A Roof Over Your Head
In Palermo, by Piazza Francesco Crispi, there’s an open-air car park crammed with advertising hoardings. Look closely and under the hoardings you can see the rusty curls of an old wrought-iron fence. That’s all that’s left of the Villa Deliella. And yet this was once one of the most beautiful Art Nouveau houses in the city: a watchtower, narrow windows, a balcony, palm trees all around.
On Saturday 28 November 1959, Dickie writes, plans to demolish the villa were put before the city council. They were approved, and the demolition began that same day. In two days over the weekend the house was reduced to a pile of stones. In a month’s time the building would have turned fifty, and the law would have protected it.
In a month. Not a year. Somebody was watching the calendar very closely.
A Right Is Worth What Its Protection Is Worth
Remember the first thing: a house isn’t its walls. It’s a right. The right to live there, let it, sell it, rebuild it and keep strangers out. Without the right, walls are worth nothing: anyone at all can move in. And a right nobody protects is a scrap of paper.
The Villa Deliella stood for fifty years less one month. It almost made it. The law was going to protect it and was a month too late. Which means there was no real protection at all, only a deadline before which it could be got around. There was a building boom on, and the land under the villa was worth more than the villa itself. The market knocked it down.
And the boom didn’t come out of nowhere, by the way. After the war, Allied bombing had left about fourteen thousand people in Palermo without a roof over their heads, and in the 1950s the city’s population grew by a fifth, to six hundred thousand. Building was needed. The trouble lay elsewhere. Who got the right to build, and how did they use it? Dickie gives a whole chapter to that, and it’s called “The Sack of Palermo”.
The oldest document I know of recording who owns the land was drawn up in England. In 1086 William the Conqueror ordered a record of who held what land, what it was worth and what tax could be taken from it, and the result was the Domesday Book, with more than thirteen thousand places in it. The king wanted to know whom to tax, and to put an end to the barons’ quarrels over whose land was whose while he was at it. Before you can trade property, you need a register. Without one, every dispute over land is settled by force.
What Banks Trust
Remember the second thing: banks love taking property as collateral.
Saviano writes about this, angrily and accurately. Italian banks, he says, lend to builders so willingly you’d think that was the only reason they existed. Not enough guarantees—there’s always a good friend ready to vouch for you. Whereas research, laboratories, farming and craftsmanship seem to bank directors like some unknown planet with no gravity. Italian banks believe in one thing only: cement and brick are safe.
You can understand the bank. You can’t touch an invention. But a house stands there. If the borrower doesn’t pay, the house gets sold. But this is where the distortion grows from. Credit flows into concrete, concrete gets dearer, and banks lend against it even more willingly, because it “always goes up”. Until one day it stops. More on that in the next essay.
Mortgages for All
And the third thing: the mortgage as we know it was invented fairly recently.
In America before the 1930s, a home loan looked quite different. It was usually given for five or six years, and all that time the borrower paid only interest, then at the end repaid the whole sum in one go. And the bank lent only about half of what the house was worth. If the borrower didn’t have the money by the end of the term, he took out a new loan. In good times it worked. In the Great Depression the banks stopped giving new loans. Hundreds of thousands of families lost their homes.
The state answered with a whole series of inventions. In 1933 a corporation was set up: it bought problem loans from the banks and gave people new ones—longer and cheaper. In 1934 a federal administration appeared that insured mortgages, and with it came terms of twenty and thirty years. In 1938, an agency that bought insured loans from the banks, so the banks had something to make new loans with. Later it got the nickname Fannie Mae, and we’ll meet it again.
But the main invention was the annuity. Every month you pay the same amount, and it includes both the interest and a little piece of the debt. At first you pay almost nothing but interest; towards the end, almost nothing but debt. Twenty or thirty years go by, the house is yours, and there’s no enormous payment waiting at the end. That’s how a house came within reach of people on an ordinary wage. And that’s how they became debtors for a third of their lives.
Everyone Has a Mortgage
We like to think mafiosi buy houses with cash out of suitcases. The documents say otherwise.
When Salvatore Maranzano, New York’s short-lived “boss of all bosses”, was killed in 1931, what he left behind, Critchley writes, was mortgages on houses in three places, a few securities and some bank deposits. And Ciro Terranova, once a rich artichoke racketeer, went bankrupt at the end of the 1930s, and the bank, Dash writes, took his mortgaged house from him, so that he and his wife had to move back to 116th Street, to the family’s old house.
The bank didn’t care whom East Harlem was afraid of. Miss a payment, and they take the house. I’d say nothing more democratic than the mortgage has ever been invented.
The Don and Anna’s Flat
Anna, who managed the second laundry, decided to buy a flat and came to the Don for advice. In forty years the Don himself had never taken out a mortgage and had no intention of doing so. But he didn’t try to talk her out of it. He asked to see the figures.
First he looked at how much it would come to each month and compared it with her wages: the payment didn’t reach a third. “Good,” said the Don. Then he asked: how long could you last if the laundry closed for six months? Anna worked it out. Four months. “Put aside enough for two more, then buy,” said the Don. And one last thing: he told her to find out whether all the house’s papers were in order. It turned out there was no permit for the extension where the kitchen was. Anna found another flat.
Eight months later the extension on the first house was ordered to be demolished. Afterwards Anna used to say the Don had saved her kitchen.
The Bottom Line
Check the papers before you fall in love with the balcony. And remember: everyone is equal before the bank. Even the people the whole neighbourhood is afraid of.