Ollstein writes: "The death of Freddie Gray in
police custody in Baltimore and the ensuing protests brought the nation's
attention to the economic devastation that continues to grip the city. Now, new
data shows powerful hedge funds are profiting off of struggling families in
Baltimore by buying up debts as small as $250, charging high interest rates, and
taking their homes when they fail to pay."
Baltimore police car at crime scene. (photo: Patrick Semansky/AP)
Bankers Are Buying Baltimore's Debt, Charging Families
Crazy Interest Rates, Then Taking Their Homes
tBy
Alice Ollstein, ThinkProgress
29 August 15
The death of Freddie Gray in
police custody in Baltimore and the ensuing protests brought the nation’s
attention to the economic devastation that
continues to grip the city. Now, new data shows powerful hedge funds are profiting
off of struggling families in Baltimore by buying up debts as small as $250,
charging high interest rates, and taking their homes when
they fail to pay. A report just released by the research and advocacy group HedgeClippers
documents how the Wall Street hedge fund Fortress Investment Group and the Los
Angeles-based Imperial Capital bought up hundreds of these small liens this
year — on everything from an unpaid water bills to delinquent property taxes —
and could take property worth tens of millions of dollars if the families can’t
pay.
Once the hedge funds buy up these small debts, they
reap an 18 percent interest, according to the Baltimore-based research group The Abell Foundation. More
fees pile up after four months, and if the families can’t pay, they lose their
homes. An analysis of those impacted
in 2014 found the families had been living in their homes an average of 21
years. Half were elderly, more than a third were disabled, and the majority
were African American.
State Delegate Cory McCray, a Democrat who grew up in
and represents Baltimore, told ThinkProgress he has gotten a handful of phone
calls this year from constituents on the cusp of losing their home over an
unpaid water bill.
“The city needs a way to recoup its money, but they
shouldn’t take someone’s home for that small amount,” he said. “Your house is
your wealth that you pass on to the next generation. We have to protect that.”
McCray and other lawmakers recently passed a bill to
raise the amount that would trigger a lien from $250 to $500, which he
emphasized is still an unfairly low amount over which to lose a home that could
be worth hundreds of thousands. He added that when at-risk families reach out
to the city, they can find an affordable payment plan “99 percent of the time”
and a foreclosure only happens “under dire circumstances.” But the city
continues to have one of the highest foreclosure rates
in the nation, and the impact has been most severe in communities of color.
Baltimore now has the ironic problem of both a growing homeless population and
a growing stock of vacant and often dilapidated homes.
The Abell Foundation recommends raising the
threshold to $1,000, noting that neighboring D.C. waits until residents owe at
least $2,500. They also emphasize that the vast majority of the money extracted
from residents by these hard policies go to the hedge funds and other
investors, not the city.
The hedge funds reaping these profits in Baltimore are
also major donors in national elections.
Imperial Capital’s directors have lavished money on
Mitt Romney and other Republican candidates in past races. This year, Several employees of the Fortress
Investment Group gave the maximum legal
amount to Hillary Clinton’s campaign, and its director Michael Novogratz has
poured hundreds of thousands of dollars into backing Robert Menendez (D-NJ),
Charles Schumer (D-NY), and other Democrats in congressional races over the
past few years.
Clinton, a beneficiary of the hedge fund’s generosity,
recently said in a speech
about Baltimore’s woes: “Let’s take on the broader inequities in our society.
You can’t separate out the unrest we see in the streets from the cycles of
poverty and despair that hollow out those neighborhoods.” Thinking back to the
beginning of her career as a lawyer at the Children’s Defense Fund, she added,
“Our legal system can be and all too often is stacked against those who have
the least power, who are the most vulnerable.”
C 2015 Reader Supported News
Donations can be sent
to the Baltimore Nonviolence Center, 325 E. 25th St., Baltimore, MD
21218. Ph: 410-366-1637; Email: mobuszewski [at] verizon.net. Go to http://baltimorenonviolencecenter.blogspot.com/
"The master class
has always declared the wars; the subject class has always fought the battles.
The master class has had all to gain and nothing to lose, while the subject
class has had nothing to gain and everything to lose--especially their lives."
Eugene Victor Debs
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