Bronx housing specialist Greg Jost took his experience and knowledge to Capitol Hill last week, testifying about the subprime mortgage crisis during a hearing chaired by a local lawmaker.  

Early last fall, Jost, a Norwood resident and longtime advocate for the University Neighborhood Housing Program, began pointing out that the nation’s fast-approaching home foreclosure hurricane had already touched down in the Bronx.

Jost and other advocates also noted that low-income and minority areas were glaringly affected by the foreclosures. Large percentages of homeowners in areas such as University Heights and Fordham had either willingly or unwittingly been victimized by risky subprime mortgages – home loans with small down payments but ever-increasing interest rates.  

Many Bronxites thought they had achieved the American Dream. Now many can’t afford the payments and are losing their homes. The instability of the housing market is infecting Wall Street, causing a rippling effect that has some economists predicting a national recession.

Last Thursday, Jost testified about the roots of the foreclosure/subprime crisis at a hearing in Washington in front of the House Appropriations Subcommittee on Financial Services and General Government, which is chaired by Bronx Congressman Jose E. Serrano (Bronx 16th District).     

According to the testimony of Michael Calhoun, president of the Center for Responsible Lending, a nonprofit policy group, residents of the 16th Congressional district, which includes Fordham and University Heights, are at high risk of suffering significant damage from foreclosures, since 42 percent of mortgages made in the district in 2005 and 2006 were subprime.

At the hearing, Serrano argued for action to be taken to prevent foreclosures and end predatory lending schemes. “My district is being hit hard by the subprime crisis, as well as the effects of other predatory financial schemes aimed at consumers,” Serrano said in a statement. “High interest ‘refund anticipation loans’ and other shady lending practices are rampant. It must end.”

Refund Anticipation Loans (RAL) are short-term cash advances, offered at high interest rates, which are offered against a person’s expected income tax refund. According to the Center for Responsible Lending, last year there were over 12 million RAL borrowers nationwide.

In his testimony, Jost said the lack of traditional banking and lending institutions in low-income and minority areas such as University Heights and Fordham enabled shady lending practices and exacerbated the financial problems of residents.

“Traditional banks continue to have a relatively small branch presence in our neighborhoods, opening up the door to fringe financial institutions such as payday lenders and check cashers who often double as mortgage brokers pushing subprime products,” Jost testified. ”It is three times as hard to find a bank branch in the Bronx as it is nationally.”

He also criticized the lenders’ vetting practices, saying “huge numbers of loans were made without regard to the borrower’s ability to repay.”

For his part, Serrano also recently voted to approve an economic stimulus package passed by President George W. Bush, saying he did so partly because it promised to increase the limits on Federal Housing Loans in order to provide refinancing options for homeowners who were hit hard by the subprime crisis.