Homewreckers: How a Gang of Wall Street Kingpins, Hedge Fund Magnates, Crooked Banks, and Vulture Capitalists Suckered Millions Out of Their Homes and Demolished the American Dream, is a book by Aaron Glantz. A senior investigative reporter at Reveal, Glantz dives deeply into the housing crisis of 2008. Only to discover many of us are still living with the ramifications of a rigged mortgage industry which reduced home ownership, especially for families of color. A system now run by the very villains who initially abused it. Is it any wonder Americans are protesting in the streets?
The Good: Glantz creates a vivid picture of a dysfunctional, downright crooked mortgage industry. He explains how predatory lending targeted low income and minority Americans with Ninja loans; no income, no job, no assets, no problem. If you’re willing to pay exhorbitant interest rates and balloon payments. Indymac Bank in California was a prominent Ninja lender. Of course with the 2008 financial crisis, most ninja mortgages went into default, causing these banks to became insolvent.
That’s when the U.S. Government stepped in and gave Indymac Bank to Steve Mnuchin for free. Since he promised to save the bank while minimizing homeowner heart ache. The feds also provided heavy subsidies for his efforts. Instead Mnuchin turned the bank, renamed One West, into a foreclosure factory. Separating at least 100,000 families from their homes, 26,000 being seniors.
Between 2008 and 2016, 8 million Americans lost homes. By 2016 America’s homeowner ship rate was the lowest in 50 years. And Los Angeles County, where Indymac Bank operated, had the lowest rate in the country, at 45%.
Sadly, 70% of foreclosures by Mnuchin’s bank were against families of color. At the same time, the bank only made 3 loans for African Americans and 11 loans for Hispanics. Effectively bringing back redlining. A big reason minority communities today have low home ownership and little family wealth. In fact African American home ownership is less now than during the Jim Crow era.
What happened to foreclosed homes? While a few lucky families purchased foreclosures. Vulture capitalists, like Tom Barrack, bundled foreclosed homes by the thousands into investment vehicles. They borrowed heavily against these rent producing assets bought for pennies on the dollar. The feds, eager to get rid of homes they’d acquired, also bundled homes for resale. Making it hard for most buyers to compete. These homes are no longer available for working families to purchase.
The Bad: According to Glantz, Trump’s cabinet secretaries Steve Mnuchin and Wilbur Ross are very bad people. And billionaires like them, who created foreclosure mills and kicked out hard working homeowners after housing crisis. So are banking CEO’s like Jamie Dimond, who lent to vulture capitalists for acquiring bundled homes. But previous politicians in the Obama and Bush administrations who allowed Ninja loans in the first place. And who didn’t police foreclosure mills are also villains. They all failed to prevent homeowner abuse.
The Bottom Line: This book is a must read. Also watch the author’s interview on Youtube, see link below. But be prepared for anger. Especially if you’re concerned about the hidden barriers to home ownership. And the hidden racial disparities denying the American dream to communities of color. Glantz deserves credit for shining a light on a complicated, yet easily abused mortgage industry. An industry allowing the rich to steel homes from the poor and middle class.
Full Citation: Glantz, Aaron.
Homewreckers: How a Gang of Wall Street Kingpins, Hedge Fund Magnates, Crooked Banks, and Vulture Capitalists Suckered Millions Out of Their Homes and Demolished the American Dream
New York: Custom House, 2019. Hard Cover
432 pages. 16 unnumbered pages of plates. 6X1.3×9 size.
Author’s interview explaining the book’s findings:
Homewreckers: Decoding The American Dream with Aaron Glantz
Homewreckers
Pros
- Well written
- Thorough
- Personable
Cons
- Infuriating