Ms. Nicola Adonis first went to American Dreams Real Estate Development, located at 944 Fulton Street, looking to rent an apartment. She was amazed, then, when she was told that on her $7,000 a year salary she should think instead about buying her own home.
AThey told me that it would be better to have other people pay me rent, that it=s smarter to own a home myself,@ she said of American Dream=s advice. AIt was hard to believe, but it did sound nice.@
After seeing numerous houses in Bedford Stuyvesant, Nicola decided upon one on St. Andrews Place. A few weeks later, American Dreams pressured her into two mortgages with monthly payments in excess of $3500. Based on her job as a manager at McDonald=s, Nicola=s monthly house payments are greater than seven times her monthly income! With such an unaffordable loan, she is already in danger of defaulting on the payments.
AI=ve seen my fair share of terrible loans, but this has to be the worst,@ said Erica
McHale, a Homeowner Counselor for PACC who works with many clients after they have signed predatory loans. APredatory loans can take many forms, but the most important question is whether the loan is affordable to the borrower. To pressure a young person into a loan whose monthly payments are seven times their incomeCthat=s a disgrace,@ she added.
In response, two demonstrations have been organized in front of the American Dreams office by Pratt Area Community Council, demanding that American Dreams stop preying on unsuspecting homebuyers. At the most recent direct action, PACC member Jackie E. Mitchell presented American Dreams with an Aaward@ for dishonesty and irresponsibility, which also officially kicked off a neighborhood boycott. In addition, Councilman James Davis, a sponsor of recent anti-predatory lending legislation, also rallied with PACC, directly confronting an employee of American Dreams while television cameras rolled.
AWe have no problem with legitimate businesses,@ said Davis. ABut today we are sending a message to all businesses that are taking advantage of our community members. We are organized, and we will fight back.@
Pratt Area Community Council (PACC), a not-for-profit community organization dedicated to neighborhood diversity and stability, organizes and counsels low-income homeowners in danger of being displaced after signing predatory loans. Such loans, frequently characterized by hidden costs and targeted primarily at seniors and people of color, often lead to foreclosure. The problem is especially prevalent in Bed-Stuy, whose many beautiful brownstones have risen dramatically in value over the past few years.
Predatory loans have traditionally been targeted at long-time homeowners, usually seniors, who are Acash poor but equity rich,@ which means that they live on a fixed income but own a valuable house that dishonest lenders may look to steal. But Nicola=s case is illustrative of a new predatory danger in Bed-Stuy, the Aone-stop-shops@ where storefronts take advantage of uninformed first-time homebuyers.
AThis is the American Dream?@ asked Ms. Adonis. AAmerican Dreams told me to trust them, that everything would be fine. But now what? Where are my baby son and I supposed to go?@