RSN Fundraising Banner
FB Share
Email This Page
add comment
Print

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)
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

By Alice Ollstein, ThinkProgress

29 August 15

 

he 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.”

e-max.it: your social media marketing partner
 

Comments   

A note of caution regarding our comment sections:

For months a stream of media reports have warned of coordinated propaganda efforts targeting political websites based in the U.S., particularly in the run-up to the 2016 presidential election.

We too were alarmed at the patterns we were, and still are, seeing. It is clear that the provocateurs are far more savvy, disciplined, and purposeful than anything we have ever experienced before.

It is also clear that we still have elements of the same activity in our article discussion forums at this time.

We have hosted and encouraged reader expression since the turn of the century. The comments of our readers are the most vibrant, best-used interactive feature at Reader Supported News. Accordingly, we are strongly resistant to interrupting those services.

It is, however, important to note that in all likelihood hardened operatives are attempting to shape the dialog our community seeks to engage in.

Adapt and overcome.

Marc Ash
Founder, Reader Supported News

 
+16 # Activista 2015-08-29 09:38
Oligarchs rule/make rules - this stealing of properties by banks are all over the country. We need substantial change in our political system.
 
 
+19 # HowardMH 2015-08-29 10:15
Up the loan amount to at least $10,000 or more. A loan of $500 or $1000 and they can take one's house. It would be over my dead body if it was my house and I would make damn sure to take a few of these scum sucking bastards from hedge fund Fortress Investors Group with me.
 
 
+14 # silverbullet 2015-08-29 10:28
You'll never see the top vultures within miles until all the dirty work is done by others.
 
 
+20 # reiverpacific 2015-08-29 11:12
Ahhhh!
The sickly-sweet, blinding WHITE face of Capitalism run rampant.
If government were to pass an infrastructure revitalization budget, including abandoned and foreclosed homes, banning all slumlord investments and property buying, it would create millions of jobs, potentially returning these homes to those dislodged by the greed speculative money laundering "Great Recession" caused by the same Bank-Mafia.
 
 
-3 # Depressionborn 2015-08-31 07:14
reiverpacific 2015-08-29 11:12
Ahhhh!

I know a town, not large, that has fallen on hard times. Jobs became scarce, subsistence farmers dependent on shopping there gave up and left for the big city. Slum lords buy the old houses now, fix them up a bit, and rent them out section 8. A restaurant in business for 30 years had to close when no one would work there. No one works much anymore. They are on food stamps and welfare and don't need work.

I don't know if the slum lords are good or bad. The people need a place to stay. Maybe without the slum lords and section 8 they would have had to leave town and find work.

So reivers, you tell me
 
 
+1 # reiverpacific 2015-08-31 11:07
Quoting Depressionborn:
reiverpacific 2015-08-29 11:12
Ahhhh!

I know a town, not large, that has fallen on hard times. Jobs became scarce, subsistence farmers dependent on shopping there gave up and left for the big city. Slum lords buy the old houses now, fix them up a bit, and rent them out section 8. A restaurant in business for 30 years had to close when no one would work there. No one works much anymore. They are on food stamps and welfare and don't need work.

I don't know if the slum lords are good or bad. The people need a place to stay. Maybe without the slum lords and section 8 they would have had to leave town and find work.

So reivers, you tell me


Have you EVER tried to survive on food stamps and welfare? They must be having a ball!
I see that you blame the "Non worker" types for the long-time restaurant closing. You wouldn't consider that the "Great Recession", caused by Wall Street and it's government toadies, had anything to do with it, from y'r limited views, would you?
Slumlords are the slimy underbelly of dirty Capitalism. Their "Fixer uppers" are models of tacky, cheapskate-cont ractor minimalism, left riddled with dry rot, damp, mold, leaky roofs, minimal to no insulation and lousy plumbing.
I'm an Architect and have seen this up close. I recall being asked by a prospective buyer to inspect them for renovation to a better standard. My decision; it was cheaper to knock them down and start from scratch.
There, I done tol' you!
 
 
0 # Depressionborn 2015-08-31 19:49
can't disagree except the restaurant owner tried to hire help-no one wanted the job. She closed. That's a fact.

I grew up quite poor, no ruining water, no car, wood for cooking and heating. food stamps would have been nice. I had to start working 8 hours a day at 13.

Capitalism, (individual freedom to excel), saved my ass. So I agree with you the world is going to hell. Socialism is not a good answer.
 
 
+15 # Vardoz 2015-08-29 12:13
As Robert Kennedy Jr. just said we have a full blown Oligarchy that is hurting, robbing and threatening the lives of the majority in our nation. This is why we must fight for Bernie and vote for Progressive reps in each state for the house and senate.
 
 
+20 # Farafalla 2015-08-29 12:55
I notice the hedge funds (with the catchy name Imperial Capital and Fortress) are also major donors to the worst politicians in the country: Hillary Clinton, Mitt Romney, Chuck Schumer, Robert Guiltyas charged Menendez. The capitalist class is tightening its grip on America's gonads. We should be screaming and kicking.
 
 
+6 # Depressionborn 2015-08-29 21:54
Not one post yet that the "City" should not be selling to debt collectors. To a conservative it seems obvious that the city politicos are the root problem.

wake up rsn posters
 
 
+3 # insooth 2015-08-30 06:06
To exonerate the hedge funds while judging the city politicos that put them on the scent harshly is to leave the beast roaming the streets with impunity. This is short-sighted to say the least.
 
 
-1 # Depressionborn 2015-08-31 00:29
Quoting insooth:
To exonerate the hedge funds while judging the city politicos that put them on the scent harshly is to leave the beast roaming the streets with impunity. This is short-sighted to say the least.


That makes no sense. If the city takes your car and puts it up for sale and all you can do is say buying my car is not nice???????? That's nuts!
 

THE NEW STREAMLINED RSN LOGIN PROCESS: Register once, then login and you are ready to comment. All you need is a Username and a Password of your choosing and you are free to comment whenever you like! Welcome to the Reader Supported News community.

RSNRSN