Over the 20 years Pastor Kenneth Sampson has led the New Home Missionary Baptist Church in Bayview, he’s seen a steady decline in the community’s African-American population.  According to Sampson, upwards of a quarter of black residents cashed out their Bayview homes and relocated to the East Bay during the last decade’s housing boom.  Now that the market has busted, those same suburbs are dotted with foreclosures.

“The Bayview-Hunters Point had a lot of older black people who owned property.  They died, and turned it over to their children. Children would take the property – now worth $300,000 to $500,000 – and buy these stupid loans and move to Antioch, Pittsburg, Vallejo, Fairfield, and Tracy,” said Sampson. “Now their houses are upside down. Their jobs are not even secure.” A relative of Sampson, who makes “good money,” bought a house in Tracy, in partnership with another family member, but was unable to pay the mortgage after the monthly payments started to rapidly escalate.  One now lives with in-laws in Pinole; the other moved in with a friend in Antioch.  “He went from homeowner to renting a room,” Sampson said. “The loans went up, and because you miss a couple of payments, you don’t qualify for loans. It happened to the majority of the people. It affected the neighborhood.”

According to “Mary,” an Antioch-based real estate agent who preferred not to be named, and who is originally from Bayview-Hunters Point, financial products that are now considered “toxic” – which enabled property owners to cash out their equity, followed by escalating mortgage payments – are the primary reason for the foreclosure crisis.  Recessionary job loss and health problems leading to astronomical medical bills also play a role.  

As housing prices skyrocketed in the last decade, homeowners took advantage of their increasing property values by refinancing their original loans, taking money out of their equity for home improvements or credit card payments.  Or they sold their San Francisco properties and moved to the East Bay to buy a bigger and better “money house.”  “Let’s say I go to a realtor and the realtor says my house is worth $450,000. Do I go buy a $450,000 house? No, I go buy a $650,000 home with a loan,” said Sampson. “And that’s what’s kicking my butt.”   According to Mary, during the run-up of housing prices most prospective homeowners didn’t qualify for government bank or veteran loans, which offered fixed interest rates and down-payments as low as three percent.  To close more deals, banks and finance companies lowered or eliminated their credit standards, offered minimal down-payments, and signed borrowers into loans that carried high fees and inflated as much as three times within a year or two of closing.

 “People used their house as an ATM machine. Some people did home improvements, which would increase the value of the house. They weren’t worried because they thought they would be able to sell their house later and make that money back,” said Mary.  A Bayview property that was purchased by someone’s parents for $30,000 a half-century ago would be worth $260,000 one day, and upwards of a half a million the next, according to Sampson.  East Bay buyers traded their family home for a bigger house with pools and lawns.

“Many of the people who obtained those loans were not qualified,” said “Linda,” another Antioch-based real estate agent who preferred not to be named.  “Mortgage Broker’s padded numbers, and everything was stated income.  There were no verifications made.  Many borrowers took advantage of Washington Mutual’s infamous pick a payment program, which gave the borrower four different options.  Most went into these loans intending to pay the full monthly payment, but wound up choosing the lowest payment.  That meant astronomical numbers in negative amortization.  I know people who added thousands of dollars to their loan balance every single month.  One I know borrowed $700,000 and at the end of the second year, the loan balance was $804,000.  More than $100,000 over what they originally borrowed.  When the market crashed they ended up with a house worth $350,000 and a mortgage of $804,000.  No way to refinance that one.” 

“You get a chance to move out to the suburbs, you get a chance to send your kids to a great school, they’ll be safer, you can buy a house with a lawn; you might as well take advantage of that,” said Sampson.  For many of the people that moved to the East Bay, such as Muni and Sunset Scavenger drivers, the commute to their jobs didn’t seem that bad because they got off work early enough to avoid end of the day traffic, he said.

The exodus from Bayview to the East Bay took its toll on neighborhood churches.  Many Bayview residents who moved east continued to attend Sunday services at their San Francisco church.  But after several months they grew tired of the commute, said Sampson.  To meet the shifting demand, pastors opened congregations in the East Bay.   “In the suburbs, churches are big. In Antioch and Pittsburg, you got a church that covers the whole block. Why would you come down to the little one?”  With the bursting of the housing bubble, many of theses new churches closed, he said.