Countrywide Home Loans, one of the largest mortgage companies in the country, sent several executives to meet with East Side neighborhood leaders today after a national report last month listed Countryside as having the worst subsidized loan foreclosure rates in Buffalo.
Neighborhood advocates say irresponsible lending practices by Countrywide and other groups have led to high foreclosure rates and abandoned properties that continue to plague the East Side. And now, they want Countrywide to make amends.
"We're glad they're making the first step by meeting with us," said James Grice, an Eastside PRIDE board member. "Hopefully they'll come up with a plan so that this stuff doesn't happen anymore, and to help some of the families whose lives have been on hold because of this."
According to the report by the National Training and Information Center, Countrywide had a citywide default rate of 34 percent on loans backed by the Federal Housing Administration. That means more than one out of every three families ended up on the road to losing their homes.
Members of Eastside PRIDE took a closer look at the report data and said that homeowners living in specific East Side zip codes defaulted on 59 percent of the FHA loans approved by Countrywide.
Moreover, they said, many of those loans were made in conjunction with real estate broker Frank Parlato Jr. and through brothers Charles and William King, all three of whom have been investigated for "flipping" practices—reselling low-value properties at inflated prices.
"Had they not done business with Parlato and the King brothers, their foreclosure rate would not look too bad," said PRIDE Director Kim Harman.
Countrywide laid the blame for its high foreclosure rates on Parlato, stating that his alleged flipping practices in the mid-1990s victimized both home buyers and lenders alike. The mortgage company has intervened to assist a number of Parlato victims, the company stated.
Parlato, who has been heavily scrutinized but never found guilty of any wrongdoing, strongly denies Countrywide's accusations.
The Kings were fined and sentenced to home confinement for six months after pleading guilty to their role in a flipping scam last year.
Today, PRIDE members planned to take Countrywide administrators on a tour of Fillmore District neighborhoods and show the damage caused by the foreclosures. They also are pushing Countrywide officials to adopt a series of recommendations to address the neighborhood damage and prevent future occurrences. Among the recommendations developed by PRIDE: a six-month moratorium on foreclosures connected to real estate scammers; paid reappraisals on homes affected by fraudulent real estate practices; paid relocation expenses for families that have lost their homes due to fraud; credit repair letters for real estate victims; and an ongoing partnership with Eastside PRIDE.
Countrywide officials said they see today's meeting as the start of a long and fruitful process.
e-mail: stan@buffnews.com
