San Francisco Weekly May 2, 2012 : Page 9in the mail describing how smart and lucra-tive refinancing was. The way it worked was Wilmington paid off Brown’s original mortgage ($194,000), then gave Brown a new home loan for the current appraised value of the house ($300,000), with Brown pocketing most of the $106,000 difference. Seven months later, property values still rising, he replaced that loan with a $431,550 loan from Equifirst; and then again in Janu-ary 2007 for $475,000 with Countrywide Home Loans. For all three mortgages, the lenders offered him their “pick-a-payment” program, which allowed homeowners to select how they wanted to pay off the loan. Brown chose the option with the lowest monthly payment: an adjustable-rate mort-gage, where monthly payments begin at a certain amount before increasing after a set number of years. For the $475,000 mort-gage, he started paying $1,800 a month. He used the new money to buy a 2000 Peterbilt truck, which got much better gas mileage than his ’79 Mac. He hired drivers. Approaching 60, he wanted to ease down his number of shifts, spend more time with Shirley. The rest of the refinance cash paid off his bills. To Brown, who’d worked hard all his life to earn his house, the refinance felt like a well-deserved reward. He wasn’t the only one, of course. Many of the homeown-ers at that Saturday afternoon barbecue had reason to refinance. Cato and Rhodes each say they had a kid in high school and wanted to be able to afford college. Caro-lyn Gage, a former San Francisco Sheriff’s deputy, says she got injured on the job and needed an extra cash flow to supplement the worker’s comp. Josephine Tolbert, a 75-year-old daycare provider who’s owned her home for 45 years, says she owed her ex-husband money after a divorce settle-ment. Romeo Baful, a Filipino who has lived on Quesada for more than 20 years, say he needed to install new walls because the old ones had suffered termite damage. Whatever the residents’ reasons, the loans came with similar ease. Homeown-ers like Brown and Cato were eager to take advantage of their property’s rising value, wanted in on these free-market spoils. And lenders were happy to take advantage of that enthusiasm. “They sat my family upstairs in that liv-ing room and said, ‘You know how much money you can save?’” Cato recalls. “All that money that would be going to my kids’ college trust fund. It seemed too good to be true. But I was working, my wife was working, why wouldn’t it happen to us? We wanted the American Dream, too.” The story is familiar by now: The hous-ing market collapsed, and property values tanked, meaning that many homeowners could no longer pay off the mortgage by selling the house. Compounding the prob-lem for Cato and Brown, their adjustable-rate mortgage payments had increased after two years. Brown’s climbed from $1,800 to $2,800, Cato’s from $1,700 to $4,200. Many residents believe that they were manipulated into taking bad loans, targeted because of their skin color. Over the past couple of years, well-publicized evidence has supported this notion. In 2009, a federal lawsuit accused Wells Fargo of targeting working-class black people for subprime mortgages, loans with higher interest rates and less favor-able terms to compensate for a borrower’s perceived financial insecurity. One loan officer testified that employees called them “mud people” and described the mortgages as “ghetto loans.” In November 2011, for-mer banker James Theckston explained to the New York Times that some account executives “targeted less savvy borrow-ers — those with less education, without previous mortgage experience, or without fluent English — and nudged them toward subprime loans,” because they earned a higher commission for those transactions. A 2010 study by Princeton’s Woodrow Wilson School of Public and International Affairs concluded that black homeown-ers with similar credit profiles and down payment ratios to white borrowers were more likely to receive subprime loans. And in December 2011, Bank of America agreed to pay a $335 million settlement after the Justice Department alleged that the bank’s Countrywide Financial unit charged higher rates and fees to minority borrowers than to financially comparable white borrowers. “They dangled a carrot in front of people that didn’t know a lot of what they were Brothers T Twin Auto Glass & Tinting Tough by nature. 3258 17th St. (near 16th & Mission BART) 415-255-0202 • Open M-Sat. twinbrothersautoservices.com sfweekly.com Fast, Mobile Service | CONTENTS Windshields, Tinting, Car Alarms, Car Stereos, Speakers, TV’s & DVD’s | WWW.AUSFAIR.COM 1017 BUSH ST. 415.441.5319 $ bring in this ad to redeem thru. July 30, 2012 See Other Twin Brothers Offers On SFWEEKLY.COM 10 OFF ANY SERVICE LETTERS | SUCKA FREE CITY | NIGHT+DAY “YOU WANNA KNOW WHY I’M MAD AS HELL? BECAUSE OF THE IDEA OF THE AMERICAN DREAM APPLYING TO EVERYBODY EXCEPT BLACK AND BROWN PEOPLE! YOU KNOW HOW I KNOW THAT? 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