take advantage of that,” said Sampson.  For many of the people that moved to the East Bay, such as Muni and Sunset Scavenger drivers, the commute to their jobs didn’t seem that bad because they got off work early enough to avoid end of the day traffic, he said.

The exodus from Bayview to the East Bay took its toll on neighborhood churches.  Many Bayview residents who moved east continued to attend Sunday services at their San Francisco church.  But after several months they grew tired of the commute, said Sampson.  To meet the shifting demand, pastors opened congregations in the East Bay.   “In the suburbs, churches are big. In Antioch and Pittsburg, you got a church that covers the whole block. Why would you come down to the little one?”  With the bursting of the housing bubble, many of theses new churches closed, he said.

Housing was just one of the factors that prompted Bayview residents to leave their community.  Families fled to the suburbs for the same reasons urban dwellers have done so for the past century:  to find better amenities.  “There’s no supermarket here. There’s not adequate transportation,” said Sampson, who was a district manager for Lucky Stores before becoming a pastor. “It’s happening by design.  There are no advocates to preserve housing for low-income African-American residents of San Francisco,” said Diane Wesley Smith, of Bayview Hunters Point Real Estate Professionals, and a candidate for next year’s Board of Supervisor’s race in District 10, which includes Bayview-Hunters Point.  “They made it very attractive for people to move out to Antioch and Pittsburg.”  Smith called the African-American migration out of San Francisco an “exodus to uncertainty.”

In 1951, Zerline Dixon, who moved to Bayview-Hunters Point from Louisiana to work as a Navy shipyard welder, bought her first house in Candlestick Heights and moved her five children in.  Over the next 16 years, Dixon bought another six homes – four for her children, one for her granddaughter, and one for her mother – all on a janitor’s salary.  In the 1980s, Dixon’s granddaughter Lola Whittle followed in her footsteps, buying her first U.S. Housing and Urban Development (HUD)-subsidized home at the age of 23.  Whittle remains in the neighborhood, but has seen much of her community disappear over the years.  Black residents make up only 6.8 percent of the City’s population, half of the nation’s average of 12.1 percent, and a fraction of what it was 20 years ago.

“My grandmother would get a house, live in it, get the mortgage down, then say ‘here’s your house; you owe $13,000’ and they’d pay the rest. By then, the children were working and they could afford to take over,” said Whittle. “On a variable loan, they sold you a dream. After three years you could refinance, but in three years, everything changed. Nobody would give you anything. The value of the property went down. I’ve always stayed with a fixed loan because I grew up with this grandmother of mine that didn’t ever do it any other way.”

“Variable will sound good because a fixed interest rate is always going to be higher than a variable. With [Alan] Greenspan, when he kept lowering the interest rate, that was great. But for people who got those variable loans, they lost their properties because their monthly mortgage may have gone from $1,200 a month to $4,000,” said Whittle.  At one point Whittle considered investing in a property in a low-income area of Oakland, but decided not to; she would have had to take out a variable loan.

San Francisco’s African-American homeowners and renters have also been disproportionably hit by the Great Recession.  Last year there were 667 foreclosures in Southeast San Francisco, with upwards of one-third of those in Bayview-Hunters Point.  According to Zackery Mack-Westrom, a foreclosure prevention counselor at the Bayview Housing Development Corporation, loan modifications are not available to everybody. “It’s all about income stability and how big a person’s budget deficit is. Someone with a budget deficit of $1,000 or more per month probably doesn’t have a huge chance,” said Mack-Westrom.  “I’m not seeing loan modifications actually happen,” agreed Linda.  

Bayview-Hunters Point still has one of San Francisco’s highest homeownership rates, according to Mack-Westrom. Most of these homeowners, he said, bought their property more than 20 years ago.  From the late 1940s through the 1970s, thousands of African-Americans in the Fillmore District were displaced by the San Francisco Redevelopment Agency’s urban renewal program. Almost 5,000 businesses, 2,500 households and 883 Victorian homes were demolished, displacing more than 5,000 families.  Many African-Americans moved to Bayview, East Palo Alto, Berkeley, and Oakland, and, more recently, Antioch, Pittsburg, Brentwood, and Stockton.

Some African-Americans see Bayview-Hunters Point’s redevelopment as another Fillmore in the works. “This is not the first time this has happened,” recalled Sampson. “Way back in the 60s, when my mother was living on Northridge Road, there was a planned exodus from this community. They were offering housing with really good rates through HUD, to go to Palo Alto. At that time, Palo Alto was not incorporated and did not offer any services. A lot of people fell victim to that, including my mother. We were going to buy a house in Palo Alto, but my mother changed her mind.”

Whittle’s mother, Yvonne Dillon, remembers attending town hall meetings at which former mayor Willie Brown advised Bayview residents not to sell their homes. “If we sold them now, we’d get ‘mini’. If we held on, we’d get many,” said Dillon. “Many elderly died off and left their homes to their children, many of whom were drug addicts. Many decided to go back to the south, where their roots were. Some thought they could get $700,000 to $800,000 for a house and pay cash and get six bedroom homes in the suburbs.”

“My mother was thinking of moving to San Jose in 1980,” said Lola Whittle. “My boss, who was a real estate attorney, said ‘Whatever you do, do not leave this City and purchase that property. Anything you own in San Francisco is going to be worth it. Twenty years from now, you’re going to see a transition of people moving from the suburbs – upper class and white people – and wanting to live in the City.’ So we held on,” said Whittle.

“Now you have people moving to the suburbs. You look at Richmond and there’s two people getting killed a day. Those people are still commuting to the City. You do that and after two or three years, it’s tough,” said Whittle. “And BART is going up. Everything is going up.”

“In order to remain [in San Francisco], you have to work. You have to make some kind of achievement so you can be part of this development and growth,” said Whittle. “I’m not here because I’m special or because somebody gave me anything special. It’s because I have been working since I was 15. If my mother had stayed on welfare, maybe I wouldn’t have had so much tenacity and perseverance.”

Maria has been cleaning houses in Antioch for the past quarter century. She was a renter until eight years ago, when a friend who worked for a bank persuaded her to buy a home. “We didn’t know how to buy a house or what to do. When they tried to sell us the house, they gave us the idea that it was much easier than it turned out to be,” she said.  Maria had been on time with payments until about two years ago, when she decided to refinance the loan to remodel the kitchen and replace the carpet. She thought it’d be a good investment.  The interest on her monthly payment doubled two years after she refinanced.

“I thought it would be fixed for 30 years. The bank people didn’t tell me it would go up,” said Maria, who can no longer keep up with the payments.  “I clean houses and right now there’s not very much work. This is one of the reasons I cannot pay,” she said. “It’s only been two months since I stopped paying. We have three more to go before they send us the paper. I owe everything. I have no money.”

There are roughly 1,200 foreclosed homes in Antoich, though the banks have placed only half of those on the market so as not to further suppress prices.  In the meantime, rents have increased to prices comparable to the rest of the Bay Area. “People whose houses foreclosed are looking for rentals. And people who rent out know this,” said Mary, the real estate agent.  “By holding off on releasing foreclosures to the market they are once again falsely inflating the market.  One of my clients has made 62 offers over asking price and still cannot get a home,” said Linda. 

“Barbara,” a Contra Costa News Register employee who, like Mary and Linda, prefers not to give her name, said that every day she records an average of 100 notices of default and 150 trustee sales of foreclosed homes, which is down by a quarter from a year ago.  “Five years ago, it was at 40 or 50 total a day,” said Barbara. When she began working for the paper more than a decade ago, the daily average was about 20 notices of default and 10 trustee sales a day. Back then, even that was “shocking.” A major influx of homebuyers occurred in 2006, she said. “People haven’t had these houses that long.”

“Three years ago or four years ago, people bought these beautiful new homes and weren’t reading the fine print,” said Jamie, a fifth generation African-American Antioch resident whose grandparents have lived in their home for 45 years. “You could tell these loan officers anything and they didn’t even verify income. They thought they could afford it this year or these next two years, but people weren’t aware that their mortgages were going to double or triple,” she said. “Lots of the newer housing developments are boarded up. Before, it was like this is the good area and this is the bad area. Now, it’s all intermingled.”

“They put all these homes here but there’s no work over here. Growth is good and change is good but sometimes when it’s not strategically planned, it can become a disaster. I don’t think they were fully prepared for the large amount of people that flocked here,” said Jamie, adding that the influx of people from the Bay Area tripled in the past five years.

“Once you leave the Bayview, there ain’t no coming back,” one Bayview resident said. Many feel stranded in the East Bay after losing their homes, but can’t afford to move back to San Francisco. “They feel they’ve moved to the ghetto,” said Dillon.


 
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