Fighting foreclosure in East Oakland

The number of homes sold in California is rising, according to the latest reports, but their value is dropping. It’s a combination the California Association of Realtors attributes to the sale of “distressed properties,” meaning foreclosed homes. Look behind the numbers, and you’ll find distressed people. Last week we brought you the story of Rosa Fernandez, a San Jose woman whose ten-year-old son developed health problems after the family went through foreclosure.

ROSA FERNANDEZ: He wouldn’t eat. For like three months he had a stomachache. I took him to a doctor and there was nothing wrong with him, he just didn’t want to go to school.

Health problems are one long-term consequence of foreclosure. Another is community stability. Right now the city of Oakland has about 5,000 properties in foreclosure, many of them concentrated in low-income areas. When families are forced to move out, the wealth they had in their homes disappears – as do their community ties.

In the second of our two-part series on the long-term effects of foreclosure, KALW’s Casey Miner looks at how empty homes affect Oakland’s neighborhoods, and what people are doing to try and rebuild.

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BRUCE MIRKEN: As you can see, we’re auctioning this lovely Manhattan condo, luxury condo, that was purchased by Mr. and Mrs. Lloyd Blankfein back in 2008 for $26 million.

CASEY MINER: This might sound like a high-profile auction in New York City...

MIRKEN: I wish you could see the lobby of this building; the lobby is bigger than some small countries...

...but it’s actually a protest in Oakland, on the steps of the Alameda County courthouse. The "auctioneer" is Bruce Mirken, who works for a nonprofit called the Greenlining Institute. He’s here to make a point: that while millions of families have lost their homes to the financial crisis, wealthy CEOs like Goldman Sachs’ Lloyd Blankfein have made huge profits.

People in the crowd are happy to play along with the mock auction.

MIRKEN: We’re going to ask for an opening bid for $100, do I hear $100?

WOMAN IN CROWD: Twelve-fifty!

MIRKEN: Twelve dollars and fifty cents? We can do better than that, folks! We could house several homeless families in here.

Mirken closes out the sale.

MIRKEN: Sold to the young lady for $550!

It’s hard not to notice the other group of people gathering behind him. They’re here for the real auction, of real foreclosed homes, that takes place on these steps almost every day. The demonstrators here today are interested in that group, too. For them, it’s not just important to know who moves out of a neighborhood. They also want to know who moves in.

CAROLINA REID: That has implications not only for the housing stock itself, but also social cohesion of the neighborhood. Who’s going to be living in those neighborhoods going forward?

Carolina Reid works with the Federal Reserve Bank of San Francisco. She researches the impact of foreclosures in low-income and minority neighborhoods. She says investor-owned properties aren’t necessarily a bad thing. But when homes are vacant or not well-maintained, they can attract crime and drugs, regardless of who owns them. It’s bad for resale value, bad for communities. Reid says that’s the worst-case scenario.

REID: In the best case scenario, which is what I prefer to think about, we see this as an opportunity to purchase some of those homes under the Neighborhood Stabilization Program and really renovate them, for affordable housing and affordable home ownership opportunities, so that we get families back in those neighborhoods living in those homes.

The Neighborhood Stabilization Program – or NSP – sends federal money to local governments so they can buy and fix up foreclosed homes. In 2009, Oakland awarded $5 million in NSP funds to the Oakland Community Land Trust. Anne Griffith is the Land Trust’s executive director.

ANNE GRIFFITH: We’re buying the least desirable houses, the ones that have sat on the market a long time, that investors have passed over.

Griffith says the land trust would eventually like to buy 200 Oakland properties and re-sell them to low-income families. The process goes like this: the Land Trust buys both a house and the land underneath it, but what they sell you is just the house. Practically speaking, you wouldn’t notice anything different – the house would still be yours. But when you’re ready to move, you sell the house back to them, and they resell it at an affordable price.

The land trust has bought 17 houses so far, but they’ve only finished renovating six. Griffith sometimes visits the properties that are still in progress. As she pulls up to one house on Cherry Street in East Oakland, she says the renovation process is slow-going.

GRIFFITH: We also keep painting over the graffiti, hence the brown paint. It’s a canvas otherwise, you know?

But graffiti isn’t their only problem. Griffith had heard that there was a squatter using the house, so she’s here to check it out.

GRIFFITH: Hello? Hello?

SQUATTER: Hello?

GRIFFITH: Hello!

SQUATTER: Who is that?

GRIFFITH: The person who owns the house!

SQUATTER: Okay.

GRIFFITH: You know you’re supposed to be out of here.

SQUATTER: Okay. Yes ma’am, I’m going.

GRIFFITH: We’re going to be walking through.

SQUATTER: I’m gonna get my clothes.

GRIFFITH: Okay.

The house is not in good shape. It’s dark – most of the windows are boarded up – and there are little piles of shattered glass on the floor. The walls are crumbling, the bathroom smells awful, and there’s no running water. But it’s clear someone has been living here. There’s a sleeping bag and a teddy bear in one of the bedrooms, and the stairwell smells like old cigarettes. Griffith makes a quick call to her contractor, Fred Mackay.

GRIFFITH (on phone): I just met our squatter over at Cherry. I’m hoping this house is on your schedule for boarding and replacing locks today? Okay, thanks.

Griffith says just knowing about the squatter is actually a good sign – someone in the neighborhood had told Mackay about him. Another neighbor, she says, wants to buy the house, once they fix it up.

GRIFFITH: There are definitely folks who are interested in being a part of rebuilding community. I think people do appreciate that’s part of what this is about. It’s not just a house, it’s also about participating in your community and being a part of change. 

Even if the land trust does eventually buy 200 properties, there are still thousands of foreclosed homes throughout the city. But other initiatives are cropping up all over the Bay Area. Tenants’ rights groups have campaigned to make sure the water stays on in foreclosed rental homes. Cultural associations and church groups are working to connect bank representatives with families seeking loan modifications. And real estate agents are holding workshops to help people stay in their homes.

After locking up at Cherry Street, Griffith drives around the corner to another land trust house. This one’s done being renovated, and it couldn’t be more different from the first: white walls, clean hardwood floors, lots of air and light. A family’s going to move in soon – people who know the neighborhood. It won’t stop the foreclosure crisis, says Griffith. But for this home anyway, it’s a new start.

In Oakland, I’m Casey Miner for Crosscurrents.

KALW’s Audrey Dilling contributed reporting for this story. It’s the second of a two-part series on the long-term effects of foreclosure. You can hear the first part here.