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Episode #1708
Landowner Options
Holloway: Jay Holloway, Host
Adams: Stella Adams
Prince: Carolyn Prince
Horne:Savi Horne
Holloway: Many people lose the land or home they own or recently inherited
largely because they are not properly informed about their
options. Whether you live in the urban, rural or have a farm,
we will talk to you tonight about how you can learn what your
options are, next on Black Issues Forum. Stay tuned.
Voiceover: This program was made possible by contributions from UNC-TV
viewers like you. Thank you.
[THEME MUSIC]
Holloway: Wealth is largely created through inheritance, and land is
one of the most common assets. But there is a great wealth
disparity in our state between blacks and whites. One of the
reasons is the loss of land due to many different scenarios.
Here to help us better understand these land loss concerns
are, first, Dr. Carolyn Prince, executive director of the
North Carolina Coalition of Farm and Rural Families; also,
Savi Horne, associate director of Land Loss Prevention Project,
and Stella Adams, executive director of the North Carolina
Fair Housing Center. Ladies, thank you all for being with
us this evening on a very important topic: that there seems
to be a real problem in our state, so we’re going to
talk about that problem. How did we get there, and what are
some of the real options for resolving this? Stella, let me
ask you first. There is a great disparity, not only in income
between blacks and whites in North Carolina, but between wealth.
Can you explain that?
Adams: Yes. 60% of the wealth that a family--any family--accumulates
over a lifetime is through home ownership. We have a great
disparity in terms of net wealth between black families and
white families in North Carolina. The average white family,
when a family member dies, passes on $44,000 worth of wealth
to be inherited by their survivors. The average black family
in North Carolina only leaves $4,000 in net wealth. So that’s
an 11:1 disparity in wealth that we need to try to overcome.
Holloway: That is a great disparity. Boy. Carolyn, is that due to poor
estate planning?
Prince:Yes, that’s the primary problem. There are not wills and
other plans to preserve the land and to pass it on to the
next generation. We see that a lot in the rural areas.
Holloway: And Savi, in your experience do you see the same things?
Horne: Yes I do, and I see a common cause between, say, urban land
issues and rural land issues in the sense of, in the urban
areas you might have, say, redlining of African American communities,
where they can’t get credited to keep their property
and therefore preserve the wealth in their homes. And then
in the rural communities you have predatory lending and other
factors, discrimination, just a lot of other factors that
prey on land ownership that result in loss.
Adams: We see a great deal, the North Carolina Fair Housing Center
works a great deal with homeowners who have fallen victim
to predatory lending practices in our state. We are lucky
in North Carolina that North Carolina recently passed legislation,
and was the first state to pass legislation to stop predatory
lending in the country, so we hope that this will stop some
of that bleed that’s going on in our communities. But
it is… Part of the problem is that many African-Americans
just walk into the wrong door to start with. 51% of African-American
homeowners go into a sub-prime lender first, and never walk
into the prime lender’s door. A prime lender is like
a bank or a credit union. They never walk into it. They go
to the mortgage broker first. So we have got to train folks
in our community to go to the bank. Yes, there was redlining,
but banks now are much more, have many more products available
to meet the needs of African-American consumers and are dying
to make loans to African-American consumers. So we really
need to encourage people to go to the bank, go to the credit
union, go to the savings bank before you head to the mortgage
broker or the finance company. That will save you thousands
and thousands of dollars in interest, and that ends up being
wealth that your family has.
Horne: And I agree with Stella, because one of the good things, if
you can see any good things about these merges with banks,
is that they really have to do a better public relations job
and really serve the under-served population much better.
So they’re on notice that they do have to provide the
kinds of loans and services to the African-American population
in the rural as well as urban centers. So I think that’s
a good thing, as well as with agriculture, making and designing
products that farmers can utilize.
Prince:What we’re seeing is that the problems that both Stella
and Savi mention is that from lack of information. Under-served
populations in urban and rural areas don’t get the timely
information they need to make good decisions, so our agency
primarily is one of outreach and education. We’ve been
going around the state, having workshops, giving information
on estate planning, wills, how to eliminate heir property
as well as options for those that want to maintain the land
in farming or other pursuits that could generate income.
Holloway: You all talked about the banks and they are open to doing this.
We talked about the problems of predatory lending. But this
Community Reinvestment Act that has been going on for the
last 10 years or so, is that also still helpful to African
American homeowners or potential homeowners?
Horne: Absolutely.
Adams: I think so.
Prince:It’s helpful, and some are better at it than others. The
problem is that the borrower needs to have the information
to be able to go in and know that they are supposed to get
a certain level of service from these banks because of their
commitment to the program.
Holloway: And they get it from organizations like yours.
Adams: Yes.
Prince:Yes.
Horne: Yes, and I’ve noticed that with the recent merger of
Wachovia/First Union that a lot of the CRP dollars are really
being targeted at agriculture businesses for small farmers,
especially African-American farmers, but limited resource
farmers in general. So we’re going to see a great push
to kind of really make loan packages available, looking at
credit, looking at the barriers and trying to design certain
instruments that would make it much more feasible for people
with bad credit history, especially farmers, to qualify for
homes.
Adams: The Land Loss Prevention, the Farm Families and the Fair Housing
Center have been very active in CRA activism with the banks,
making sure these products and services are available. Freddie
Mac and Fannie Mae, which are secondary markets, have committed,
each of them have committed $100 million to rural North Carolina
and to homeowners in predominantly black communities, to make
loans available to folks who don’t have perfect credit
as well as to African-Americans who do have good credit. One
of the things we have to realize is that everybody’s
credit is not as bad as they think it is. In fact, about 50%
of the people in the sub-prime market, according to one study,
don’t belong there, don’t have credit bad enough,
could qualify for a prime rate mortgage if they just walked
in the right door.
Holloway: You’ve mentioned that sub-prime twice. Explain that please.
Adams: The sub-prime market… The prime market is banks and regular
loans that you go to, to a bank. People whose credit is blemished
end up in the second, in the sub-prime market, which is for
folks whose credit is not as perfect or doesn’t meet
the criteria. Unfortunately a lot of African-Americans assume
their credit is bad, or assume that because they didn’t
pay a Sears bill, that is going to keep them from getting
a home loan, without going for counseling, without talking
to one of our agencies and seeing what new products are available.
So they just assume that they belong in the sub-prime market
and they go to that finance company or mortgage broker or
mortgage company instead of going to the bank, and that is
a very bad decision on their part. They should go to the bank,
because we have really worked hard and negotiated some really
fine products that are available through the financial institutions
in this state.
Holloway: Is that why we see a lot of African-Americans going to these
predatory lenders or these payday type loans, because they
are largely in our community. Is that prevalent in the rural
areas? Because we see them often in the urban areas, but is
it also prevalent?
Prince:Not as prevalent, because those types of agencies require a
check stub, so they know they can get their money back in
30 days. And if you’re talking about rural communities,
people are underemployed or they are part-time or farm labor.
Or if they are a farmer, then they don’t have that type
of regular job with a pay stub that would qualify for that
sort of thing.
Horne: Right, they need a certain kind of infrastructure.
Holloway: Well let’s move now to how we—we are talking a
little bit about how we got to this situation, but over the
years this disparity in land ownership and building wealth
has gotten worse. I would say that many of our ancestors or
forefathers or parents and grandparents accumulated land,
and it was very difficult to do that, but is it true that
this problem has gotten worse? How did we get to where we
are?
Horne: When you look at it historically, we went from a people without
land back in 1865 to about 1919 we had well over 15 million
acres of land. Today the statistics, it’s hovering in
terms of somewhere around 4 million. We have, like, about
18,000 farmers. We went from a high of 975,000. So a lot of
it is the changes in agriculture, but a lot of it is, like
the persistent problems that we find in terms of, as a people,
how we deal with wealth issues, how we deal with estate planning,
as Carolyn has said, how we hold onto property in the urban
areas, as Stella has been talking about.
Prince:We try to focus on teaching a family, and we take the holistic
approach, being able to create, enjoy and pass on wealth.
And wealth is not just money, but it’s land, it’s
other assets that people own. And what we find is that they
don’t realize that things that they take for granted
are worth something to family members and to other people.
So it’s a learning process, and we work hard to try
to change the mindset and to educate people about what is
going on and how they can protect what they have, and to pass
it on.
Adams: One of the things that Carolyn talked about that is so crucial
is estate planning and making sure you have a will and that
you don’t leave heir property just out there. So many
times we’ve seen situations where there may be 10, 15
family members of some blood relation, but there was no will
so they all have a little piece of this land. And a developer
or a nefarious person might purchase one person’s piece
of the property, but they have access to the whole property.
So they’ve purchased the rights of this one heir, and
there may be 12, and then they go in and strip all the trees…
Holloway: Without the permission of the others.
Adams: They don’t have to have it. They are equal owners.
Horne: Because they are co-tenants.
Prince:Or they could force the sale. They could say, “Well, I
want my part,” and because they all can’t agree,
then the land has to be sold. And then if it’s 12, it’s
divided by 12.
Horne: And we see that kind of connection with the urban areas, because
when you do a property search you can locate heirs, say, in
New York City who might be having hard times and might be
willing to give up one one-fourth of their interest for $5,000?
Right. But that person now becomes legally entitled to use
that land as a co-tenant with equal rights. And, you know,
as Carolyn said, they could force a partition sale, where
the land might be divided up, but it might be such a…
It becomes economically undesirable to do so. It’s forced.
It’s a forced sale, and everybody loses.
Holloway: So let me make sure. If most of our target audience watching
tonight do not have as much wealth as their white counterparts,
they may feel that, “Well, I don’t have enough
resources to do estate planning. I may not need to do this.”
But you are not encouraging them to do that. You are saying,
“You still have enough.”
Adams: It’s essential.
Horne: It’s essential to do estate planning.
Prince:It’s essential if you own anything, because having a will
is the only way a person gets to have final say as to who
gets, and how much or where their assets go after they pass.
And the problem was really highlighted here in North Carolina
in the African-American and Native-American communities when
the tobacco settlements came, and they had to have people
signed up to be able to get the payments for quarter owners
and growers. And there were so many people, there are millions
of dollars sitting out there somewhere that cannot be paid
to people because it’s an heir property, and the person
that may be farming the land does not have the legal authority
to sign, so no one gets that money.
Holloway: And for those families… I’m sorry.
Horne: So we lose. We lose.
Holloway: Yes, and for those families that do not have heirs, if they
don’t do a will what happens to the property?
Prince:The state. The Feds.
Adams: The state of North Carolina gets that property. And I say,
even if you have no children, do you really want the state
to have that money? Or can you think of some community organization?
This is what other people do with their money when they don’t
have children, they leave it to an organization, or they leave
it to a church or they leave it…
Prince:To a college.
Adams: To a college so that that money can continue to be in our community
and work for the benefit of our community. It is so essential
that people, if you have a dollar that’s going to be
left, you should decide how that dollar is going to be spent
and not have it just go into the banks, I mean, into the state’s
coffer. You earned that money and you should decide how that
money is used. But we need to be wise about how we use our
equity in our urban homes. Once you build the wealth in your
home it really is there for you to use for the benefit of
your family. A lot of folks use that wealth to start businesses,
to send children off to college, to have retirement income,
to feel safe in their retirement years, but you don’t
want to spend that money on pizza. And a lot of times…
Horne: Or to buy a car.
Adams: Or to buy a car, okay? A lot of times you will get pitches
in the mail from lenders saying, “You’ve got these
credit card debts,” and the credit card folks are calling
you on the phone and harassing you, yes. But what happens
if you don’t pay that credit card? They’re going
to come, cut it up and put it on your credit report. You will
still have a home to live in. If you take that unsecured credit
card debt, and you put it on your equity loan and you don’t
make that payment, you lose everything. Is the dress at Sears
or the pizza from Dominos worth losing your home over? This
is the time of year that folks are going to start getting
a lot of these pitches. You want money for Christmas.
Holloway: What about this problem? Because it is a problem, and many
people in our community have done this, how do they get out
of that situation? They’ve got these large equity loans,
they’re paying on this now, and that’s one of
the reasons we’re talking about it on this program,
because we’re losing land and homes that way. How do
they get out of that?
Prince:There are counselors that specialize in financial management
that can help individuals like this. So I would suggest that
they would seek that type of counseling and be willing to
face the reality that they have to be conservative and to
work hard to get themselves out of debt and to look at other
resources. They may have talents or skills that can be used
to generate income. So there are ways, but it takes sacrifice,
it takes planning and it takes getting enough information
for informed decisions. And it has to be a family affair,
because their son or their daughter may want a new car at
16, but the family can’t afford it. Then the parents
shouldn’t jeopardize, as Stella was saying, shouldn’t
jeopardize the family’s land or home just to satisfy
that consumer interest that could be temporary or delayed.
Horne: And with your farm, if you’re running into problems with
your farm, there are farm management tools. And if you don’t
want to go to USDA, the department, to handle that, there
are organizations such as Carolyn’s that could help
you do deal with farm management. There are plenty of options
available, you just don’t have to lose your property
or your home.
Adams: And if you are the victim of illegal predatory lending then
you need to contact the Fair Housing Center, the Attorney
General’s Office or Land Loss Prevention. We will assist
you. The Attorney General has just recently settled a case
for $20 million with the associates on single premium credit
life insurance premiums. Between now and January over 9,500
victims will receive an average of $4,000 in refunds.
Holloway: Stella, how does one know that they are the victim of an illegal
predatory lender?
Adams: Generally the signs of a predatory loan are if you took out
a loan within the last year and you have an interest rate
above 14%, 13% or 14%, you’re probably in a predatory
loan. If you look at your HUD-1 settlement statement and you
see points and fees. Loan origination fees generally are one
or two points. If you see more than that on there you might
want to call one of us up and let us look at your loan documents.
If you see “single premium credit life” on your
loan, you need to call one of us up right away. If you see
something that says “POC” with a figure beside
it, you need to call one of us.
Holloway: Let’s spend the last five minutes—believe it or
not we’re about ending—you wanted to say something
real quickly.
Adams: I wanted to say that in the rural areas we’re finding
creative ways to help farmers and rural businesses diversify
what they’re doing so they can generate more income.
Holloway: That’s exactly what I want to move to now.
Horne: I was hoping you would get there.
Holloway: I’m sorry, we spent so long on this and I was hoping…
Yeah, what are these options, passive income, direct things
you that you can do to keep your land.
Adams: Well, if it’s farmland and they don’t want to farm
it anymore they can lease or rent to other farmers, they can
put it in state or federal programs, such as forestry or conservation,
which preserves the land, there’s an annual payment
for that and the land is still theirs. If they want to continue
farming, there are diversity issues such as agrotourism, where
you bring urban people in. They can do value-added processing
to farm commodities and sell them for higher value. And there
are some new enterprises that can be used that are more high
value and generate more money, such as organic products, specialty
crops, herbs, medicinal herbs are very big now, and that sort
of thing. We also see farmers that are going into tourism
in terms of ponds for fishing or renting land to hunters.
You’d be amazed at the amount of money that hunting
clubs will pay for the exclusive use of a farm to hunt for
the different—go from duck season to deer to turkeys
to bear, you name it.
Holloway: Savi, what are some of your options?
Horne: I was going to say, while given—I’m always harping
on the discrimination factor, but I mean one of the things
that has resulted from, like say, race-based discrimination
in terms of where you live in North Carolina, is in the rural
communities you do have a lot of land ownership that borders
rivers or are within flood plains. And those are prime properties
that could be put in a federal program where you could be
paid money for not farming near those streams or waterways.
That’s passive, good income that could keep you from
any kind of tax foreclosure. We’re also stressing that
land loss prevention, ways in which we can consolidate our
ownership for the land in a land trust that would alienate
the productive capacity, so if a younger person wants to farm,
they can come and farm, but I can still hold on to my right
to own that land.
Adams: In the urban communities what you want to do is make sure that
you monitor the investment that you’ve made in your
home and your community. So you want to make sure that there’s
no down-zoning of your property, you want to stay actively
involved in zoning decisions that affect your neighborhood,
you want to make sure that the proper types of businesses
and all... If there’s an absentee landlord in your community
who is renting property but not taking care of it, you want
to be aggressive about addressing that problem as a community
to keep the values up in your community, to make sure that
abandoned houses—if there have been a lot of foreclosures
in your community because of predatory lending and the houses
are just sitting there boarded up, you want to aggressively
go after the banks that own those properties and say, “You
need to sell them or rent them or fix them up, but we’re
not going to let them just deteriorate our neighborhood.”
Holloway: You all have given us a lot of good choices. Let me ask you
one other about the urban area. When is it a good time to
sell your property and maybe move up?
Adams: A good time to sell your property is, I think, once you have
maybe gotten 30% or more equity in the home, because you want
to have enough value in the home that when you move up, you
don’t necessarily move up your payments, that you can
put a big enough down payment on the next house so that you’re
still comfortable. It’s always about managing your wealth.
And moving up, but not having equity in that new house, is
just a greater debt. You don’t necessarily have to move
up. If you have a nice, comfortable home and you have a lot
of equity in that home and the neighborhood around it has
improved and the house went from $40,000 when you bought it
to now it’s worth $120,000, that’s a lot of wealth.
You don’t have to move to a bigger house and lose that
wealth. That money can be used to educate your kids, to start
a business. That’s the wealth you pass on.
Horne: That’s right.
Holloway: Well thank you so much. Time has run completely out. You all
have given us some wonderful options. Thank you so much for
being with us.
Horne: Thank you for having us.
Prince:Thank you.
Holloway: It’s an important
topic. You know, each of us are the sum total of the choices
that we have made. Hopefully tonight’s program has helped
us to make, or to better inform you on the issues of building
wealth through land or home ownership. Now the choice is yours.
Take advantage of all the resources to help you properly plan,
manage, sell or pass on your property—or increase the
risk for losing your land or home.
We’d love to have your feedback
on tonight’s program or suggestions for future topics.
Visit our website at www.unctv.org,
we’ll let you know how to get in contact with our guests,
or you can call us at (919) 549-7167 or email us at bif@unctv.org.
For Black Issues Forum, I’m Jay Holloway. Please
join us again next Friday night at 9:30 only on UNC-TV. You
have a blessed evening.
[THEME MUSIC]
Voiceover: This program is made possible by contributions to UNC-TV by
viewers like you. Thank you.
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