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The Path To Ruin > Public Disinvestment: Planned Shrinkage

SECTION GUIDE

The Path to Ruin | Demographic Changes | Private Disinvestment: The Real Estate Follies |
Public Disinvestment: Planned Shrinkage
| "The Fire War" | The Many Causes of Arson | Hitting Bottom
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bushwick

Public Disinvestment: Planned Shrinkage
by Adam J. Schwartz

One ugly reality of the demographic transformation of Bushwick was that real estate brokers saw a chance to make more money by speeding up the white exodus. They did this in two ways: through "Blockbusting" and through the FHA program, a government loan program designed to help poor minority families get home ownership.

Blockbusting worked like this:

"At a time of great racial tension, real-estate operators would buy a house in a largely white neighborhood, such as Bushwick once was, rent or sell it to a black family, and try to create community panic by leaving calling cards in mailboxes. The cards included the operator's telephone number and, in the case of Bushwick, such messages as, 'Houses wanted, cash waiting,' and, 'Don't wait until it's too late!' Frequently, the houses were sold by their longtime inhabitants to the real-estate companies for a fraction of their value. The companies then sold the houses to working-class minority-group members for several times their worth."

Martin Gottlieb, F.H.A. Case Recalls Bushwick in the 1970's, The New York Times, February 2, 1986

Toby Sanchez explains the FHA Mortgage Scam this way:

"Real Estate Brokers took houses they had bought for cheap panic sale prices, then had them appraised by bribed inspectors, who assigned a high value to them. They were painted to look nice on the outside and sold to minority, first time, unsophisticated buyers, with low down payments and federally insurd mortgages. Sometimes the new families were able to hold on for 5 or 10 years, but when major repair problems or the family's income declined, they had to default. Rather then work things out, it made the broker more money to foreclose quickly, get paid off by FHA insurance, and sell the house to another innocent victim. Families, as well as the neighborhood, paid dearly in this game, as most of the houses eventually ended up boarded up and uninhabitable."

Toby Sanchez
Bushwick Neighborhood Profile, 1988
Neighborhood Information Center

Taken together, these two private trends took a profound toll on the pace and impact of white flight in Bushwick.

"Between June and September of 1962, there was one block (Palmetto Street between Knickerbocker and Wilson) on which over 100 families had moved out."

Rev. Peter Mahoney Former Chairperson, Community Board 4

"The neighborhood went from 72% owner occupied to 30%. Absentee landlords did not have an interest in Bushwick."

Vito Lopez New York State Assemblyman Founder, Ridgewood Bushwick Senior Care Council
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