Grassroots community groups, including the Northwest Bronx Community and Clergy Coalition, are teaming up with larger national organizations in an effort to push Wall Street into paying up for its role in the mortgage foreclosure crisis hitting the Bronx and every other part of the country.

The Coalition, with help from the National Training and Information Center (NTIC, based in Chicago) and People United for Sustainable Housing (PUSH, based in Buffalo) released a report last week saying the biggest Wall Street investment banks grew fat on, and encouraged, the very same predatory lending practices that led to the foreclosure crisis.

Now, the Coalition, NTIC, PUSH and other groups want Wall Street big wigs to give up their bonuses, which this year totaled $38 billion, to create a national foreclosure relief fund that will provide immediate help for borrowers in danger of losing their homes.

“The trail of money and greed leads straight to Wall Street. The big investment firms plan to cash in on big holiday bonuses while our neighborhoods are destroyed by foreclosures,” said NTIC board member Inez Killingsworth.

At a press conference in front of the bull on Wall Street two weeks ago, the collective released its report and demanded action from the banks. When they tried to take their demands to the offices of Goldman Sachs, one of Wall Street’s largest investment firms and a prime target for activists, group representatives were promptly removed from the premises.

Goldman Sachs did not respond to requests for comment.  

A recent spike in home foreclosures can be traced to a proliferation of subprime mortgages (which come with higher interest rates that often reset and balloon to even higher rates) over the past six years. Statistics and housing advocates say lenders and mortgage brokers pushed these loans specifically on minority borrowers in lower-income areas. University Heights, a predominantly minority neighborhood, for example, has the highest rate of subprime mortgages in New York City.

It now appears the foreclosure crisis could have been largely averted if investors had not pushed mortgage lenders to go after large quantities of subprime loans. As many as 50 percent of borrowers with subprime loans could have qualified for prime loans, according to a study by Fannie Mae, a government-run lending agency.

The report released by community groups two weeks ago, by freelance researcher Kevin O’Connor, says investment banks, through a variety of tactics, compelled mortgage lenders to produce more and more subprime loans even when it was apparent the housing market was cooling off. Large investment banks paid lenders more for producing high quantities of subprime loans, the report says.

Banks used the loans to make vast sums of money, which they paid out in billions of dollars in year-end bonuses, according to activists. “In the past six years, the hottest products on Wall Street were a collection of complex, lucrative financial products that relied heavily on high-yielding subprime mortgages,” the report says. “The investment banks were reaping billions in revenue for churning out these subprime-related bonds, and bankers who worked with them were taking home some of the biggest bonuses on Wall Street.”

“This is rich guys robbing poor people blindly,” said Coalition activist Joseph Ferdinand who attended the Wall Street event. A renter who lives in Mount Hope, Ferdinand said he doesn’t expect Wall Street big shots to just start emptying their wallets, but that doesn’t mean activists, advocates and homeowners should stop pushing them to help remedy a problem they helped create. Ferdinand sees the effort as a battle in a larger class war.

“This subject needs to be talked about,” Ferdinand said. “We need to keep the pressure on. Whatever weapon is used in this struggle, let it be used. There’s a battle going on between the rich and the poor. All poor people have is numbers. What poor people need to do is come together and keep talking about this and how are we are going to get this situation better.”

Jamie Johnson, a member of the Coalition’s housing committee who spoke at the rally, said he almost fell into the subprime trap a few years ago, when he was looking to move out of his Tremont-area apartment. “I think that people weren’t aware of what could happen,” Johnson said. “You give them the cream on the top, but didn’t tell them how it could go wrong.”

Local and national efforts to stop people from losing their homes are beginning, but none are directly targeting Wall Street investment banks. Last week, Mayor Michael Bloomberg announced the creation of an independent nonprofit called the Center for NYC Neighborhoods to assist in subprime-related relief efforts. And President Bush recently unveiled a plan, working in conjunction with lenders, to freeze interest rates on subprime loans. But housing experts said the plan came late and would only help about 15 to 20 percent of subprime borrowers.

Here in the northwest Bronx, the need for loan counselors – specialists who can help borrowers refinance loans or stop the foreclosure process – is glaring. Homeowners defaulting on loans or slipping into foreclosure have nowhere to turn. Only one person, Teresa Ortiz, of Neighborhood Housing Services, counsels borrowers in the entire northwest Bronx.