Forclosures Grow like Daisies in Frayser.

Frayser is neighborhood that has seen better days. Yet, people have been trying to make improvements and help residents build wealth. Unfortunately, that wealth building has been deliberately destroyed. The map below shows the foreclosures in Frayser in 2005. There were 477. That was up from 267 in 2004. The foreclosure rate was 7.4%. That is 10 times the national average of .7%. 48% of loans issued for mortgages in the area were subprime. In 2005, there 1066 houses sold in Frasyer. The ratio of foreclosed to total sales is 44.7%. Unbelievably, 30% of borrowers in Frayser who received subprime loans actually qualified for a prime loan. The biggest loan issuer (equity miners is a more accurate term) in Frayser is Countrywide.

Here is a little background on the CEO of Countrywide. His name is Angelo Mozilo. In 2004, Mr. Mozilo had a base pay of $2.5 million and received a bonus of $17 million. The compensation committee of Countrywide justified his compensation by saying (it) "reflects the outstanding and sustained financial performance of the company during the year," and has a "direct relationship to the company's financial and operational results."

He did such a good job economically pillaging neighborhoods like Frayser that in 2005 he got a pay raise and bonus that topped out at $72 million, with stock options totaling $308 million. “From the start of 2004 to the end 2005, the overall (stock) value (of Countrywide) has increased by more than $7 billion since the beginning of 2004--meaning shareholders have benefited from owning the stock with Mozilo at the helm. And earnings for 2004, while down slightly from 2003, totaled $2.3 billion.”

Notice that last sentence though, earnings were slightly down. Funny how that little drop in earnings didn’t bother the shareholders too much. So what if he is having Countrywide write bad loans to people and causing economic devastation. It’s just about raising those share prices. Well flash forward to 2007. Countrywide is on the verge of bankruptcy. Seems as though Mozilo so overextended his company that a rise in foreclosure rates for Countrywide mortgages to 1.07% his pushed the company to the edge of meltdown. But never fear, the Federal Reserve has dumped $62 billion into the Financial sector over the past two weeks to bailout all those banks, hedge funds, and other institutions that bought those debt based securities issued by companies like Countrywide. If you are wondering about what will happen to Mr. Mozilo, he will not have to pay back that compensation he received during the good times. In fact, Mozilo is protected whatever happens. Under the new agreement that took effect in 2006, if either Countrywide or Mozilo decide he should leave, he receives a cash severance equal to three times his base salary and the average bonus or cash incentive award for the two preceding years. I’d say that is a golden parachute for running a company into the ground.

In case you thought 2005 was the worst year for foreclosures in Frayser and things are now getting better, I wish I could say that was true. In 2006, there were about 700 foreclosures and 2007 looks like it will be over 900. On a side note, there are only 10,000 residential properties in Frayser. Over the past three years over 20% of all the residential properties have gone into foreclosure.

Finally, wasn’t it great that President Bush placed the responsibility of this economic calamity squarely on the shoulders of real estate speculators in neighborhoods like Frasyer, where the median home value is $47,000, rather than the millionaire CEO’s and Wall Street financiers.

Data on Frayser came from the 2005 Foreclosure report from the Frayser Community Development Coproration