The Zombies from Wall Street
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http://www.abc.net.au/foreign/content/2015/s4429987.htm
Broadcast: 22/03/2016 Reporter: Paul Barry
GFC after effects: Foreign Correspondent examines ‘zombie mortgages’
22 March 2016
THOUSANDS of homes worth nothing, their broke owners left with heartache and mounting debt. As the residents of Cleveland, Ohio, grow poorer, the bankers of Wall Street grow richer. That’s the shocking reality facing devastated homeowners left with “zombie mortgages” and broken dreams.
Media Watch host and ABC investigative journalist Paul Barry travelled to the northern American city and found the effects of crazy loans that triggered the Global Financial Crisis are still being felt today. In fact as Foreign Correspondent reveals things are worse than ever in Cleveland’s housing market which is still reeling from the“banking villainy that gave us the GFC”. “Thousands of homes have been left empty and they then get vandalised or fall into disrepair,” he said.
Barry said it was a downward spiral from there because as more houses fell into decay, and attracted gangs, no-one wanted to live in them so moved on. However, Barry, who visited the city in 2007, and again recently, told news.com.au that while the housing sector was in disarray, its people remained strong and resilient.
In tonight’s Foreign Correspondent, Barry examines what it looks like when a property bubble bursts and asks if the worst is yet to come. He said greedy banks should never have been allowed to lend money to people who couldn’t pay it back, adding crazy loans were giving way to “zombie mortgages” which are hitting some American cities hard. However, the real issue at hand is greed with banks selling the loans onto Wall Street or not bothering to default on the loans. This meant people were being stalked by “zombie mortgages” and in many cases left with a house worth less than they paid for it.
The broke homeowners were also hit with paying back property taxes and maintenance costs, while the local authorities are forced to knock down the decaying homes which are often occupied by gangs. Barry met with residents as well as those looking to salvage what is left including local councillor Tony Brancatelli who has been left with the clean up. “We’re the guys behind the elephant cleaning up the mess — and it’s a big bucket that we’ve gotta carry these days,” he said revealing that bucket must hold the debris from 20,000 abandoned homes.
He also met with activist Jim Rokakis who compared the vacant lots to being “like broken teeth on a smile”. “It’s estimated ... that the minority community, African American and Hispanic, have taken a $1.2 trillion hit between 2000 and 2010 to their net worth,” he told Barry. Foreign Correspondent reveals those houses which remain are either sold off at auction for as little as a few hundred dollars or literally given away, “a legacy of the banking villainy that gave us the GFC”.
Barry said Cleveland was a city already suffering the effects of a wound down steel and oil industry and the banks came and made things worse with their pure greed. “The banks came along in the ‘90s and early 2000 and lent them this money that they of course could not afford to pay back,” he said. “It’s simply predatory lending not seen in other countries. “It worked well for banks who not only got fees (through mortgages) but then went on to sell that debt to Wall Street. and that’s of course how the CFC was created — through passing on toxic loans.”
This predatory lending often targeted poorer, uneducated people many of whom are from black or Hispanic backgrounds. Meanwhile cities like Cleveland were struggling and would never recover. “It’s truly appalling, it’s greed” he said. He added unregulated lending practices as well as people lying about their borrowing capacity also contributed to the problem. Yet among the heartbreak and despair, Barry found a community keeping up the good fight. “The community has remained resilient,” he said.
“A lot of people are fighting to save the community, some people are even turning the vacant blocks into gardens. “It’s a very interesting place, it’s a great mix of people, and one of the main reasons I wanted to go back.” Barry also warned what happened in Cleveland, and also in other areas of the States, could happen anywhere if banks are allowed to lend without restrictions. Foreign Correspondent: The Zombies from Wall Street airs at 9.30pm on Tuesday, March 22 on ABC and iview.
http://www.abc.net.au/foreign/content/2015/s4429987.htm
Broadcast: 22/03/2016
Reporter: Paul Barry
burying the dead".