Saturday, October 9, 2010

From Vargas Llosa to Dorchester Avenue

I finally got around to reading an English translation of Mario Vargas Llosa’s Conversación en La Catedral a few years ago. The thick paperback had been stacked on a shelf at three different locations for as many decades. But I was hooked right away by the crapulous opening. And it’s even better in the original:

Desde la puerta de “La Crónica” Santiago mira la avenida Tacna, sin amor: automóviles, edificios desiguales y descoloridos, esqueletos de avisos luminosos flotando en la neblina, el mediodía gris. ¿En qué momento se había jodido el Perú?

A newspaper reporter—let’s say a reporter washed out before he’s forty, or grey at noon and descolorido, if you will—looks out on the dreary streetscape of Peru’s capital city and wonders (in much more polite terms) what went wrong.

A Peruvian native who writes for the Jamaica Plain Gazette, Andy Zagastizábal, describes this fictional reporter as “a desperate person who feels he has lost everything.” When we had talked about this passage a few years ago, Andy quoted the last sentence in the original and asked me if I knew what the verb meant in English. I came fairly close. Even in translation, this was a memorable passage. I certainly remembered it last Thursday when I learned that Vargas Llosa had just won the Nobel Prize for literature. And, after I shared this news with Andy, he called this passage “one of the best beginnings of a novel.”

I’ve never seen Lima, but a college classmate who grew up there once described it as a rather depressing place with a lot of gray weather (he much preferred the Peruvian jungle). I’ve always imagined a much less pleasant San Francisco, with a swelling periphery of shanty towns.

The title of the book actually refers to the name of a seedy bar. This is where the journalist meets with his rich and influential father’s chauffeur, who fills him in on some dark family secrets, overlapping with the underside of Peru’s military dictatorship in the 1950’s. True, there’s something in common here with the post-traumatic effects of other dictatorships, whether you read them in works by Junot Díaz or Viktor Pelevin (who once described Russia of the early 1990’s as “a banana republic that imports bananas from Finland”). But, when I read the beginning of Conversación en La Catedral, I think of a place in Boston.

To be precise, I think of an unremarkable bar on Dorchester Avenue, Vaughan’s Tavern. This was in the mid-1970’s, and Vaughan’s was just another brick-faced bunker with small rectangular windows, where there surely would have been the kind of skeletal avisos luminosos tracing the name of some beer. As for decor, I remember few details except for a portrait of Bobby Kennedy hung on a wall, just above a couple of rifles. The bar was right across from Edison Green, which at the time was only a vacant lot where there used to be substandard housing.

As it turned out, I went to Vaughan’s on the first story I covered in Dorchester. This wasn’t even a story as much as a way of meeting people and gathering dots that could later be connected as stories. Some of those stories would concern trouble over liquor licenses, so it was a good idea to sit on the meeting, which took place in a storefront next to the bar. Also making an introductory visit was the newest member of the Boston Licensing Board. He was meeting with leaders of Dorchester neighborhood groups, among them a no-nonsense leader from Savin Hill, Kit Clark. After much else on the agenda, Clark finally let him speak and told him to keep it brief.

There was one more reporter in the room, a columnist for The Boston Globe, Alan Lupo. He thought it would be a good idea to finish connecting dots for his piece about the man from the Licensing Board at the bar next door. Lupo graciously invited me to tag along, and, after that, I mainly listened and watched, if not all that perceptively.

I do remember that the man from the Licensing Board stood out from his surroundings. He wore a suit and he spoke with a certain deferential confidence about listening to concerns of people in the neighborhoods and being responsive. After all, he had been a concerned neighborhood leader himself in another part of Boston.

The most memorable thing happened as the three of us were on the way out. One of the customers, who’d had a bit to drink, for some reason went up to the man from the Licensing Board like a voter courting a politician (yes, it sometimes works this way, too). Taking the man in the suit by the hand, the customer told him, “I’d want my son to grow up some day to be just like you.”

To this day, I’ve never really been sure whether this was an outburst of admiration or sarcasm. In any event, time would later prove it to be misdirected. The man from the Licensing Board would, among other misfortunes, go on to have a tarnished career.

But I would keep reading Alan Lupo’s columns and books for many more years, until he passed away in 2008 (or, in the words on his voicemail, “shrugged off his mortal coil”). And, by sometime in the 1980’s, the vacant lot across the street would become an elderly housing complex named after Kit Clark.

First impressions do linger, and maybe no less when they mislead. As benchmarks, they help show how the dots that seem so factual, even if logged in a notebook or pixelated in a photo, can also be fictitious, or at least a kind of mythology. If some of these dots are deceptions that need to be exposed, others are symbols that instruct and inspire by keeping alive the memory of a role model.

The other side of this is how fiction draws on fact. In the case of Vargas Llosa that especially means his earlier career as a journalist. After learning Thursday that he won the Nobel Prize, he told the Spanish paper, El País: "El periodismo me ha dado la obligación de confirmar, de verificar, me ha enseñado lo importante que es la perseverancia. Si no hubiera tenido esa disciplina no hubiera sido un escritor; sigo verificando, sigo corrigiendo, obsesivamente. Es un gozo para mí escribir, sin duda, pero si detrás no hubiera este esfuerzo no hubiera escrito las historias que ahora forman parte de mi vida. Es una servidumbre y un gozo, un gran gozo".

To hazard a translation: "Journalism has given me the obligation to confirm, to verify, has taught me the importance of perseverance. If I hadn't had this discipline, I wouldn't have been a writer; I keep verifying, keep correcting, obsessively. Writing is a joy for me, without a doubt, but if there hadn't been this effort, I wouldn't have written the stories that now form part of my life. It is a servitude and a joy--a great joy."

What Vargas Llosa speaks of here might be what Dante called “la mente che non erra”—the mind that gets it right. That’s not always available at all times, so there’s a need to fall back on something for guidance, or at least a standard. Dante, washed out and middle-aged, meets Vergil in a dark wood and starts making his way out by making his way down—with the plod of reason. Myself, I think of another “low dishonest decade” and a conversation in a certain dive on Dorchester Avenue.

Thursday, October 7, 2010

From Blitz Conversion to Scratch and Dent

This article appears in the Dorchester Reporter.

There was a time when Peter Power knew some of the people who lived in the six-family houses across Parkman Street. But that changed after mid-September of 2007, when the three buildings were converted into condos, all within less than four weeks.

“The next thing I knew,” said Power, “nobody was living in them at all.”

By mid-October, a developer had bought all three buildings in separate transactions for a total of $2.2 million dollars. The units then sold, on paper, for a total of almost $4.9 million. All but one of them were sold within three days the after sale of their building. Lenders put up mortgages totaling $3.8 million.

Even more unusual was the assortment of condo owners—from the manager of the Bank of America Branch in Fields Corner, to buyers from Brooklyn, the Bronx, and even as far away as Atco, New Jersey and Norfolk, Virginia. On paper, some of them were owner-occupants. Others supposedly bought units as their second homes, or for investment—at a time when the condo market in much of Dorchester, and many other places, was in decline. Yet, judging from the difference between sales prices and mortgage amounts, the down payments for the units ran as high as $75,000.

Less than three years later, the developer, Michael David Scott, is under federal indictment for mortgage fraud, along with the bank manager, an attorney who worked on many of the transactions, and two other people accused of being recruiters for straw buyers. Scott and two other defendants pleaded not guilty last week. In the indictments, they are accused of paying the straws to buy units at falsely inflated prices, and making false statements to lenders about the buyers’ assets and down payments. Also pleading not guilty is the now former bank manager, Arthur Samuels, who stands accused of producing false documents and recruiting a straw buyer.

Before the first indictments were handed up late August, foreclosure petitions had been filed for 8 units in the buildings on Parkman Street. But, even without, in most cases, going all the way into foreclosure, the units that Scott sold for as much as $299,900 apiece would later be scooped up for as little as $55,000. Some were turned over for a nominal fee, with the buyer assuming the mortgage. In the interim, the buildings were painted on the outside and filled with new occupants.

But Power says the buildings still have problems. He mentions rodents attracted by trash containers that some residents don’t put out on the curb for collection. Plus, during the summer, there was a shooting in one of the buildings that, according to police, resulted in four arrests.

“It just brings the value of your house down,” says Power.

A lifelong resident of Dorchester, Power describes the buildings as a “flophous
e” with “revolving tenants.” Saying he and his wife are thinking moving, he adds, “I actually do like Dorchester, but I don’t like what’s coming down the street right now. It’s not safe."

Federal authorities list fraudulent transactions by Scott and his collaborators on 48 units, all but six of them at locations in Dorchester—including the ones on Parkman Street. Most of the units have since been turned over to new owners. In at least one case, in a three-decker on Centre Street, there was a period when the doors and windows for one unit covered with plywood.

But there were also problems at another building listed in the indictment, a three-decker at 672 Adams Street.

“The lawn was disgusting. There was broken glass everywhere,” said a neighbor who described the building as “an eyesore.”

“We own our condo,” she said, “and we were afraid it would bring the price of ours down.”

Records show units in 672 Adams Street were all sold within a few days after it was bought under the name of Astoria Realty Trust. One unit was sold to Arthur Samuels. The others were sold to buyers from Virginia and Pennsylvania. Last year, foreclosure petitions were filed on two of the units. By February, all three units—which had sold less than two years earlier for a total of $870,000—were sold in separate transactions to a buyer from Quincy for a total of $140,900.

To buy all the properties listed in the federal indictment, Scott and his associates paid almost $6.2 million. On paper, the separate units sold—mostly within a few weeks—for a total of $13.9 million, while the mortgages put up by lenders came to almost $11.8 million. The highest loan totals were from Salem Five—more than $3.3 million—and Gateway Funding Diversified Mortgage Services—$4.4 million. And sources at both lenders say a loan officer who played a role in some of the transactions for Gateway later went to work for Salem Five.

Records show Scott and his associates, overall, sold more than one hundred units in Boston, mostly from condo conversions in Dorchester and Roxbury. Foreclosure proceedings were started on at least 80 of the units, while even some of the other units would be turned over in distressed sales. One lender—Gateway—wrote mortgages totaling more than $13 million for 44 of the units. Out of these, there would be foreclosure petitions filed on 35 units.

Many of the buyers purchased multiple units at multiple locations, and the same pattern can be found in multifamily transactions by other sellers. A partial review of records in Boston over the past few years shows foreclosure proceedings on more than 240 units against more than 100 owners of anywhere from 2 to 8 units. Some of those owners also turned over other units in distressed sales, without the filing of foreclosure petitions.

Researchers disagree about the effects of foreclosures on surrounding property, and they caution that poor conditions and price declines can also make distressed sales more likely.

The Rappaport Institute estimates a discount of 28% on sales of foreclosed (REO) properties, with the steepest discounts in areas where lenders have the most fear of property being damaged by vandalism.

According to a study by the Federal Reserve Bank of Boston, small multifamily properties make up less than one-quarter of the housing stock in Massachusetts, but they account for 33 percent of the post-foreclosure sales. Researchers say the REO property discounts were steepest in areas with lower income levels, a higher percentage of minority residents, and a sharper decline in overall prices.

In multifamily REO properties that were converted into condos, potential buyers face even more obstacles. With staggered foreclosures on individual units, observers say financing is more difficult to arrange in buildings without functioning condo associations.

“You’re going to be left with someone who’s going to be willing to buy for cash,” said one appraiser based in Dorchester, “and, when you’ve got the cash buyer, you’re going to be left with considerably less for it.”

Monthly reports by The Warren Group show that the sharp declines in the median prices for Dorchester condos have since been reversed, even if prices are still below the levels at the height of the housing bubble. In July and August of this year, after the expiration of federal tax credits, there was a fall-off in condo sales, though the median price was still getting higher.

According to a report by In Realty, housing prices strongly rebounded in the second quarter of this year in all areas of Dorchester. In the area where the market had been the weakest—between Blue Hill Avenue and Washington street—prices were going up, but volume was down. According to the report, one reason was the decrease in foreclosures.

Helping to bring down the number of foreclosures are the efforts to keep buildings occupied, sometimes through loan modifications or sales to occupants. The non-profit Boston Community Capital has arranged this kind of turnover for 85 units of housing, mostly in Dorchester, Roxbury, Mattapan, and Hyde Park.

“If we let nature and the market run its course, we have a real issue because of the inventory and the amount of time it’s on the market,” said the president of lending affiliates for Boston Community Capital, Patricia Hanratty. “If the people who are in one of these units can afford to buy it back at $70,000 or $80,000,” she asked, “why is that not under consideration?”

One reason is that, as speakers said last month in a Dorchester symposium on REO properties, non-profits are often outbid by for-profit competition. Though observers say the quality and intentions of the buyers are mixed, the competition increases demand for the housing supply. And, as the director of the city’s Dept. of Neighborhood Development, Evelyn Friedman explained, that can keep the property values from going too low to make repairs unprofitable.

At 672 Adams Street, the new owner of the condo units sold the whole building in June to another buyer from Quincy for $235,000. With recent signs of repair work, the neighbor says, “In the end it turned out OK.”

At a three-family house on Bernard Street, in the Franklin Field area, the people who bought units from Scott and his associates in late 2005 even managed to stay in the building, after getting help from Boston Community Capital. Records show the units, including one with less than 1,000 square feet, sold for more than $900,000. Foreclosure petitions would later be filed on two of the units.

Hanratty said Boston Community Capital intervened at Bernard Street and other locations because the mortgages had monthly payments that were “incredibly high,” adding that “nobody looked to underwrite these loans to say this is what somebody could afford.”

Despite renovations, Hanratty said, the units, as they sold almost five years ago, were “vastly overpriced."

"They were very high, even then,” she added. “Just thinking about a three-decker on Bernard Street as being worth almost a million bucks is pretty challenging.”