While there are many opinions about the holders of subprime mortgages, including that contingent which simply states that people who fell prey to them basically “should have known better,” there are some pretty clear indications that minority groups of blacks and Hispanics were targeted by lenders for these loans, according to the National Community Reinvestment Coalition (NCRC).
According to the study, African American and Latino borrowers were more likely to receive subprime mortgages and then go into foreclosure than “similarly situated” white homeowners. The study controlled for credit risk and “other borrower, neighborhood and loan characteristics.”
The NCRC used regression analysis to examine statistical samplings of loans in the Washington, D.C. area. This means that they used existing data on home loans and other variables to determine associations between race, loan type, foreclosure and a variety of other factors.
The NCRC declared the results indicative of a “shameful condition” in borrowing, and believes that these problems are ongoing and demonstrate a need for strong financial reform in the country, along with the formation of – surprise – another government agency, suggesting the formation of an “independent Consumer Financial Protection Agency.”
These statistics are appalling, and it’s truly sad that minorities have been and were targeted by lenders or loan brokers in this manner. However, given that there were all sorts of government-linked incentives out there to push these types of loans at the time of the inception of this particular brand of corruption, I do not think that the formation of another federal supervisory agency is the way to address the issue. Furthermore, before the NCRC feeds the racial divide in this country, I think a larger sampling is needed – after all, they are analyzing, existing data, not running new tests and samples – that will support such comprehensive, sweeping statements in a more effective fashion. I do not dispute these results, and they are unsettling and distressing. However, I do think that a larger sampling and a comprehensive analysis of all the factors involved in these loans is necessary in order to truly and effectively address the problem.
Thank you for reading the Bryan Ellis Real Estate Letter – your comments are welcomed below!
Ridiculous!
Their targeting was NOT racial…
They were looking to target ANYONE Black, Hispanic, White or any other color in lower class neighborhoods…
Why would that be? Obvious..
Lower class would not be able to qualify for any other kind of loan…
This has nothing to do with the color of a persons skin…
It has to do with taking advantage of ALL lower class society that Obama is trying to protect now… ; )
As a Real Estate Agent for 15 years, until last year when I purposely let my license expire due to the ugliness that has become the retail real estate industry, I can attest that many minorities were vidimized by Agents, Loan Officers, and Brokers as well as lenders in the sub-prime arena. However I must make it clear that in my experience I can say that those minorities were victimized by those of their own culture. I witnessed hundreds of deals in which Hispanic Agents working with Hispanic borrowers led these clients into the so-called “Tricky Loan” products that were popular at the time, knowing full well that these deals were DOOMED to failure in the near future. This also occured in the African American culture as African American professionals put their clients into these loans as well. What disgusted me most however, was when I attempted to complain about this to my Broker, Office manager, Agents in my office, Loan Officers and Bank Rep.’s who were pushing these loans, and the DRE, my complaints fell on closed ears. I have since grown to hate this industry, and I do not know if I can ever respect it, or those who are a part of it again.
All of this is just so much conversation. As long as the public allows the government to treat the symptoms and not the disease all we will every get is layer upon layer of more government and government intervention and supervision of private business.
If I was on a jury I could NEVER convict the good folks at Goldman Sachs or any of the other Wall Street firms or bank people of their misdeeds if the people who made it all possible were not being charged as well – and that goes DEEP! It would certainly included President Clinton and Greenspan – just for openers. Before you get huffy about that look at Greenspan’s recent testimony and then tell me I’m wrong. Democrats, desperate for votes at all costs have promoted the “Great Society” bit (before it was ever called that) in order to get the votes of those who look for something for nothing. Until and untess the public stops thinking in terms of party and starts thinking about the economic health of this nation’s economy goverment prgrams will continue to proliferate, its size will increase, our liberties will be less and less and when the axe falls all we will hear is the same old sad song – “How Could This Have Happened?.”
A thought you might want to chew on is this. For many years banks have been seeking a way to get into the retail real estate business. What better time for them to get further economic control of business than by trying to do so now. They have a tremendous amount of foreclosure inventory and and can cry crocodile tears to the goverment and cry out that they can help control further declines in home prices and help underpin sales by being allowed to offer homes and loans iin a package deal. Then they can work out a sweetheart deal with the iinsurance companies to include insurace in the package. Banks truly due have a license to steal.
This only scratches the surface of what should be said but hell nobody seems to care so ———- .
John Fish
I agree with you on the loans. The government was the problem to
begin with, and correct again. Too small a sampling.
Best of Everything,
Mel
I agree that more of a sample is need and the government may slow the resolution.
I do not feel this situation was racial , there are just as many whites that have fallen prey to this financial scam.
I do feel that if the blacks and hispanics would not have been able to obtain a loan it would have been the usual complaints that it is some type of hate crime because they could not get a loan.
So get over the “poor me” crap , because no matter what is done the blacks or hispanics say they are being singled out, but a white rancher in texas can be killed on his own property by illegals and almost goes without notice.
The Community Reinvestment Act of 1977 was the brainchild of the worthless one, Jimmy Carter. It began the process that eventually forced banks to make home loans to minorities even when they couldn’t even afford to pay rent. The concept evolved into stated income and liar loans. The banks were under huge pressure to make loans to minorities even when they knew they would have to foreclose because the banks wanted to stay in business and the regulators were breathing down their necks about redlining and the percent of minority loans made. As long as prices went up, it wasn’t much of a problem.
Well guess what, prices started to decline and the snowball became an avalanche. Carter isn’t the only one to blame; greedy lenders, Wall Street, HUD, the Treasury, the Fed, and a cast of thousands share the blame for the unintended consequences.
What I find unconscionable is that hundreds of thousands of minorities in California have gotten together to stop making mortgage payments when they see their neighbors still in their homes after 18 to 24 months of not making payments. Loan Mods, HAMP, HAFA and the parade of dumb government ideas have failed. The lenders dumb idea of not filing for notices of default for 6 months to 2 years has backfired. Many homeowners are perfectly capable of making the house payment, but since there are no consequences for not paying, why should anyone but an honest person make their house payment?
Since we now know that the vast majority of those who got a stated income and sub-prime loan are dishonest, guess who’s going to pay for the problem. You got it….the 56% of the folks who actually pay state and federal income taxes.
Your lead story is quite interested in your content as I recently completed a study of 232,000 foreclosures in a State that has 58 Counties. It was interesting, in that as I studed the data I was struck with the disproportion number of foreclosures were in areas that are heavily populated by Hispanic and Black distressed property owners.
A second observation was the loan and mortgage processing that took place in these communities were originated by Hispanic and Black agents. Wheather this was by design or an opportunity for employment amoung Hispanics and Black individuals is not known.. This may also be the fact that non-minority agents were more at ease in interacting with that population and entered these communities without fear, doubt or skeptism of the residence.
I am not sure what an indepth study of this situation would reveal. I would opt to concentrate on expanding the efforts of the Short Sales program in view of the fact that this appears to be about the only thing that is having significent impact of releaving pressure on the foreclosure crisis.
Al D