Many Guyanese in New York have been hit hard by the US economic meltdown, losing homes, jobs and pensions due to bad mortgages and risky investments that did not pay off.
Faced with soaring food and gas prices, they are cutting back, making adjustments to their lifestyle, while trying to protect their dreams of a better life for their children. In Guyana, the impact of the financial crisis has not had a huge effect on remittances as yet, although it is believed that it will be felt soon. A local cambio dealer expects the slump in the US economy to be felt by the middle of next month. Now, she said, her business is experiencing just about a two to three percent decline in money transfers from the USA.
In 2000, a census found 130,496 Guyanese-born residents living in New York City. Licensed real estate broker and writer/artist Edgar Henry said the crisis has taken a heavy toll on Guyanese and other Caribbean nationals, particularly in the housing sector. He said a number of Guyanese who went into purchasing houses “were caught with their pants down.” He knows at least ten Guyanese who were affected to varying degrees on home purchases but he believes there may be many more. They were affected mainly on account of bad mortgages due to predatory lending which was unregulated and they have no choice but to walk away from their homes.
While the real estate business has been badly affected since people right now do not want to take chances, he said, “I am rolling with the punches.” He said that during the time of plenty he had invested in other businesses in which he is part owner and some of them were now proving worthwhile. “I will ride it out,” he said referring to the financial crisis.
As a real estate broker, he said that getting the best terms on a mortgage now requires a high credit score, a substantial down payment, full documentation and solid financial reserves. However if time is on one’s side, he said a purchase now could improve their position. “If you need a loan now and have less than stellar credit or a minimal down payment, ask your broker about mortgage insurance,” he said.
He added: “If you can’t make a mortgage payment, don’t be shy, call your lender. Banks and lending institutions do not want to own your home, and the sooner you call the more options they can offer to cure your problem”.
Henry said that no one can deny that times are tough due to the financial meltdown which has resulted in recent mergers, thousands of layoffs, the Merrill Lynch, Freddie Mac and Fannie Mae fiascos, coupled with the proposed government bailout of the world’s largest insurance company AIG. He expects that remittances to Guyana and barrels and packages sent to Guyana from New York would decline in the coming months.
America is struggling with soaring prices, mounting debt, a volatile stock market, housing woes, and fluctuation of fuel prices, he said adding that in spite of the gruesome economic situation and the terrible ricochet effect on every phase of daily lives “we still have to find ways and means to survive. It is imperative that we cut costs, retire when our nest egg has taken a hit, pay back student and car loans and at the same time avoid foreclosure.”
For a woman who asked to be identified only as Sonia, the crisis has meant becoming the sole breadwinner for her family. She left Guyana three years ago to join her husband and two children in New York. In the first year and a half after she arrived in Brooklyn, Sonia and her family lived in the basement of her in-laws. She worked at two jobs to help her husband “to pay down” on a house so that they could eventually move out. Her husband was forced to take early retirement so as not to lose out on some of his benefits. While that might have been good, Sonia said he has lost substantial money on investments he had for their children’s education. She did not say how much was substantial. For now, she is still holding down two jobs: as a clerical assistant during the day and as a caregiver in the evening. She and her husband have had to “give up” the house they had mortgaged in Queens and they are now back in her in-laws’ basement; a situation which she does not like. Sonia wants to come back to Guyana but her husband does not, she said. One good thing that has come out of the financial crisis, so far she said, was that he has stopped drinking. He now tries to be more understanding to her, since he has all his family in New York and she had no one but him and the children.
Suffered heavily
In a telephone interview with the Stabroek News, investment banker Carlyle Stewart said he has suffered heavily in the markets, losing about US$100,000 on an investment in equity. “For me, it is painful,” he said. The loss, he said may not be a big deal on the part of market volatility, but he called it a huge loss for him considering the impact on his future plans, including vacations, tuition fees for his children and his general lifestyle.
On the real estate front, he said everything was safe with him. But he feels those losing homes, especially in the Jamaica and Liberty areas were due to “very bad financial decisions because they do not understand the markets and financial strategies.” On Monday, he said a number of houses on one block in Queens – where a number of Guyanese and Caribbean nationals live – was boarded up. “They had just lost their homes or they had just walked away from them. They cannot meet the mortgage, which in some cases are less than the mortgage balance. They might as well give up. Real estate value has depreciated,” he said.
Stewart, who has worked with the investment bank Barclays Capital for over a decade in various capacities and is on the trading floor for fixed investment income, expected to make back some money when the situation gets stable but described it currently as discouraging. Losses were part of the risks on the stock markets, he said.
Via e-mail, Editor of the Caribbean Voice in New York Annan Boodram told the Stabroek News he has lost directly through his accounts. He also lost out US$8,000 from a college fund for his son. Boodram, who is also teacher, said his income has not been affected directly since his job was contractual. But with the cost of basic groceries and other consumables having gone up, he said: “We pay more for less and we have to restrict some purchases while eliminating others.”
To deal with the impact of the crisis, he said he was trying to exercise more caution over spending and is being more conservative, generally.
In New York, he said some Guyanese have lost homes, while some of their homes are in foreclosure; and some who rent homes are being scammed and find themselves being evicted.
“Some have lost money on their pension, retirement investments or commercial investments. They have to deal with higher prices. Some have lost jobs while others are struggling – those in real estate, travel financial investments for example. They travel less, entertain themselves less, are more cautious in spending, bargain hunt, buy less, etc.”
He also said some businesses owned by Guyanese, particularly in the Brooklyn area, are closing.
Trade union activist and teacher Chuck Mohan lost US$10,000 on his Individual Retirement Account and his 410K Savings Plan. A friend of his has lost US$46,000 on similar retirement plans. He is a teacher and does not expect to lose his job since his skills are more or less needed.
