NY Times, April 11, 2004 Blue Skies and Green Yards, All Lost to Red Ink By MICHAEL MOSS and ANDREW JACOBS
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 home.
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
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