2008 Woodie Awards
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Racism is a factor on the economic ladder, too
Guest commentary
by Guest Commentary |
I don't think you understand the severity of this situation. We, as black people, have been systematically kicked off the economic ladder, and it will now take an estimated 5,300 years to get back on (no joke!). I'm talking about home ownership, the principal source of wealth for Americans, and more so for African-Americans. This "housing crisis" that they are speaking of is, for black and Hispanic people, a disaster of epic proportions. I am intentionally using dramatic language because I want you to catch what I'm pitching. When we talk about racism, most people think segregation, racial violence, etc. But racism, in all its forms, is born from FINANCIAL exploitation, such as this housing mess.
Subprime mortgages are offered to people who have little, no or bad credit. It does not refer to the interest rate a borrower is offered, but to the status of the borrowers themselves. Usually people who fall below a 620 credit score (FICO), or whose credit histories indicate a high "risk" for repayment are offered subprime lending. Under these terms, a borrower is much more limited in the options he or she has to repay the loan. They are virtually defenseless to the whims of the financial market, whether they keep up on their payments or not.
The problem is that people of color are disproportionately offered subprime mortgages. An independent report has confirmed that in city after city, African-Americans are three times more likely than whites to only qualify for subprime loans, regardless of if their credit history is better. There is a term for this, and it is called Predatory Lending. The company lures them in with a low introductory fixed-interest rate (around 6-8 percent) that quickly balloons to a much higher variable-rate (12-13 percent). When the low rates reset at the end of the fiscal year, the higher rate adds hundreds of dollars to homeowners' monthly mortgages, forcing many of them into default and foreclosure.
And now for the numbers. African-Americans have lost more than $92 billion, and a loss of more than $122 billion is expected before the fat lady sings. Latinos will lose $98 billion. Overall, people of color will be robbed of more than $200 billion. The ripple effects have the potential to be even more injurious to us: Foreclosed homes drain tax bases out of communities, and send neighboring homes' property values into a downward spiral. Without tax bases, school funding decreases rapidly (as if inner-city schools are well-funded anyway), and unemployment rises as businesses opt for other areas. Crime increases, and the cycle starts all over again. This is the largest loss of wealth in modern U.S. history behind, you guessed it: slavery.
Please read the report on this disastrous financial injustice that is being inflicted on middle-class and poorer-communities regardless of race. The site is www.faireconomy.org/dream. You can download the PDF file titled "State of the Dream 2008: Foreclosed." I have no witty ending to leave you with, nor do I wish to do so right now. It is kind of hard to focus on topic sentences and essay structures when the financial health and quality of life in my community has been exponentially diminished.
Jontae Grace is a student at the University
Subprime mortgages are offered to people who have little, no or bad credit. It does not refer to the interest rate a borrower is offered, but to the status of the borrowers themselves. Usually people who fall below a 620 credit score (FICO), or whose credit histories indicate a high "risk" for repayment are offered subprime lending. Under these terms, a borrower is much more limited in the options he or she has to repay the loan. They are virtually defenseless to the whims of the financial market, whether they keep up on their payments or not.
The problem is that people of color are disproportionately offered subprime mortgages. An independent report has confirmed that in city after city, African-Americans are three times more likely than whites to only qualify for subprime loans, regardless of if their credit history is better. There is a term for this, and it is called Predatory Lending. The company lures them in with a low introductory fixed-interest rate (around 6-8 percent) that quickly balloons to a much higher variable-rate (12-13 percent). When the low rates reset at the end of the fiscal year, the higher rate adds hundreds of dollars to homeowners' monthly mortgages, forcing many of them into default and foreclosure.
And now for the numbers. African-Americans have lost more than $92 billion, and a loss of more than $122 billion is expected before the fat lady sings. Latinos will lose $98 billion. Overall, people of color will be robbed of more than $200 billion. The ripple effects have the potential to be even more injurious to us: Foreclosed homes drain tax bases out of communities, and send neighboring homes' property values into a downward spiral. Without tax bases, school funding decreases rapidly (as if inner-city schools are well-funded anyway), and unemployment rises as businesses opt for other areas. Crime increases, and the cycle starts all over again. This is the largest loss of wealth in modern U.S. history behind, you guessed it: slavery.
Please read the report on this disastrous financial injustice that is being inflicted on middle-class and poorer-communities regardless of race. The site is www.faireconomy.org/dream. You can download the PDF file titled "State of the Dream 2008: Foreclosed." I have no witty ending to leave you with, nor do I wish to do so right now. It is kind of hard to focus on topic sentences and essay structures when the financial health and quality of life in my community has been exponentially diminished.
Jontae Grace is a student at the University
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Ted Janusz
posted 2/06/08 @ 5:04 AM PST
With horror stories like this, what are potential mortgage borrowers now supposed to do? As they attempt to refinance out of the adjustable-rate mortgages you just mentioned, they are scared to death that they will be the next victims of predatory lending and possibly foreclosure!
I am a former senior loan officer for a regional mortgage bank. (Continued…)
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