Don’t tell Brandon German that Boston’s foreclosure crisis is over. He knows better. He wrestles with it every day.
German is the community outreach coordinator at Harvard Law School’s Legal Services Center, and for him, work is wading through the toxic detritus that the housing boom left behind. The wreckage is still littered across Boston’s poorer neighborhoods, six years after the bottom fell out of the subprime market.
The Mattapan neighborhood where German works felt the subprime boom, and the resulting foreclosure crisis, more deeply than anywhere else in Boston. Mortgage companies saturated the predominantly black, working-class neighborhood with some of the worst home loans the housing bubble had to offer. So now, even with a multi-billion-dollar nationwide foreclosure settlement and a tough new state foreclosure prevention law on the books, and most of Massachusetts leaving the foreclosure crisis behind, the struggles in Mattapan drag on. That’s why German is knocking on doors in Mattapan, six years into the housing bust. Until he’s run out of doors to knock, the neighborhood won’t be stable.
At first blush, Dorchester is Boston’s foreclosure capital, and no other place comes close. According to data from the Warren Group, the sprawling neighborhood has seen more than 4,800 foreclosure starts since the beginning of 2006. More than 2,250 families have lost their homes. The figures in other Boston neighborhoods don’t come close; in round numbers, Mattapan has seen just a fifth of the carnage Dorchester has suffered.
But even with its enormous foreclosure tally, Dorchester has maintained a functioning real estate market. The same can’t be said for Mattapan; the neighborhood is relatively small, and foreclosures there have been all-encompassing. Since the beginning of 2006, Mattapan has been responsible for 2 percent of Boston’s home sales, but more than 9 percent of its foreclosure activity. Foreclosures dominate the neighborhood’s real estate market on an unmatched scale. At its worst, the foreclosure crisis saw more homes entering foreclosure than were selling in normal transactions. Even now, the neighborhood is seeing four new foreclosure starts for every ten home sales — a foreclosure rate that’s three times greater than Dorchester’s, and 10 times the citywide average.
The intensity of Mattapan’s foreclosure crisis has been unparalleled because subprime pushers flooded the neighborhood with predatory loans at an unmatched rate. The mortgage lenders who stoked the subprime mortgage machine did so by steering costly, unconventional loans to poorer and more heavily minority communities. They hit Mattapan especially hard with the kind of stuff — loans with introductory interest-only periods, with low teaser rates, with high face values and weak income verification and stiff prepayment penalties — that took down the country’s economy when it soured.
Homeowners are still fighting with banks to modify bad mortgages and stave off foreclosures. That’s where the lawyers and organizers at Harvard’s Legal Services Center come in. The nationwide foreclosure settlement and the state’s new foreclosure law put homeowners in a stronger position to stay in their homes, but these new protections only matter if homeowners are able to act on them. On Wednesday, Harvard Legal Services will formally launch its Mattapan Initiative — an effort to organize homeowners and modify predatory loans in Boston’s most foreclosure-ridden neighborhood.
The state’s tough new anti-foreclosure law offers special protection to homeowners who received predatory mortgages. The law requires banks to try to avoid foreclosing on predatory loans; borrowers with these mortgages have a right to ask for a loan modification, and the banks have to weigh these requests in good faith.
The recent history of the foreclosure crisis makes it difficult for troubled borrowers to take these rights at face value. It was just a year and a half ago that Massachusetts sued the country’s five biggest banks, alleging that the banks were running foreclosure mills while issuing empty promises about modifying troubled mortgages. Many of the folks who are helped by Harvard Legal Services in Mattapan have been through the loan modification wringer two or three or four times already. They’re under pressure from banks and beset by scammers. They need to be convinced that the law is now on their side. Most of the homeowners German meets don’t even know about their rights under the new state law. “You can pass a law, but if the homeowner doesn’t have legal representation, how do you enforce the law?” he asks. “It’s a very strong law. But banks don’t necessarily always follow the law.”
Paul McMorrow is an associate editor at Commonwealth Magazine. His column appears regularly in the Globe.