Three-decker Units: Any Owners at Home?

The following article was published August 21 in the Dorchester Reporter.

On a single dead-end street on Meetinghouse Hill, two extremes of Dorchester's troubled multi-family housing market can be found side by side. The difference between these two three-deckers on Navillus Terrace - creatively named for a man named Sullivan - reflects market price, but also conjures up a fortune-telling vision for the neighborhood.

With multi-family buildings accounting for a large share of properties heading toward foreclosure, and more foreclosure filings in Dorchester than any place in Massachusetts except Worcester and Springfield, the conflicting extremes are cause for concern, even if mixed with hope for a market recovery.

Late last September, after mortgage defaults led to a rash of boarded-up three-deckers on Hendry Street and elsewhere, causing property prices to plummet in Dorchester particularly, all the units in a three-decker at 10 Navillus - just three short blocks away from Hendry - sold for no less than $345,000 apiece.

The buyers seem to be habitual high-price mortgage borrowers. The mortgage on one unit was for a second home, and the lenders for the other units waived the requirement for owner-occupancy. Two of the owners have also bought units at other locations in Dorchester.

Next door, at 12 Navillus, there's a very different story. After changing hands three times in little more than two years, the entire three-decker was sold at auction last month for $260,000. The buyer was an investor and developer who also bought five other properties in Dorchester sold by auction since last November.

What neither vision at Navillus involves is owner-occupancy on even one floor, the thing most neighborhood activists say is most vital to improving any neighborhood.

The developer whose firm did the conversion at 10 Navillus, Michael "Dave" Scott, says, "You're going to see more investors buy this housing. It's going to be an investor's market."

Real estate analyst John Anderson has spotted both trends: unit sales at prices that still make him predict more foreclosures, and buildings at bargain prices often going to investor/developers who survived the slumps of the past.

"Everybody's having a field day, except the people who live in Dorchester," said Anderson. "We're still concentrating equity and wealth in the hands of the people who have it."

Pricey Condos in a Depressed Market

On paper, it would appear the equity in multi-family conversions is going to people like Scott, who shows up in several conversions as manager of the development company Southeast Properties. But Scott says he also pays back equity through renovations, and by providing jobs.

"I have a lot of expenses that you don't see," he said. "The rehab costs are really killing me."

Scott has been linked to conversions of more than one hundred units, whether in sales by himself, his development entities, or associates. Most of the units are in Dorchester and Roxbury, with many sales going to buyers who buy multiple units. Many of the buyers are listed as being from other states or locales outside of Boston, and the number of foreclosure filings against these buyers - whether at locations involving Scott or other developers - continues to climb.

Three weeks ago, in response to a Reporter article detailing at least eight foreclosures among his converted units, Scott said the figure was "impressive," given the overall market.

"If I don't have foreclosures, I think I'm doing something wrong," he said.

A review of additional and more recent transactions on properties where Scott has been involved shows roughly two dozen petitions to foreclose. That figure includes units where Scott represented a buyer with power of attorney, or where units in a conversion that involved him were sold again, usually within no more than a matter of months.

Scott says he sells units to "legitimate buyers," even though, he allows, they "sometimes make bad choices." He notes that condo units purchased for investment take time to pay off.

"I think it's a good investment," he says, "because after taxes, you're making money and you're building up equity over time."

But, for a good deal of his unit buyers, time tends to run out.

"It's a scary market," says Scott. "Everybody's pointing fingers. It's a high-risk area."

Scott points his own finger at appraisers, underwriters, and some buyers. He also points at 70 Sawyer Ave., a three-decker where a developer named Edward Mazurkiewicz sold three units for $439,900 apiece to a buyer from Hyde Park, Cristobal Toledano. The sales took place in May and June of last year. By May 1 of this year, foreclosure petitions had been filed in all three units.

He also points to Draper Street, where several converted units have drawn foreclosure petitions. Three of them were at 85 Draper St., a house purchased by Giles Moss-Hayes, who was represented through power of attorney by Patrick F. Lee. At 80 Draper St. across the street, Lee sold two units that would later draw foreclosure petitions. Each of them sold in November 2006 for $374,900.

Lee also represented Moss-Hayes in the conversion of 110 Norton St., where all three units sold in May and June of 2006 for $350,000 apiece. Foreclosure petitions would later be filed on all three units.

Over the past two years, there have been 17 foreclosure filings in buildings where Lee figured in a condo conversion. In his most recent transaction, Lee was the buyer for three units in a house on Theodore Street in the Franklin Field area where foreclosures are taking a serious bite out of housing prices. He bought the units in January of this year, at $315,000 apiece, from, wait for it… Giles Moss-Hayes.

A review of more than 200 conversions over the last two years in Boston - mostly in Dorchester and Roxbury - shows more than 100 foreclosure filings against owners who bought more than one unit, sometimes in the same building. Names that appear as unit buyers with mortgage trouble sometimes turn up later as investors converting more units, or as people with power of attorney to represent other buyers.

One of the stand-ins is Jerrold Fowler, a buyer from Norfolk, Virginia, who purchased a unit from Scott on Avondale Street in Lower Mills in November 2006. A foreclosure petition on the unit was filed last month. In the interim, Fowler was given power of attorney to represent buyers in seven other unit sales involving Scott.

Another unit buyer recycled into a developer was Tariq Muhammad. He lost three units to foreclosure in a three-decker at 43 Whitfield St.

After two of the units there were sold at auction to another developer with his own trail of mortgage troubles, they were resold this year to buyers from out of state.

In the developer role, Muhammad converted a three-decker at 310 Fuller St., where he sold two units last year for $355,000 apiece, and one this year for $365,000. A foreclosure petition on one of the units sold last year was filed in July. Meanwhile short sales and bank-owned condos, albeit without existing condo associations - have gone for less than half of that price on Fuller.

The New Market: Owners or Investors

In a local multi-family market where Anderson sees an "incestuous mess," some see opportunities, at least in the long term, and probably without more condos.

One investor and developer, who is mainly avoiding conversions, says there is a market for three-deckers and "plenty of value" in Dorchester. But he also says media reports have frightened off buyers, and even scared some owners into walking away from their property.

"There's some good buys out there," he says, "and, instead of waiting for the market to bottom out, they should be out there buying."

Some predictions call for the Dorchester market to begin recovering in one or two years. The executive director of the Mass. Affordable Housing Alliance, Thomas Callahan says there has recently been a "fair amount of activity" in its "soft-second" mortgage program to make purchases more affordable for first-time home-buyers.

"We are definitely seeing people taking advantage of the market drop," he said.

But Callahan says even the current lower prices on three-deckers are no match for the affordability of the early 1990s, when these houses were within range for buyers with an annual income of $30,000.

"What we say in our classes," Callahan notes, "is that three-deckers are not for everyone. You've got to really want to be a landlord."

Potential buyers interested in multi-family housing still have to compete with the market for conversions. A survey of recent conversions in Dorchester - on Mt. Vernon Street, Rill Street, Adams Street, Everton Street, Torrey Street and Topliff Street- shows several buyers who have also bought units at other locations. The prices are lower than figures for the condo conversions of two and three years ago - for sale of the entire building and for units, most of which have been selling for less than $300,000 apiece.

While the city works toward bringing owner-occupancy back to vacant houses on Hendry, at least one non-profit community development group is exploring ways to break the foreclosure cycle at other properties. Codman Square Neighborhood Development Corporation Executive director Gail Lattimore said it's difficult to get cooperation from most of the companies in charge of foreclosure sales.

And putting the properties back into control of owner-occupants or "good-guy" investors, she said, will require more intervention from the private and public sector.

"I'm a little concerned," she said, "that if there are lots of investors out there, I don't think it bodes well for Codman Square and the rest of Dorchester being stable as we go forward."

Editors note: Patrick F. Lee shares part of his name with a principal in the development firm Trinity Financial, but other than that, there is no connection between the two men.

All information about transactions referred to in the story was drawn from the Suffolk County Registry of Deeds.

Three-decker Condos: Rebound or Relapse?

The following post appears as an article in the Dorchester Reporter.

To judge by sale prices for three-decker condominiums in Dorchester, the housing slump is over—at least at a few locations. The prices do have connections to names that repeatedly turn up in foreclosure filings, and they stick out like tree stumps in a flood of declining values, but that hasn’t stopped the flow of credit—whether from small lenders or high-profile companies such as JP Morgan Chase.

One example of a unit with a rising price is a top-floor condominium in a three-decker at 43 Whitfield St, a few blocks west of Codman Square. After selling for $330,000 in February, 2006, the unit would be taken by foreclosure. In April of this year, Fannie Mae let it go for $65,000. Then, after less than two months and a certain amount of improvement, there was a new buyer who put up $339,000, with a 20% down payment.

The last transaction in June also stands out as a turnaround for the seller. This was a company called SRC Investments, whose president and treasurer, Sirewl Cox, figured in nine other transactions that have drawn foreclosure filings since last September. It was a director of the company, Lord Allah, who bought Unit 3 at 43 Whitfield St from Fannie Mae in April. Later the same month, he bought Unit 1, for $45,000. Each time, he turned over the property the very same day to SRC Investments for $100.

Once SRC Investments took title, it received mortgages for both units from a lender based in Jamaica Plain, Capital Trust LLC. Though Capital Trust was lending to a company that had no record of previous borrowing in Suffolk County, the mortgage notes—for loans totaling $72,000--were signed by Cox.

Attempts to reach Cox at phone numbers in Easton, Mass., and a broker’s office listed in Dorchester were unsuccessful. Capital Trust has yet to respond to messages by email and phone asking how it could give mortgages to someone with a paper trail showing several recent bad loans.

On its website, Capital Trust says its approach to lending provides “speed and flexibility that traditional banking environments cannot provide.” The website also says Capital Trust can “provide creative financing options for opportunistic real estate transactions” and “quickly fund loans that make sense.”

But some observers of the real estate market in Dorchester say what doesn’t make sense is the Unit 3 sale price of $339,000. One observer said, even with “top of the line” renovations, the market value would only run as high as $300,000.

Another observer familiar with the market said, “Based on what the current market conditions are, I won’t imagine it would be three-anything.”

When the unit sold June 3, the buyer on the deed was a Christine Hoyte of San Francisco, California. JP Morgan Chase gave her a mortgage of $271,000, on condition that she use the condo as a second home. To complete the transaction, she also gave power of attorney to a stand-in named Larneshia Bryant, whose name appears on the mortgage note.

But other documents show Bryant also has connections to Cox. The two of them were shown as joint tenants of a condo in another three-decker in Dorchester, on Roxton St, where a lender filed to foreclose on the mortgage in February of this year. The unit is listed as being owned by Cox and Larneshia Bryant Alexander.

Over a period of three months earlier this year, there were foreclosure filings against Bryant on seven other properties. Two of the properties were bought from Cox in 2006, less than two months after he acquired them. Two others, also turned around in less than two months, were bought from another seller whose mortgage was signed by Cox with power of attorney.

Bryant has one other tie to Cox, through a business entity called Strategy Investments. The company was organized three years ago, with Cox as president and director, and Bryant as treasurer and secretary. The company bought two properties—one in Dorchester and the other in Roxbury—on which lenders would later file to foreclose.

Strategy Investments is listed on the directory of an office building at 40 Court Street for Suite 700. That’s also the official address for SRC Investments.

The notary who stamped the mortgage note for Unit 3 at 43 Whitefield St, Rebecca Konsevick, was asked whether Bryant was supposed to represent the interest of the buyer.

“That was my understanding,” said Konsevick.

When told about Bryant’s business ties to Cox, the notary was asked which side Bryant was on when she signed the mortgage for Hoyte.

Said Konsevick, “I have no idea.”

* * * * * *

The previous owner who lost all three units to foreclosure at 43 Whitfield St was Tariq Muhammad. He bought these units and another in a three-decker on Wheatland Ave from Iris and Kelvin Sanders. The other two units at Wheatland Ave were bought by Cox, and both also went down the road to foreclosure. Over the past three years, lenders have filed petitions to foreclose on a total of 12 units sold by Iris or Kelvin Sanders—all of them in Dorchester.

Muhammad also bought a three-decker for conversion at 310 Fuller St, with the help of a $120,000 loan from Kelvin Sanders. The house shows signs of repairs. After selling two units last year, each with 5% down payments for $355,000, Muhammad sold a third unit in February of this year for $365,000, with a down payment of 10%.

Just down the street, a realtor at Dorchester Associates, David Cahill, has been working on the sale of a whole three-decker which has been listed on the market for $369,021. When asked about the slightly lower price for a single floor sold in February--$365,000—Cahill called the figure “ridiculous.”

“When I see those prices pop up in the public record, I just shake my head,” he said. “It’s unbelievable.”

By way of comparison, Cahill noted the difficulty in selling condos at the new development right next to Ashmont Station, The Carruth. Based on that, Cahill says, it would be harder to sell condos in most other parts of Dorchester, especially if they’re farther away from rapid transit and commercial centers. The condos at 310 Fuller Street are roughly half way between Ashmont Station and the commuter rail stop at Morton Village.

“It’s not an area where people are going to go shopping for condominiums,” said Cahill.

But that didn’t stop Marcus Emile.

He was the buyer at 310 Fuller St who paid $365,000 and signed for a loan of $328,500. The loan was from Dreamhouse Mortgage Corporation. On its website the company says, “Our team of experienced mortgage experts is committed to your success and will go above and beyond traditional means to insure your satisfaction.”

The unit at Fuller St wasn’t the first for Emile. Four weeks earlier, he bought another property, in the St. Mark’s area, a three-decker unit at 15 Santuit Street for $340,000—from Kelvin Sanders. The down payment on the unit was 10% and the loan was from Countrywide Bank.

As with previous three-decker acquisitions by Kelvin and Iris Sanders, there was also a single buyer who took multiple units. In this case, the buyer was John Castodio. One deed shows him as being from Stonington, Connecticut. One of his mortgages for 15 Santuit St requires him to use the unit as a second home. On the other mortgage, the owner-occupancy requirement has been waived.

Cahill says the transactions at high prices make some owners more reluctant to sell at the normal market rate. And if more of the high-priced units go into foreclosure, he warns, there will be more converted three-deckers without active condo owners associations—which might limit the unit’s next sale to cash-only.

“No bank in their right mind’s going to finance it,” he said.

* * * * * *

Less than two years ago, some three-decker condo units in Dorchester, often with freshly made improvements, were selling for as much as $435,000. At least ninety units were sold in conversions—mostly in Dorchester—involving Michael D. Scott (and other variants of the name) and his associates or their business entities. So far, there have been at least eight foreclosure filings on the properties. Some of the units have recently been listed for sale, at prices as low as $174,000, and one unit—on Lafield St—sold June 30 for $190,000. Less than two years earlier, Scott sold the unit to a buyer from Maryland for $375,000.

Some properties bounce from one foreclosure to another. This happened at 24 Gayland St, Dorchester, a conversion in which Scott figured. After the first buyer lost unit 2 to foreclosure, Scott bought the unit and sold it again at a higher price less than two weeks later, in February of last year. The new buyer also has mortgage trouble. A foreclosure petition was filed against her last month.

There have also been repeat foreclosures among Cox and his associates. After he lost a property he originally bought on Claybourne St with Jacquelyn Pittman, Cox bought a property that Pittman lost to foreclosure on Reservation Road in Hyde Park. That purchase led to another foreclosure petition, against Cox.

Pittman also lost a property to foreclosure at 2 Rock Ave in Dorchester. It was purchased in January of last year by Larneshia Bryant. A foreclosure petition was filed against Bryant in March of this year.
















www.298fuller.com

Dorchester Day: Passage in Pageantry

The sun was shining on Dorchester Avenue, but the supersized papier mâché face of Prospero was tossing in the wind and tugging on a piece of wood attached to Shanaen Anderson. Preparing to ride in the Dorchester Day Parade in a flat-bed semi-trailer, she was among the DotArt students who would be mounting puppets to represent characters in Shakespeare’s The Tempest.

In the DotArt creation that rolled down the avenue on Sunday afternoon, Shakespeare’s castaways and heirs to Dorchester’s seaborne founders were delivering an ecological message that hearkened back to the first refuge for endangered species, Noah’s ark. Cruising the waters painted along the side of the trailer was an endangered shark missing a fin. Trailing behind were carts bearing an elephant, a giraffe, and DotArt kids needing to get off their feet.

One of the DotArt parents, Ceronne Daly, was ready for the four-mile journey by her 7 year-old daughter, Alexis. She packed four bottles of water, along with carrots and grapes.

Walking in front of another flatbed, for DotOUT, Rosie and Anna had a pail for their Yorkshire terrier companion, Che. DotOUT members on the trailer had an easier time, playing the role of sun-bathers or even getting some shade from the umbrella with rainbow colors. True, they were another cast upon a shore, but the locations posted on signs were clearly in Dorchester: Tenean Beach, Savin Hill Beach, and Pope John Paul II Park.

Following DotOUT was First Baptist Church, just as Union soldiers from the Civil War marched in front of the Dorchester Lacrosse league. Vietnamese war veterans also marched in uniform, while other veterans showed their opposition to war in Iraq. And, as they passed through Fields Corner, one spectator yelled to the anti-war group, “Send ‘em home. Send ‘em all home.”

Elsewhere in the rolling chain were the double Dutch girls with SWIRLS (“Sisters Working for Real Life Solutions”), Estrellas Tropicales, and the St. Ann’s CYO girls’ basketball champs. Vietnamese formations won applause, while rotating shifts of lion dancers ran up to giggling bystanders. When Caribbean carnival dancers approached with their glitter and outspread peacock feathers, the less encumbered bystanders started moving to the music.

As always, there were elected officials and candidates—from the mayor and the governor, to several City Councilors, state legislators, and a Governor’s Councilor. Former City Councilor Albert “Dapper” O’Neil had passed away since the last parade, while the Vietnamese presence he once deplored has become a fixture in the parade and a multi-million dollar investment along the avenue. A year ago, O’Neil made his last appearance, going down the avenue in a 1977 Cadillac Coupe de Ville. But, insubstantial or not, the pageant had a place for him this year, too: a black 2007 Lincoln Town Car, with O’Neil’s name in green and orange, and one more sign: “The Legend Lives On.”

Also: view parade photo essay.

Civic Summit: Getting from Small to Large

The civic mind begins with small things.

Rough patches left in the pavement in Roslindale by a utility company. The way a precinct in Beacon Hill with low voter turnout in city elections keeps getting redistricted. Or the dissatisfaction by a Grove Hall resident with quality-of-life services: “Things just don’t get done,” she says.

When more than 450 people gathered Saturday for the “civic summit” at the Boston Convention and Exhibition Center, most of them were from either neighborhood groups or non-profits. Both kinds of groups usually cover a limited territory. For the neighborhood groups, it often means land use or public safety. For non-profits, it’s the economic development project, the social service, or advocacy for a particular need.

But the summit co-chaired by City Council President Maureen Feeney was supposed to help groups move beyond their usual boundaries. Even as participants arrived, they were given stacks of business cards so they could follow up on new contacts from around the city.

Feeney reminded them of a low point in Boston’s civic engagement, the 14% turnout of registered voters in the 2007 election for City Council. But Mayor Thomas Menino and the event’s other co-chair, the executive director of the Mass. Convention Center Authority, Jim Rooney, brought up some high points of civic engagement, from the War of Independence to the opposition that stopped the extension of Route I-95 through Boston.

The morning workshops were closer to the small things: zoning, organization building and resources, political action, and getting out a message through the media. But the people taking on these topics at the workshops were from all around Boston. And the topics themselves often require organizations to think beyond their own territory and natural allies—whether in a dispute over land use or in being portrayed by the media.

At lunchtime, there was a shift toward a larger perspective, in a talk by Dr. Thomas Sander, Executive Director of Saguaro Seminar: Civic Engagement in America at the Harvard Kennedy School. Sander compared the recent gains and losses in civic engagement to the beginning of the 20th century, when new groups took shape in response to immigration and the massive population shift from the countryside to the city.

A century later, Sander explained, there have also been dramatic changes. He acknowledged research indicating that racial diversity can make people close ranks more closely among their own kind, while being less trustful of others. But he vouched for the advantages of social capital, even on a small scale. One example: getting to know neighbors is more effective at reducing crime than increasing coverage by police.

“We didn’t think the answer is that we all ought to live in gated communities,” said Sander.

Likewise, during the town meeting after lunch, small things connected to something larger. Participants from Dorchester noted that desirable streets could be only stone’s throw from a “hot spot” for gun violence, just as a student attending a prestigious exam school can ride the same bus route on which another student was fatally shot last year.

When asked to identify the “most important issues” facing Boston, more than three hundred participants put education and youth development in first place, followed by economic development and public safety. They also identified education and youth development as the issue that would benefit the most from civic engagement, followed by public safety and the environment.

Other results from the town meeting showed there was a gap between the turnout at the summit and Boston’s population. Almost three-quarters of those at the summit were white, and two-thirds were at least 45 years old. They listed concerns about youth participation, a disconnect between citizens and government, even feelings of “us vs. them” in community groups.

But, for all the concerns and the demographic mismatch, participants tried to figure out their next move. For the year 2020, their goal was a city with a 100% high school graduation rate and a school system on par with those in the suburbs. For the year ahead, the list began with after-school tutoring, a campaign against litter and graffiti, and more summer jobs.

They were only lists, but the small things had gotten larger.

Crossing the Line from Violence to Peace

Kai Leigh Harriott and Anthony Warren had spoken to each other before, face to face. It was three years ago, in a courtroom. Warren apologized to the five year-old girl for the gunshot that left her paralyzed two years earlier. Harriott responded by forgiving.

Wednesday morning, at the Dorchester House Multi Center, Warren apologized once more, this time in a statement recorded at the Old Colony Correctional Center in Bridgewater, Massachusetts.

“She gave me a second chance to really make a difference,” Warren said, “to show people here that forgiveness is good, to work on myself and change my life.”

Appearing on a screen and facing a darkened room, Warren was dressed in a prisoner’s outfit. After Harriott finished watching the videotape and the lights went back on, she responded once again.

“Thank you for making an apology,” she said, “because you can inspire so many people when you say don’t carry guns and don’t do bad things.”

As it was re-enacted, apology crossed boundaries, starting with the one between the offender confined to prison and the survivor confined to a wheelchair.

“Many of us are behind invisible bars,” said Harriot’s mother, Tonya David. For survivors of violence, David explained, the bars were the bitterness and rage trapped inside.

The excerpt shown at Dorchester House was part of a declaration of “peace month” by violence prevention groups, community leaders, and elected officials. The full-length video, with messages from nine inmates, will be shown May 10, at the Teen Empowerment’s “Youth Peace Conference.”

Randy Muhammad, who does prison ministry for Nation of Islam, Muhammad’s Mosque No. 11, said young people usually see violence represented in the glamorization of popular culture, especially in gangsta rap. Speaking at the “peace month” announcement, he said young people need to see the truth in the video or even in visits to prison.

“We have romanticized the idea of violence. Violence is promoted,” he said.

“A lot of the time, these images are glorified,” he said. “That’s not the reality.”

Community leaders also say people who go to prison can speak with the most authority to discourage violence.

“We believe those who are behind the walls are part of the problem,” said William E. Dickerson III, Senior Pastor of Greater Lover Tabernacle Church, “but they can be part of the solution as far as violence on the streets.”

An aide to City Councilor Chuck Turner, Darrin Howell, explained that getting the reality inside the prison on tape was an idea that came from another inmate, Darrell Jones. Howell said one reasons why Jones tried get out a message from behind bars was the death of his 23 year-old son, Darrius, on January 16. He was shot after leaving the funeral of a friend who had been killed.

Before the speakers began their program, 17 year-old Kevin Hurd, Jr. was looking over familiar faces and names on a traveling memorial to victims. He pointed to badges for two of them who were shot on bus rides just a few blocks away from each other in Dorchester.

“I know too many of them—way too many,” said Hurd.

“The majority of people up here, I knew their faces—around the neighborhood, playing basket ball with them,” he recalled. “So many good people.”

And why do bad things happen to good people?

“It’s life,” he said. “People with too much time on their hands do senseless acts.”

Some of the victims have also been described as “known to police.” The label implies the killing wasn’t random, and that people not involved with gangs would be less at risk. But that distinction broke down in 1993, when 15 year-old Louis D. Brown was killed by a stray bullet. He was on the way to a Christmas party held by a violence prevention group for teenagers.

Brown’s mother, and co-founder of the Louis D. Brown Peace Institute, Clementina Chéry, explained that the response to violence has to move beyond assigning blame.

“They’re our children,” she said. “And we have to look at the shame and the pain our children inflict on us and begin to turn that around.”

That happens in the annual Mothers’ Walk for Peace, when the faces of victims reappear as they were known to friends and family. Survivors walk side by side and cross the line from rage to compassion for other survivors. From there it’s only one more step to the exchange between Kai Leigh Harriott and Anthony Warren.

“We shouldn’t be shocked when a child says, ‘I forgive you,’” said Chéry. “That should be the norm.”

* * * * *

• Saturday, May 10, 1-5 p.m., Strand Theatre (543 Columbia Road, Dorchester). Boston Youth Peace Conference, organized by Teen Empowerment.

• Saturday, May 10, 6 p.m. Annual vigil in memory of Bobby and Mathew Mendes, at Dudley and Wendover Streets, Dorchester. Organized by the Bobby Mendes Peace Legacy.

• Sunday, May 11 (registration begins 7 a.m.), starting from Town Field, Dorchester. Mothers’ Walk for Peace. Proceeds to benefit outreach to survivors and elementary school program to aid in prevention and healing.

Barney Frank on Politics of the Mortgage Crisis

To explain the mortgage crisis that became a global credit crisis, US Rep. Barney Frank (D-Mass.) started by putting the blame on the party politics of Ronald Reagan. Instead of borrowers, brokers, financial markets or even the Federal Reserve Bank, the current chair of the House Committee on Financial Services went back twenty years to the former president’s philosophy of government.

“Reagan’s central idea,” said Frank, “was ‘Government is not the answer to our problems—government is the problem.’ His philosophy is why we’re here today.”

Frank was speaking Monday in a forum at the John F. Kennedy Library, but he was also in Dorchester, the heart of the mortgage crisis in Boston. According to an article appearing the same day in Banker & Tradesman, housing foreclosures in Dorchester had more than tripled in the first quarter of this year, compared with the same period in 2007, to a total of 171. That was more than half the total for whole city.

When it came to assigning blame, Frank included everyone from champions of deregulation in financial services to prominent Republicans in Congress, and even the former chairman of the Federal Reserve Bank, Alan Greenspan.

Frank had praise for Greenspan’s monetary policy—keeping interest rates low when some believed employment levels were high enough to be inflationary. But he faulted Greenspan with a “rigid ideological distrust” of deregulation. Most of the foreclosures currently being tracked in Boston were made by mortgage companies, which were usually much less regulated than banks. Once the loans were made, they were recombined and sold in financial markets, where high risk was often outweighed by high returns and high ratings for investors.

When prompted by the moderator, New York Times columnist Paul Krugman, Frank rejected explanations of the mortgage crisis as being caused by low interest rates, cycles in the real estate market, or requirements of the Community Reinvestment Act.

“It was not just the housing bubble,” said Frank. “People made housing loans that shouldn’t have been made.”

Also contradicted were the arguments by lenders (including those attributed to former chair of Countrywide Financial Corporation, Angelo Mozilo) that it was wrong to equate higher-interest subprime lending with predatory lending, and that subprime loans actually expanded home ownership opportunities for people of color. Frank took the side of UMass. Boston researcher James Campen, who showed a disproportionate concentration of subprime loans in the Boston area among people of color—even those with higher income.

“It’s not that in a fair situation they would have gotten zero loans,” said Frank. “In a fair situation, they would have gotten prime loans.”

But Frank also extended blame for the ensuing mortgage meltdown to a way of thinking that resembled a policy theme of President Bush: the “ownership society.”

“We made a mistake,” said Frank, “when we equated providing decent housing for everyone with giving everyone the right to own a home.”

To place lenders and mortgage originators under the same regulation as banks, the Committee on Financial Services approved legislation last November. The bill would set a standard for a borrower’s ability to repay a loan, and there would be an extension of liability to the investors who buy loans in the secondary market.

Opponents of the legislation say it will make loans even more expensive and make it difficult for owners of small businesses to get mortgages on the basis of stated income. High-interest subprime loans based on income statements that were erroneous or falsified have been blamed for many of the mortgages that would end up in foreclosure.

Frank credited the current Federal Reserve chairman Ben Bernanke with being “useful” by favoring the kind of regulatory powers allowed by Congress in 1994. Those were powers that Frank said Greenspan “explicitly refused” to impose on mortgage companies.

“What we have now are people afraid to buy things,” said Frank.

“Good regulation,” he argued, “is an important part of bringing the market back.”

Another of Frank’s ideas for bringing back the housing market is a compromise on the part of subprime lenders. Instead of trying to recapture the full paper value of bad loans, the companies holding the mortgages would allow refinancing by the Federal Home Loan Bank at lower interest rates. The new mortgages would then be sold in the secondary market. Frank says this could “avert many hundreds of thousands of foreclosures.”

“Housing prices would still go down—as they should,” he said, “but at a less dizzying rate.”

After the forum, Frank emphasized the refinancing would only be available for properties used by owners as their primary residence. That would exclude much of the housing that has been faced with foreclosure in Boston, where it’s not unusual to find a single owner defaulting on mortgages in multiple units. To help neighborhoods hard hit by foreclosures of these units, the legislative proposal Frank announced in March with US Senator Christopher Dodd would also provide $10 billion for acquisition and repair of vacant properties. The money could be used by public agencies or community-based non-profits.

“We want to give the money to the cities to buy these properties,” said Frank.

The outcome on response to the mortgage crisis by Congress also depends on the election in November. Frank positioned himself much closer to the Democratic candidates, Hillary Clinton and Barack Obama. Though he said Clinton’s call for a foreclosure moratorium was “unworkable,” he contrasted the Democrats with the backing for John McCain from a supporter of deregulation and foe of the Community Reinvestment Act, former Texas Senator Phil Gramm. For Frank, it was one more piece of the argument that, for all its disrepute, party politics makes a difference.

Long Struggle Ahead for School Budget

Thanks to a one-time infusion of $10 million from the city’s reserve funds, the Boston School Committee approved an $827.5 million budget with words of relief and praise for Mayor Thomas Menino. Despite requiring some cut-backs and new cost-savings, the budget figure for the next school year was still higher than the current figure by 5.7%. While budget-watchers see the potential for more savings in facilities and transportation, new plans to help students—sometimes by expanding services—are up against the growing pressure expected in coming years to hold the line on spending.

School officials say more than half the budget increase over the coming year is for personnel costs and other non-discretionary costs such as utilities. Almost one-quarter of the increase is for the cost of programs originally funded by other sources, such as paraprofessionals in kindergarten, family and community outreach, and the summer school transition program. A smaller portion of the increase is for new spending and expansion in areas such as K1, K-8 schools, advanced placement, “international Baccalaureate,” and dropout prevention and recovery.

Because student enrollment has declined over the last five years by close to 10%, the Boston schools are getting less money from the largest source of federal funding, the Title I program. Over the last two years the decrease was $7.8 million, and next year’s reduction is expected to be $3.6 million. For the coming year, officials expect a slight increase in the state’s Chapter 70 funding, to about $173.4 million.

The School Dept. acknowledges that some of the drop in enrollment is because of families choosing other options, such as charter schools. But officials also cite a change in Boston’s population mix—up in recent years by 30,000, though with a decrease in the total number of school-aged children. What officials say has not changed is the share of the city’s school-aged children attending the Boston Public Schools—about75%.

At the March 26 School Committee meeting when the budget was approved, Supt. Carol R. Johnson said there was “excess capacity” in elementary and middle grades, and that officials would have to look at consolidating services.

“The budget challenge we’re facing tonight is not a one-year challenge,” she said. “It is a multi-year challenge where we will be forced to look at savings in the future.”

The decrease in Title I funding and student enrollment was noted last year by the Boston Municipal Research Bureau.

“They’ve got buildings that are underutilized, underperforming, and yet resources are going into them,” said Municipal Research Bureau President Samuel R. Tyler.

“If they don’t go forward and make the kind of changes they have to make,” he said, “the next time around it’s not going to get any easier.”

In his state of the city address in January, Menino strongly urged cost-saving in transportation. Though he promised to maintain service to students with special needs, he said the School Dept. could “save significant money on the majority of transportation costs,” or else see them increase by 50% over the next five years.

But decision-makers are also concerned with other numbers, starting with dropout figures. In 2006-07, the Boston schools had 1,659 dropouts, with an annual rate of 8.9%. That was better than the figure for the year before, 9.9%, but still only down to the second highest figure since 2000-01. Last year’s figures from Boston show continuing disparities by race and gender, with a dropout rate for Hispanic students at 11.9%, black students at 8.7%, white students at 6.9%, and Asian at 3.3%.

In her memorandum to the School Committee on January 30, Johnson drew attention to other sub-categories—the graduation rates for the two largest groups of male students in the Boston Schools: 45% for Latinos and 48% for African-Americans. Another challenging figure is the almost 20% of the students in special education. Johnson maintains one part of that total is caused by an “over-referral” of students of color. And special needs students, according to statewide figures, are also the most likely to drop out.

The state’s second highest category of dropouts is English Language Learners (ELL), and in Boston they account for 18% of the students.

“There is not an adequate range of programs for ELL students, and there is not enough support for these students in their schools,” Johnson wrote. “Exacerbating the problem is a shortage of qualified, certified English as a Second Language teachers. Finally, families are often confused or uninformed about the choices available to them, resulting in their children not receiving appropriate language services.”

Johnson’s memorandum also drew attention to the call for quality in the schools, and it follows a request for proposals to set up more innovative pilot schools. And, as her message to the School Committee noted, her agenda depends on new revenue and collaborations.

After the budget vote, Johnson spoke of budget needs and the importance of keeping students engaged.

“I don’t think we can get the kind of excellent opportunities for all children that everybody wants,” she said, “without some added resources.”