Politics

Obama’s Citibank plaintiffs hit hard when housing bubble burst

Melissa Quinn Contributor
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Samuel Wilson is a small business owner. He owns a community laundromat in a Chicago suburb and, coupled with his neighborhood hardware store, demonstrates the perfect marriage of the American dream and hard work.

But he’s starting to slip on his mortgage payments. He had taken ill last month and now can’t keep up with the taxes on his house — a problem he hasn’t faced since 1969.

Now he’s two months behind and the banks have come knocking, not only on his door but on the doors of multiple houses in his neighborhood. [RELATED: With landmark lawsuit, Barack Obama pushed banks to give subprime loans to Chicago’s African-Americans]

He’s watched the banks swing through, first encouraging home buyers to put next-to-nothing down on their new homes, then encouraging them to walk away when they can’t keep up on the payments.

Since the housing bubble burst in the late 2000s, Wilson has watched neighbors vacate their homes. He has seen wooden boards nailed over windows. He’s been there when banks seized properties.

Then come the looters. “They’ll take anything,” Wilson said. Compressors in air conditioning units that sell for scrap metal, stoves and even hot water heaters — whatever they can find to make a quick buck.

Crime in the area has increased significantly as more and more people are struggling to make ends meet, he observed.

According to Neighborhood Scout, an online analysis project of Location Inc., Chicago is safer than only 6 percent of other cities across the nation. Murder rates have surged to more than four times the rates in New York and Los Angeles, making the city more dangerous than Kabul, Afghanistan.

“The riff raff in the neighborhood will loot it [the home] because the guy around it isn’t in it,” he said.

The crime, Wilson said, has only gotten worse, and more residents face unemployment and are trying to get money in any way they can.

“Work began to slow down, and they weren’t able to keep up,” Wilson told TheDC. “So many people are unemployed in one block, maybe 12 people gather, sitting around drinking beer and playing dominoes — and doing drugs too, I imagine.”

In 1995, Wilson joined 185 other plaintiffs in a lawsuit against Citibank for discriminating against Chicago residents in loan approvals. Lead counsel for the case, a young Barack Obama, alleged that the bank denied Wilson and the others their loans solely because they were black. [RELATED: Obama’s African-American clients got coupons, not cash]

They settled their case, and Citibank began doling out loan approvals.

Wilson had never foreclosed on a home before but filed for Chapter 13 bankruptcy in 2001. He’d gone to court before for not paying his taxes. Now the bank is asking him if he wants to walk away from his home.

“The mortgage company claimed you can walk away and sell it for a reduced price,” he said. “A lot of people get behind, and they can’t catch up.”

By his neighborhood’s standards, Wilson is one of the lucky ones, though. His home is worth more than what he owes his lending company, according to recent estimates on the real estate site Zillow and public records obtained by The Daily Caller.

Others in his neighborhood haven’t fared as well. In Chicago, more than 57 percent of homes are underwater. Just four blocks south of Obama’s neighborhood, that number jumps past 72 percent.

Wilson had never tried to obtain a loan prior to the suit against Citibank, but when he applied for one after the suit he was denied. He thinks the tanking economy plays a large role.

“They’re sitting downtown somewhere investing in the tax sales of the government,” Wilson said of the politicians and banks. “They sit there until they find out what they’re going to do with it.”

From his lawsuit with Citibank, which Wilson scarcely remembers, plaintiffs allegedly received between $770 and $3,250 each. But vast majority of plaintiffs interviewed by TheDC, Wilson included, don’t recall receiving a payout from the suit; many did receive loan approvals.

According to an analysis by TheDC, more than 45 of the plaintiffs in the Obama-led lawsuit, or 25 percent, declared bankruptcy between 1987 and 2012. Sixty-five — or 40 percent — filed for foreclosure.

One home under foreclosure can cost the local government up to $34,000, the Federal Deposit Insurance Company reported. And those homes and neighborhoods often become havens for crime, a trend to which Wilson can attest personally.

After Wilson got sick, he couldn’t find anyone to look over his two businesses, choosing instead to close up shop. Both the laundromat and the hardware store were burglarized; two more break-ins were reported at his home.

“Crime in the area has increased. Some people don’t want to bother with living in the neighborhood,” Wilson said. “Coming through the alley, hustlers come around to see what they can find or sell.”

Wilson believes it’s the government’s responsibility to clean up the mess in Chicago, and he’s preparing himself to lose his property.

“Government needs to help the people, clear everybody of all their debts and start all over again,” he said. “I think that he should. Everybody is riding the people, gas company, taxes on the property …”

Obama’s — and Wilson’s — lawsuit against Citibank lasted until 1998, and many plaintiffs began to take out loans after the settlement. But 2009 was reportedly the hardest-hit year for Chicago, and the majority of foreclosures were concentrated on the west and south sides of the city where Obama’s clients live.

“In the late 1990s, risky and predatory home lending practices gained a hold in the city’s lower-income and minority neighborhoods. Independent mortgage companies entered these credit-starved neighborhoods and issued mortgages with high interest rates, costly fees, and unfavorable terms,” reported National People’s Action, a politically progressive housing advocacy group.

And while Obama’s crusade against Citibank was successful on paper, plaintiffs like Samuel Wilson still find themselves barely holding on.

“Just like he gives money for the banks to stay afloat, the banks ride the backs of the people,” Wilson said.

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