From Redlining to Subprime Lending: How Neighborhood Narratives Mask Financial Distress in Bedford-Stuyvesant, Brooklyn

Abstract

This article explores why and how homeowners in Bedford-Stuyvesant, Brooklyn, New York, took out subprime mortgage loans, and the effect of these loans on individuals and their community. It analyzes real estate histories for properties on four street blocks in Bedford-Stuyvesant by linking public data for real estate transactions with homeowners' descriptions of those transactions, gathered through interviews. Subprime lending flourished in a neighborhood that historically was redlined by conventional lenders, and created and exacerbated poverty, as it stripped equity from individuals and the neighborhood. Many homeowners in the study managed to combat this process of becoming poor, however. Homeowners are averting foreclosure while making sacrifices that are not apparent from data for mortgage foreclosures, neighborhood appearance, or initial conversations with residents and community leaders. Longtime homeowners' personal and neighborhood narratives of upward mobility and stability remain sacrosanct and attached to homeownership, even when belied by financial realities. More recent homeowners are more likely to focus on safety concerns and economic uncertainty and to consider leaving. These findings suggest that efforts to address the subprime lending and foreclosure crisis and to prevent its recurrence should include homeowners who are not in foreclosure, but may nonetheless be struggling, and that solutions must consider homeowners' relationships with their communities.