Share
I remember buying my first house. It was 842 square feet and cost $22,500.
I was in my 20s, earning about $9,000 a year, and at the closing I really didn't have a clue. I just signed the papers. As I signed page after page, I remember thinking, “They really make this way too easy.” And that was back when you got a mortgage from a federally regulated bank, not a nonregulated mortgage broker, and no one had invented subprime mortgages. Yet I remember being staggered, even then, at how much debt I would have been allowed to take on.
Which leads me to Beazer Homes USA and the landscape it helped create – and the continuing question of what a city could or should do when confronted with miles of deteriorating, starter-home subdivisions.
The Atlanta-based homebuilder Wednesday agreed in federal court to pay $50 million and acknowledged some employees took part in criminal mortgage and accounting fraud schemes between 2000 and 2007. Documents describe Beazer's strategy of “willful blindness” in originating mortgages, telling staff about “the danger of knowing too much about a buyer.”
In other words, home-buyers were led to believe they could afford unaffordable mortgages.
In recent years the Observer has reported on many cases of mortgage fraud and other illegalities, and not only by Beazer. If you still think everyone losing a home to foreclosure was simply greedy, you haven't been paying attention.
And in Charlotte, the subprime mortgage sharks had help from city government, which rolled out a welcome mat for subprime subdivisions.
City planners and City Council members were worried, with reason, that housing was not affordable. But their solution was wrong. They saw “affordable” subdivisions and didn't look much closer.
I have to note here, that in a city whose leaders say they want to encourage mixed-use development along strategic transit corridors, the easiest thing to build is typical suburban sprawl – no stores or workplaces, only houses and more houses.
That's because Charlotte long ago put suburban subdivision growth on auto-pilot. Most greenfield sites are already zoned for three-house-per-acre, single-family development. No rezoning needed. An estimated 75 percent of single-family subdivisions here are built “by right.”
For a decade Beazer and similar companies built mile after mile of subprime subdivisions. And that's where most of the foreclosures are.
So what do you do with all those neighborhoods? They're not designed to blend into any urban fabric. The housing stock probably won't last another 20 years. Most are far from transit lines.
I posed the question to a group of urban experts this week at a Citistates Group conference. Some suggested just tearing them down – as the housing is vacated – and starting over.
(Interesting note: MarySue Barrett of Chicago's nonprofit Metropolitan Planning Council said that in Chicago, “Where transit is, is where foreclosures are not.”)
Others had more creative ideas:
Don't tear them down; that's wasteful, said Roberta Brandes Gratz, author of “Cities Back From The Edge.” Instead, “deconstruct” them, meaning reuse the materials.
If they're already served by infrastructure – roads, schools, emergency services, etc. – don't waste that investment, said transportation expert Tom Downs, a former president of Amtrak. Re-engineer them. An emerging industry is retooling aging shopping malls, he noted. Maybe someone can retool subprime subdivisions into communities for aging baby boomers, many of whom will likely be retiring in semi-poverty.
In other words, it might be possible that out of this mess we can make some chicken salad – if we have enough imagination, plus public and private investment. Thanks, Beazer.
Mary Newsom is an associate editor at the Observer, mnewsom@charlotteobserver.com or P.O. Box 30308, Charlotte, NC 28230-0308. Read her blog, The Naked City, at www.marynewsom.blogspot.com.
