Eight neighborhood and legal services groups have joined forces to take down Brooklyn’s predatory lenders–by getting to potential customers first. The coalition recently received federal funding to educate residents on the practices of “sub-prime” lenders who target low-income communities, only to hit them with a big bill later on.
In credit-strapped areas, lenders and mortgage brokers scout out homeowners, offering loans on tough terms. What homeowners may not realize is that many of these loans have high interest rates, high fees or towering payments due at the loan’s end–and the mistake may cost them their homes. In Brooklyn, frequent victims are widowed black seniors who need cash to make home repairs.
“It’s like equity theft,” says Sarah Ludwig, executive director at the Neighborhood Economic Development Advocacy Project (NEDAP), which leads the coalition. “Essentially, the equity in neighborhoods gets sapped by this process.”
Now, the Department of Housing and Urban Development has awarded NEDAP about $286,000 for an 18-month project that will try to target the problem and short-circuit it. To help with consumer education and bolster the efforts of South Brooklyn Legal Services, NEDAP pulled together seven community groups, including Neighbors Helping Neighbors, Brooklynwide Interagency Council for the Aging, Cypress Hills Local Development Corporation and the Central Brooklyn Partnership.
“We’re trying to do outreach, to get people early, before they’re behind. In the beginning, we were getting people who had already lost their homes, and then it’s too late,” explains Josh Zinner, who runs the foreclosure prevention program at South Brooklyn.
The group plans to offer legal services to forestall foreclosure when all else fails, as well as map out where these lenders thrive. Data indicates that the neighborhoods where sub-primes have the greatest market share, in Sunset Park and Central and East Brooklyn, overlay exactly with Brooklyn’s largest communities of color.