The U.S. Treasury Department is stepping in where the current housing crisis left off with a new “fair lending unit” that demands that once again, banks make loans not based on credit scores or worthiness, but based on race and ethnicity. “The foreclosure crisis…disproportionately touches communities of color,” explains Thomas Perez, head of the department’s civil rights division. He explains that lending discrimination (which he compares to cross-burning) is “discrimination with a smile” and goes on to say that even if lenders are not actually discriminating based on race or ethnicity, if “the cumulative effect of their actions implies discrimination,” then they can still be sued for the crime[1].
Let’s get clear here: Discrimination is wrong, and it’s easy to spot. Here’s a simple test: If two parties are equally compliant with a clear standard of measure, yet one of the parties is singled out in some way that is external to the clear standard, that is discrimination.
Therefore, it is actually discriminatory to pursue charges of criminal conduct against legitimate, law-abiding businesses for no more reason than the fact that some bozo named Perez doesn’t like the racial distribution of mortgages granted based on 100% legal standards. Remember: There are thousands of lenders all over America who have absolutely played by the rules and done a good, ethical job. But if this guy Perez doesn’t like the racial distribution of the loans granted by these lenders – even though the approval standards are 100% legal – he has stated he will pursue criminal action against them.
You know there’s a problem when a government official suggests that a financial matter of any sort is in any way similar to something as despicable as cross-burning. This is clear evidence that there’s no rational or legal justification for their opinion, so they have to incite rage which encourages emotion and discourages rationality.
It is not a gift to give a person a financial commitment that they are unable to fulfill – and that’s true regardless of a person’s race. In fact, such an act is malicious, and is the basis of our present housing crash. What Perez is suggesting will not only ultimately lead to another housing crash – probably before the wreckage of this one has been completely cleaned up – but also is intentionally designed to financially damage the people in this country who are already hurting the most and can least afford this kind of deception.
Thank you for reading the Bryan Ellis Real Estate Letter.
Your comments and questions are welcomed below.
[1] http://online.wsj.com/article/SB10001424053111904199404576538283776006582.html
You are absolutely right in stating that their opinions are irrational and can only be successfully promoted by these tactics. Most Americans realize that making loans to persons or families that could not afford to pay them was a major contribution to the housing collapse. The administration’s desired outcome cannot be to provide home ownership for all through these methods. It is obvious that those methods did not work. Their failure to be able to put forth a cogent argument for that proposition, but to instead rely on racial retoric, is evidence that the administration also realizes that this will not lead to increased home ownership. it’s pandering, pure and simple.
The current administration is setting race relations back a good 40 years by claiming that every belief in this country that they do not agree with is racially motivated. Members of the Black Caucus spewing that Tea Party representatives in Congress want to “see them hanging from a tree” is completely baseless and intended only to incite anger and hatred.
Assignment of blame is not the same as solving the problem. We need rational adults to competently assess the situation and rationally and intelligently work to remedy it. Sometimes this means getting out of the way and letting business do business.
Will you Liberals please open your eyes and see what is happening! This socialist sob is one of Obamas clones.
Let him put up his own money and we’ll find out real quick what his true thoughts are…
I am just as entreprenuerial as the rest of you, and while this approach may be misguided, there are numerous credit worthy consumers of color who are discriminated against every day. Discrimination in lending is real.As ab African American real estate investor, I have a credit score over 800 but had lenders constantly attempting to steer me into B and C mortgage products. Of course I did not get into those loans because they were ridiculous. Not everyone is financially literate or savvy and that is where it needs to begin. So stop making comments that appear to be lacking in sensitivity when you have not had the same experience as low income people who simply want the same thing for their families as you want for yours.
Thomas Perez, head of the department’s civil rights division, is an idiot.
Our Government has lost it’s mind. Perez is yet another example of an incompetent public servant who just doesn’t get it.
Discrimination is just plain ole wrong. The “Race” part of every application for anything should be removed “by Law”. I live in a community where reverse discrimination has been rampant for years so I can personally attest to the adverse effects of discriminition.
The highest growing segment of the population these days is bi-racial. Let’s all get past this crap and get on with prosecuting the perpitraitors of the largest financial scam in history.
Stop the Looting… start the prosecuting!
That was a good article and so true! I remember, very clearly, that some years before the housing crisis, I had read several speeches that had been given by then, bank presidents, of at least two major banks, which said in essence or literally, that the lending standards would be lowered so that “minority” people (using code word “underserved”), would be able to qualify. it was a disservice to those people and it was theft to the stock holders and eventually theft to the taxpayers which is most of us that work!
People will always have issues with each other for one reason or another, so I would say from what I have learned that no community is exempt from practicing some form of discrimination, whether racial or anything else.
I happen to be a white guy who only dates black ladies. I have an adopted son who is black. I have as many black friends as I do white. My point? I know from very personal experience that they are every bit as viable a citizen of these United States as anyone else. I consider racists one of the most despicable life forms masquerading as human beings. That said, this Perez character, as well as the rest of the radical left race-baiters in the DOJ Civil Rights Division, as well as Eric Holder himself, are working overtime to make their contribution to destroying the United States as you know it. For my money, they are all deserving of an extended vacation to Leavenworth. Any provider of mortgages actually found to be discriminating on race should be prosecuted. I agree with that absolutely. Equal application of lending standards is to be expected. However, if your credit history and income indicate you can’t afford the property, lenders should not feel pressured to make unsound loans. If your creditworthiness – race, ethnicity, religion notwithstanding – does not meet requirements, then too bad. No soup for you. Heavy handed leftist government apparatchiks of this regime, heavily populating not only the halls of Congress, but every agency of the Executive Branch, are progressively pushing the envelope to set new leftist precedent, and to move the nation inexorably into the socialist realm. Wake up, Americans, and engage fully in the political arena. Time is short.
Our government is one of the largest groups that causes discrimination to continue. We polarize our communities by taking money from the upper and middle class of American workers, and gives it to the lower to non-income bracket of Americans. We don’t always say that it is for the lower income earners, but we say it is for the blacks or the hispanics. There are some very poor white people, too! We track voting polls by race (d1scrimination), we adjust voting districts to accommodate the minorities (discrimination), we are mandated by government to give special help to minorities (discrimination), we make exceptions in trials because of someones race (discrimination), etc.
My suggestion is that all those liberals who think it is okay to finance homes for individuals who are not credit worthy, that they organize a private bank, and loan money to whomever they want, without the backing of the US Government. Our country has enough risk already by providing special relief for people who decide they want to live in a flood zone, but don’t want to pay for insurance.
The majority of successful people (not rich) in the world today, are so because of education, hard work, and meeting minimum acceptable standards. Sometimes factors beyond our control inhibits success. But the majority of those affected, get back on their own two feet by working hard, or double shifts, etc. I grew up in the government projects in New York City. I delivered papers at 10 years old, I worked in a grocery store at age 13, I entered the military to serve my country at 17, and while in the military, I worked extra hours on the loading docks in Florida, as a bartender in Arizona, and even opened a corporation in Germany, all while serving my country and going to college to earn my degree. So, for me to find my money going to free loaders, or people who don’t want to put out the effort to become credit worthy, or are just plain lazy or spend their earned income on alcohol, drugs, and cigarettes is an affront to everything I believe in. I lived in the ghetto in New York City, and so did many of my minority friends. Most of them became successful because of adapting and never believing that anyone owed us anything that we didn’t earn. I don’t want my hard earned dollars going to support housing programs that will not at least pay for themselves, or to allow these same funds to be at high risk at my expense.
This new (like hell it is) idea of giving loans to non-credit worthy people is wrong and discriminatory, but most of all it is again, another stupid idea, at the expense of the taxpayers, to get or stay elected.
Richard Radzik
This is more evidence that the Federal Government is completely out of control.
Perez is just another race baiter giver a position of power.
It boggles my mind that white folks actually believe that the borrowers of color should be blamed for taking mortgages that they could not pay back when they were lied to by the mortgage brokers and underwriters. Seriously???? Seriously!!!!! It also boggles the mind that people actually feel that the financial/housing crisis was caused by irresponsible lending and not more so by the irresponsible bundling and peddling of worthless securities by investment bankers. Furthermore, red-lining, in effect since the 1930s did not prevent other real estate bubbles and meltdowns. So anti-redlining was certainly not the sole cause of this cyclical real estate bust. Rather, irresponsible Bush tax policies and deficit spending, in addition to fraud and greed on wall street were the real culprits. And the poor people of color trying to get a piece of the long denied American pie were just grist for that economic mill, which chewed them up and spat them out, leaving them homeless and disenfranchised once again.
Forget race and forget politics, this is all about greed. Wall Street paid the rating agencies to give the securities a AAA rating so they could be sold to institutional investors, opening up a virtually limitless supply of investment capital. After all, home prices always go up so this was a “safe” investment. But all of those securities included the infamous no-Doc or stated income loans. So anybody could get a home loan by simply “stating” income without any documentation to back it up. Red, yellow, black or white, American or immigrant, all you had to do was fill out the paperwork and “POOF”, instant home. The bank and mortgage companies were the facilitators, writing mortgages to feed the insatiable appetite of Wall Street. Since the loans were made to people who had not really been underwritten in terms of their actual ability to pay the note, the inevitable happened and they defaulted. Thanks to Wall Street and the rush to process these securitized trusts, It is anybody’s guess as to who the actual holder of the note might be and this is played out every day in foreclosure cases across the country. But the servicers are still responsible for making payments to the securitized trusts…and that is where most of the bailout money has gone. And as usual, the pendulum has swung way too far in the opposite direction with banks raising minimum credit scores to the level where no body can be qualified. So, in spite of the lowest interest rates in history, nobody can borrow. Until the holders of the mortgage notes (whoever they are) agree to write down the notes to reflect current market conditions this mess will continue on, with illegal foreclosures and more fraud on homeowners and the courts.