[Marxism] Poconos housing bust

Louis Proyect lnp3 at panix.com
Sun Apr 11 08:50:08 MDT 2004

(About five years ago Bill Moyers had a show on PBS that dealt with the 
impact of economic crisis on some working-class families. One of them was a 
house painter from Long Island who could not afford a house in his local 
community and who moved to the Poconos where housing was more affordable. A 
car ride to his work place in Long Island took 2 1/2 hours each day! It 
turns out that these houses in the Poconos were not all that they were 
cracked up to be. This lengthy NY Times article, the first in a series, is 
a classic tale of working people, especially of color, being ripped off by 
banks, real estate developers and politicians. It is a *must* read.)

NY Times, April 11, 2004
Blue Skies and Green Yards, All Lost to Red Ink

STROUDSBURG, Pa. — Ethel Davis first glimpsed her luminous future in 1997 
when she saw a television ad that offered a vision of a green, secure world 
that had seemed hopelessly out of reach.

"Why Rent?" asked the ad for a home builder in the Pocono Mountains of 
Pennsylvania. "Our goal is homeownership for you and your family. Every 
American wants it; every American deserves it."

And so, with the ad's irresistible kicker, "The only thing you have to lose 
is your landlord," ringing in her ears, she did what thousands of her 
neighbors, many of them middle-income blacks and Hispanics from New York 
City, did. She took the interstate west, lured by the promise of fresh air, 
good schools and green, gated communities they could never afford closer to 

It turned out there was more to lose than a landlord. Six years later, 
after her new house proved far beyond her means and the five-hour daily 
round trip to her job in New York City sapped her endurance, her marriage 
has collapsed, the bank is seizing her house and she is back in Brooklyn 
renting space from a landlord who took pity on her.

"I worked so hard for so long, and I have nothing to show for it," said Ms. 
Davis, a 45-year-old legal secretary. "I'm just devastated."

Ms. Davis's migration west was part of a national campaign that has made 
homeowners of millions of middle- and lower-income Americans. But her 
tumble from ownership to foreclosure was part of another mass movement.

In the last decade, lenders have brought foreclosure proceedings against 
5,700 homes in Monroe County, Pa., or more than one in five of all 
mortgaged homes in this rural county that takes in most of the Poconos.

Thousands more families here are struggling to hang on. In some of the 
fastest-growing Pocono townships, census data show, one in four minority 
families are using half or more of their gross earnings to pay for their 
homes. They are piling on credit card debt, forfeiting college savings and 
plundering retirement funds just to meet their mortgage payments and 
unexpectedly high expenses.

The story of the Pocono Mountains, drawn from corporate and government 
documents, and interviews with more than 100 homebuyers and dozens of 
finance industry employees and policymakers, is one of miscalculation and 
greed, of questionable business practices by builders and banks, of dismal 
state regulation and a federal policy whose ambitions outstripped its 
ability to be carried out.

President Bush is enthusiastically promoting his role in raising the 
homeownership rate, particularly among minorities. Indeed, encouraging 
homeownership is one of the few issues the Clinton and Bush administrations 
pursued with equal ardor.

But the national foreclosure rate has tripled over the last three decades. 
Experts say mortgage fraud is on the rise in the United States and is now 
evident in as much as 25 percent of the loans that falter. And what 
happened in the Poconos is a disturbing glimpse of how a worthy goal — 
helping more middle-income Americans own their own homes — can sometimes 
produce disastrous results.

Just last month, in a familiar scene here, a former renter from Queens, 
Lewis Delgado, gave up a five-year struggle to pay for his home in 
Tobyhanna, Pa., by helping his three sons get their belongings into storage 
before the sheriff arrived with eviction papers.

"We're losing everything that we worked for," he said, as he drove off to 
look for a new place to live.

Some tried to avert the calamity here. Finance industry insiders warned 
government officials and prestigious institutions like Chase Manhattan and 
Freddie Mac that homebuyers were being overcharged and buried in debt, 
according to records and interviews. Still, the selling and lending rolled on.

Ethel Davis was good for federal officials who boast of their success in 
promoting minority ownership. She was good for the home builder and the 
banks, which used mortgages like hers to reach a new market for consumer loans.

She was good until she collapsed, and then she became an inconvenient 
casualty on the bleak side of the housing boom.

Distant Yet Inviting

There was, to be sure, something quite improbable from the start about 
having a home in the Poconos and a job in New York.

It is, after all, 100 miles from Manhattan to Tobyhanna, which means that 
with no traffic the drive would be two hours, and the average rush-hour 
trip more like three.

full: http://www.nytimes.com/2004/04/11/nyregion/11POCO.html

Louis Proyect
Marxism list: www.marxmail.org 

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