Fighting Foreclosures: The American Nightmare

Memphis, Tn - Homeowners fortunate enough to stay in their homes during this foreclosure crisis are facing a nightmare of their own. They are seeing their "white picketed-fence" communities crumble in the hands of banks and bad investors. Some Memphis neighborhoods are watching this un-fold from their front porches.

The American dream on the streets of Southeast Memphis is boarded-up, broken, and nearly abandoned. What keeps part of it alive is the "roll-up-your-sleeves" work of the Burlington Area Neighborhood Association. BANA President Lynda Whalen and her group of homeowner-volunteers are cleaning-up a rental property that they say hasn't been touched in weeks. It's owned by "Fairway Capital Partners LLC"--which belongs to investor brothers Richard and Jeff Boone.

"These houses are literally falling down. And boarding them up doesn't solve the problem," Whalen said.

It's far from the only house this group watches over.

"The ones where the grass grows up, the leaves get all over the place, we go by and just clean 'em up or something. Nobody else is going to do it," BANA member Willie Coleman said.

Whalen says the Boone Brothers top her list of bad investors. Under their names, Boone Investments, and Fairway Capital Partners, they own 288 properties. The Division of Community Enhancement reports that within the last decade, of those 288 properties, 167 have a current or past code enforcement violation case. That's more than half of the investors' properties.

"These people move out and they can't sell and they rent and every time another somebody moves in it, it just seems to go down, down, and down. It's something I really don't understand," BANA member Bernice Travis said.

This community is dealing with so many investors because two out of every three foreclosures are sold to people who will rent them out. The 38125 zip code is one of the top ten zip codes for foreclosures in the city. And, there's a reason why its long-time home-owners have a hard time with that distinction. Just nine years ago, that zip code had one of the highest percentages of homeowners on that list. Whalen remembers the "old" Burlington. She has been here since 1976.

"Property owners, young couples, small children. It was a growing neighborhood. It was a growing family neighborhood," Whalen said.

Dr. Phyllis Betts is the Director of the "Center for Community Building and Neighborhood Action." It just finished a study of the city's residential properties.

"We're looking at about a 20-percent blight rate city-wide. Meaning, one out of five properties could use some improvement," Dr. Betts said.

You can blame the housing bust for the blight in neighborhoods like Whalen's. But, Dr. Betts says, the study shows there are strategies that could help.

"We don't have any kind of rental inspection, for example. Most cities do require that rental properties be inspected," Dr. Betts said.

As for code violations like busted garage doors, tall grass, shattered windows, Dr. Betts suggests having built-in incentives like tax breaks or low-interest repair loans, for good landlords.

"A lot of the less responsible investors have an investment strategy, where they will sell back and forth, really to avoid code enforcement," Dr. Betts said.

Whalen says the landlords she fights pass the responsibility of care onto the tenants. Dr. Betts says that's not an excuse, "Two words, tenant screening.”

Dr. Betts says fixing the housing problem in Memphis will take policy changes and people like Whalen, who won't hesitate to call code on something like over-grown shrubs.

"Because people can hide behind those shrubs, they can break-in that window and nobody would ever know," Whalen said.

Whalen and her group are willing to chase a dream they were living just years ago, “That is my home over there. I've been there for 33 years. I've raised four children there, I fought to own it. I own that home. And, I take that very seriously.”

We did reach-out to brother-investors Richard and Jeff Boone. Jeff Boone did not want to do an on-camera interview. He was surprised to hear that more than half of his properties have, or had, code violations. He said the majority of them probably dealt with over-grown lawns--which he says, are the tenants responsibility to keep up. As for the property BANA was cleaning-up in this story, he said weeks of rain kept them from cutting the lawn for so long. Jeff Boone said he appreciates neighborhood activists. And, he called Whalen once we left the office to see what else he could do with that property they were targeting.