How One Neighborhood Hit by Mortgage Crisis Battled Back
CHARLOTTE, N.C. (AP) - There’s only one way in to Windy Ridge - across freight train tracks that zipper up the subdivision on three sides. Living room windows offer views of a cardboard box factory and a Pepsi bottling plant. It’s an unlikely place to come looking for the American Dream.
But to appreciate Wigena Tirado’s bond with this neighborhood of 133 vinyl-sided starter homes planted on a mostly treeless slope, listen to how she got there.
Tirado, a divorced mother of four with a degree in social work, moved to North Carolina in 2003 searching for a job and counting on a Section 8 low-income housing voucher to cover most of her rent. She moved out of her first home after eight months when she woke to find a bullet hole in the front door. Then, Tirado rented a house with a porch in a neighborhood that felt a little like being out in the country. But she fled that place, too, after it was burglarized at 2:30 on a weekday afternoon.
By then, Tirado was teaching at a daycare center. She jumped at one mother’s suggestion that she rent the house across from her own.
The three-bedroom house, white with blue shutters, sat on a new street with lots still awaiting construction. Tirado liked her neighbors. She’d always been community-minded and when the street lights went dark after the homeowners’ association fell behind on its bills, she started making calls to get them back on. Her biggest doubt was raised by the cards that began showing up in the mailbox offering help in battling foreclosure.
Tirado’s landlord told her not to worry. But in early 2007, a Mecklenburg County sheriff’s deputy rang the doorbell.
"What did you do?" Tirado quizzed her son, John, then 13. The problem, though, was Tirado’s house. The owner was in foreclosure and the family had to be out by April. Tirado was both angry and mystified. She’d noticed homes like hers on Windy Valley Drive and Morning Breeze Lane, windows boarded and yards overgrown. But she couldn’t afford to pick up again. And although she was not a homeowner, Windy Ridge had become home.
"I will not be moved from here," Tirado told the bank, offering to buy the place. She had no idea what she was getting herself into.
Four years later, the nation is finally coming to terms with the gambles and gross errors that pushed the economy, and neighborhoods like Tirado’s, over a cliff.
But how do you go about reversing the damage the mortgage disaster has done to families and neighborhoods? Where do you even start? On that afternoon in 2007, Tirado’s questions went only as far as how to stay put in the house at 4625 Palm Breeze Lane.
And so the battle for Windy Ridge began.
Windy Ridge is a small petri dish in a much larger experiment. Across the country, city officials, non-profits and others are searching for ways to stabilize neighborhoods pummeled by foreclosures - most visibly by buying up vacant houses - pairing their ideas with nearly $7 billion approved for the job by Congress.
"Lots and lots of places are going to have long roads to hoe," said Dan Immergluck, a professor at the Georgia Institute of Technology who is the author of "Foreclosed: High Risk Lending, Deregulation and the Undermining of America’s Mortgage Market." ’’Even if you can get 100 or 200 houses in some targeted neighborhoods, or even 1,000 in a city, there’s still foreclosures going on and because of the length of the crisis, it’s hard to see stability."
In Charlotte, where Windy Ridge followed a nearby subdivision, Peachtree Hills, as the first to undergo triage, it’s too soon to know how such efforts will work long-term. But it is already a story worth examining for lessons, and to do so, it is best to start at the beginning.
Until a little more than a decade ago, the 38 acres that would become Windy Ridge was a field, buffering the neighborhood of Todd Park from a busy industrial zone. If people ever noticed the land, it was because of a red cinderblock Hell’s Angels clubhouse which long ago occupied the front of the property.
In 2000, a developer bought the land and laid out streets in a subdivision shaped like a saxophone, with Windy Valley Drive forming its long, curved neck. Nearly all the lots were purchased by a local company, Barber Builders.
Barber built houses - all single-story, most measuring less than 1,100 square feet, and sold at a top price of $109,000 - designed for families with modest paychecks, buying for the first time. Some early arrivals fit that profile.
But a review of county property records and interviews with buyers and some of the neighborhood’s first residents, show that Windy Ridge was marketed extensively to investors as an opportunity for steady rental income. A number of those investors, many in their 20s and 30s and who never lived in the houses, purchased multiple homes in quick succession.
One 26-year-old investor bought five homes on Palm Breeze Lane and one more a street over on Morning Breeze Lane. A New Jersey couple bought all but two of the seven houses on Wind Chime Court.
Luther Rankin, a former city street maintenance worker who has lived in the subdivision since 2003, recalls being mildly surprised by the age of the property owner who arrived in a new BMW to show him a house for rent. Only later did Rankin realize his landlord owned four others within view of the doorstep.
"Who gives that kind of money out to at most a 30-year-old unless your daddy is Donald Trump?," Rankin says.
"From our standpoint, volume was good, so if somebody wanted to buy more than one house we were more than willing to sell it to them," says W. Freeman Barber Jr., who sold the building company about 6 years ago. "Of course, we had no idea of the implications."
Barber said he delegated marketing to real estate agents paid commissions to bring in buyers. But the builder offered volume discounts to investors who bought multiple homes and many went to such buyers, Barber said.
Many investors signed up tenants with federal Section 8 vouchers, given to low-income families to cover rent in the private market. Latrecia Grate, a Charlotte investor who bought four homes in Windy Ridge, said she did so with the intent of renting to Section 8 families. Keith Wesolowski, who bought five houses, said a sales agent presented the subdivision as "newly constructed houses you can use as rental properties and here’s Section 8. Here you go."
Both investors and early residents recall a neighborhood full of potential. Chris Youmans, who moved in with his wife in 2004 with a rent-to-own deal, said he was encouraged to see other black, working-class families in the houses around his and looked forward to becoming a homeowner for the first time. Joana Madruga, an Atlanta investor who bought four houses with her then-husband, recalls the homes and newly seeded lawns as beautifully kept.
It didn’t last.
Just two months after Madruga took title, somebody broke in and ransacked three of her houses. "They stole even the (electrical) outlets, the knobs on the doors, everything," she says. The Youmans’ landlord went into foreclosure and the couple lost roughly $5,000 - the portion of their monthly rent that was supposed to give them an equity stake. They moved to a second house down the street, determined to make a go of it.
By the time Tirado moved in, stenciling her mailbox post with tiny blue flowers, a growing number of investors had stopped making loan payments, leaving battered houses vacant. But she and others said they did not notice the problems until after moving in. It wasn’t until her own house went into foreclosure that Tirado started to connect the dots - the streetlights gone dark, the frequent break-ins, the yards littered with trash - to the mortgages to absentee landlords that were the neighborhood’s foundation.
That happened even as Charlotte’s economy, with banking as its mainstay, remained strong. But foreclosures were rising fast, particularly in starter subdivisions, thanks to lending that encouraged investor speculation and questionable mortgages that reset to put costs beyond the reach of many homeowners, said Chuck Graham, a Charlotte management consultant focused on residential building and development.
The bank wouldn’t sell Tirado the house because of a weak credit record. But she stayed put when a new investor bought the property. She kept the blinds turned down so potential burglars couldn’t see in. But she’d never been one to keep quiet. Neighbors already knew her as the woman who came knocking soon after they moved in, reminding owners to pay their dues.
Tirado became Windy Ridge’s self-appointed keeper. She went to Homeowners’ Association meetings even though she didn’t own. She called police repeatedly to report the sound of break-ins, even though the lack of streetlights made it difficult to know which house the thumps were coming from. She listened to renter after renter explain they were moving out because of landlord foreclosures.
"Have you seen "The Ten Commandments," when that black smoke comes curling around the doors?" Tirado says, recalling the epic film in which the wrath of the heavens is visited on the ancient Egyptians. "That’s what it felt like in Windy Ridge. Everybody was moving out and it was like, ’Oh, it got you, too."
In 2007, police investigated 38 break-ins in Windy Ridge, with 32 more in 2008. Years earlier, Tirado had taken criminology classes with thoughts of becoming a detective. Now she was digging through property records trying to locate absentee landlords, demanding they secure their houses or get rid of renters she believed were dealing drugs or fencing goods stolen from neighboring homes.
"All of Morning Breeze looks like a war zone," Tirado e-mailed the homeowners board in 2008, with a house-by-house breakdown of grass that needed cutting and trash piling up. "Needs major love."
Charlotte police asked Tirado to head up a neighborhood crime watch, formalizing her patrol. She walked the neighborhood with her sons, Angela Youmans and a few others. She and allies like Fausto Alfaro, a guard at the Mecklenburg County Jail who bought the foreclosed home across the street and moved in with his family, stepped up calls to police, e-mailed prosecutors and sat in the courtroom when those arrested for break-ins in the neighborhood went on trial.
When Officer Brent Hartley drove through the subdivision, Tirado waved him down at curbside, delivering the latest neighborhood intelligence. The police were paying more attention, she knew. Still, sometimes she felt like an army of one.
In late 2007, staffers in Charlotte’s department of neighborhood development tried to get a handle on the local dimensions of the exploding foreclosure crisis. They were used to working in older neighborhoods plagued by crumbling housing and property crime. But data they collected focused their attention on fast-decaying new subdivisions.
"To get out in suburbia and to start seeing the same kinds of things you normally see in an inner city neighborhood, it was something that was totally unexpected," says Stanley Watkins, then the department’s director.
The highest concentration of foreclosures was in two new subdivisions on the city’s northwest side: Windy Ridge and Peachtree Hills, a neighborhood of mostly two-story homes, with the same problems of absentee landlords, rapid turnover of mostly poor renters and a rash of break-ins, vandalism and unkempt properties.
City officials were working on an action plan when Watkins got a call from Evan Covington-Chavez of the Center for Community Self-Help, a non-profit lender based in Raleigh, N.C. that works primarily with poor and minority homeowners. Self-Help was looking for a single neighborhood where it could focus on turning the foreclosure tide.
They settled on Peachtree Hills. The city finished sidewalks, stepped up policing and building code enforcement and worked with residents to build a viable homeowners’ association. It’s most visible triumph came last summer when, thanks to a private grant and the work of 300 volunteers, the neighborhood erected a new playground.
Self-Help started out intent on turning renting families into owners. But banks ignored their calls, letting homes go to investors at auction. So the group changed plans, buying 30 homes, most of them vandalized, fixing them up and trying to resell them to responsible owners.
On a recent afternoon, Self-Help’s Donnetta Collier leads the way through her Peachtree portfolio, "the good, the bad and the ugly." The worst is a two-story on Rockwood Road with windows missing, holes punched in the drywall and condom wrappers littering the living room floor. But the same floor plan sparkles around the corner on Peach Place Lane, where a brass chandelier hangs in the dining room, the beige carpet is fresh and Collier has stocked an upstairs tub with olive oil chamomile foam bath soap.
"It’s a great starter house. It really is. You’ve just got to find the right people," Collier says.
Peachtree is clearly much better than it was, with many empty houses now filled with proud owners. But Self-Help’s leaders, who started out expecting a commitment of a few years, say it will clearly take more. Attendance at homeowners meetings has dropped off again. Last year, burglaries climbed from 27 to 40. And home prices are still falling.
Self-Help’s Covington-Chavez keeps tally on a white board, including sales figures for a bend in Peachtree’s Crandon Drive - where the group has bought 8 of 16 houses. Through last spring, Self-Help was reselling there for about $87,000, covering its costs.
Then, a federal tax credit for first-time home buyers expired, even as more foreclosures came on to the market. The last home it sold on Crandon went for $75,000 - much less than previous sales even though it costs more to buy and spruce up.
"The goal is to stabilize the neighborhood," Covington-Chavez said. "We started that happening and it felt really good to see we were able to make a difference, but then the second wave of foreclosures came in and sort of knocked us back down to reality."
In Windy Ridge, Wigena Tirado and her neighbors were at last getting some allies.
Early in 2009, city officials asked the local chapter of Habitat for Humanity - which had built homes on empty lots in Peachtree and rehabbed some of its foreclosures - to take a role in the battered subdivision sandwiched between railroad tracks. Habitat is known for building houses with volunteer labor. But this year, the Charlotte chapter will spend a third of its budget buying foreclosures, putting families into nearly new homes too cheap to pass up.
Habitat’s volunteers knew Windy Ridge in passing from work in the adjacent Todd Park neighborhood. But the group’s executive director, Bert Green, was still stunned. Well over half the houses had been through foreclosure. More than 30 were vacant, many vandalized, yards littered with trash.
Habitat, drawing primarily on federal grants, bought 10 houses and so far has matched families with seven of them. But, just as Self-Help found in Peachtree, relying on federal grants with built-in restrictions left it unable to keep pace with investors from as far as California and Hawaii.
To prevent such scenarios, the U.S. Department of Housing and Urban Development reached an agreement with mortgage lenders last September to give neighborhood stabilization grantees a first look at foreclosed homes before allowing investors to buy them.
"In retrospect, maybe we should’ve borrowed some money to make it happen quicker, but it’s a lesson learned," Green says.
Meanwhile, the city cracked down on landlords who were not caring for houses. City crews filled and resodded some backyards, trying to combat erosion that has washed away much of the topsoil. They installed speedbumps along Windy Valley Drive. And Tirado’s Crime Watch, feeding information to Charlotte police, paid dividends. Home burglaries dropped from 32 in 2008 to 6 in 2009 after the arrest and prosecution of three men, one of whom lived in the neighborhood.
The subdivision also drew the interest of Janni Sorensen, a professor at the University of North Carolina’s Charlotte campus who had spent years organizing residents in poor, but much older, neighborhoods in East St. Louis, Ill. She was struck by the similarities to the subdivision where some houses were not yet five years old.
Windy Ridge is a "neighborhood built to fail," says Sorensen, pointing to factors ranging from its site between railroad tracks and its lack of communal space to the marketing and mortgages that packed it with absentee landlords and poor renters.
With a grant from the city, she hired a graduate student, Liz Shockey, to organize residents and assigned others students to do fieldwork in the subdivision.
Shockey, who is 29 and white, and Tirado, black and 46, bonded during hours poring over paperwork and knocking on doors. "I tell everybody this is my sister," Tirado says, throwing her arm around Shockey’s shoulder during a walk through the subdivision. "She’s the lighter half. I’m the dark side."
Shockey worked to build the homeowners’ association and with Alfaro as its new president, Windy Ridge replaced the company it had been paying to manage the subdivision. She and Tirado organized movie nights for neighborhood children and UNCC hosted a day of workshops for teens. They powerwashed Audrey Stokes’ fence after it was covered with graffiti and recently brought in 140 volunteers to pick up trash.
The neighborhood still has eyesores like the house on Morning Breeze with plywood masking its windows and a rental on Windy Valley where children play in a yard so devoid of grass Alfaro calls it "the little Sahara." But the number of vacant homes has declined, to 22 in the most recent survey by UNCC students. There are plans for a new fence and Sorensen is intent on finding money to buy one of the empty houses and turn the site into a playground.
Still, marshaling forces remains a struggle. In the East St. Louis neighborhoods where Sorensen got her start, families had been in place for generations, with memories of how things used to be. You could build on that. Windy Ridge has no history and constant turnover. When crime in the subdivision was at its worst, more than 40 people came out for neighborhood meetings. At a recent Thursday night session, just three residents showed up.
Even the diehards run up against what Shockey calls "Windy Ridge burnout." The Alfaros have their house on the market for the second time in four years. Last year, the Youmanses found a house they could buy, but in another neighborhood. Then, in September, one of the neighborhood’s first homeowners, 82-year-old Spurgeon Martin, rode over to Palm Breeze in his electric wheelchair to investigate a troubling rumor: Wigena Tirado was leaving.
It was true. Tirado’s landlord hadn’t been paying his taxes and she saw foreclosure looming. She also worried when her son was threatened by another teen, because of her work reporting crime.
Months before Tirado left, city officials gave Windy Ridge their award as the city’s "most engaged" neighborhood. Still, tax notices that arrived last month confronted owners with figures showing their homes are valued at little more than half their original prices. Break-ins are back up, quadrupling to 27 last year.
"I’m not going to lie to you," Alfaro says, opening the door off his kitchen, where a tiny sign reads "God Bless this Home." ’’Sometimes I know I made a mistake."
But from his back step, Alfaro then points out the fresh paint and new shrubs at three nearby homes bought by Habitat. Two doors up, Andre Knight, a cook at a sports bar, recounts how he visited every afternoon to water the fresh sod while Habitat’s crews brought the house back to life. He picked out the teal paint for the master bedroom and chose the carpeting. When U.S. Housing Secretary Shaun Donovan stopped in Charlotte last March and visited a neighborhood stabilization project, Knight beamed at being asked to play host.
"The lord says you ask for what you want, to picture it in your mind and you design your own ideas," Knight says. "That’s why I knew this house was meant for me."
Does the American Dream still have a prayer in a place like Windy Ridge?
When Sarah Gaddy was 13, she pressed her ear against a door to hear a landlord tell her father "you’ll never get to own this house because we don’t sell to your kind." Soon after, her art teacher asked the class to paint pictures of something they dreamed of attaining in adulthood. Gaddy’s showed a white house with black shutters.
In 2009, Gaddy, who is 46 and manages a supermarket deli counter, had to move out of her rental when her landlord went into foreclosure. She saw a listing in Windy Ridge and went for a look. It was the very house she’d pictured all those years ago. Today, it is hers.
"I like pulling up in the yard knowing it’s something I’m working for and only I can turn the key," says Gaddy, who has taken over for Tirado on the Crime Watch and joined the homeowner’s board.
But for Windy Ridge to succeed will take more than one woman or one house. Nobody understands that better than Tirado. Walking down Palm Breeze, she still calls it "my street" and shouts greetings to the neighbors. A few weeks ago, she signed on as the subdivision’s first-ever property inspector, paid only to cover mileage.
In the new apartment she shares with her sons, Tirado leaves the shades open and the light floods in. There’s a swimming pool in the complex and a racquetball court. But the battle for Windy Ridge keeps drawing her back.
"Over here it’s nice," she says, "but it’s not a family."