The racial back-and-forth since Sen. Hillary Clinton and Sen. Barack Obama left the "prodigious hilltops of New Hampshire" is a reminder that the Rev. Dr. Martin Luther King Jr.'s dream that his "four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character" is still just that: a dream.
To commemorate Dr. King's actual birthday, United for a Fair Economy, a nonpartisan economic justice organization, has released "Foreclosed: The State of the Dream 2008," a report on the subprime mortgage crisis that has turned the American Dream of homeownership into a nightmare.
African Americans disproportionately rely on subprime mortgages, which are made to borrowers who do not qualify for a fixed-rate mortgage due to their weak or limited credit histories. Subprime lenders offer low-interest "teaser" rates that reset to higher adjustable mortgage rates.
According to United for a Fair Economy, the subprime mortgage crisis will lead to a net loss in black homeownership. The bottom line: The subprime crisis "will cause the greatest loss of wealth for African Americans in modern U.S. history."
The report's key findings include:
Our estimates indicate that it will cause the greatest loss of wealth for African-Americans in modern US history.
People of color are more than three times more likely to have subprime mortgages.
Blacks, who represent roughly 13 percent of the U.S. population, got 54.7 percent of all subprime mortgages issued nationwide.
The total loss of wealth for people of color is between $163 billion and $278 billion for subprime loans taken out since 2000.
African American borrowers will lose between $71 billion and $122 billion.
It will take 594 years to close the racial gap in median household net worth.
At the 11th annual conference of the Wall Street Project, Texas state Sen. Rodney Ellis said: "People who thought they had moved on up now find they are moving out."
But the subprime mortgage crisis is more than a family crisis. The increase in foreclosures depresses property values, and lowers local and state revenues. Black neighborhoods are particularly vulnerable given the concentration of subprime mortgages. So, cities, including Baltimore and Cleveland, have filed lawsuits to recover the additional maintenance, police and other costs associated with vacant houses.
Investigations are also underway in Illinois and New York over allegations the subprime mortgage crisis was triggered by white-collar crimes. Indeed, the Rev. Jesse L. Jackson, Sr., founder and president of the Rainbow PUSH Coalition, has called for a congressional investigation on the "subprime crime crisis" that is "consuming the global economy."
2. I feel that the housing builder put themself in this problem by raising the price of homes way to high gread playes a big part in this and the people should not have brought houses and let them fall the builder i means in the 80 they did this with the SNL but this time they were trying to move black people out there neiberhood and over price the homes and now it is going to crash and more people are going to loese there home i feel for them but you were the dumm one that brough at that price to me you should loese your home and next time wait them out they will come down soon then later like now if you had waited you would have saved houndreds of thousand of dollars and no you are going to loese your home wait next time. For black people we need to stop running behine white people and get i own together first til then there is no dream to come.
3. I think people should take the time to thoroughly research mortgage lenders, and educate themselves on exactly what they are getting into, before purchasing a home. For most people, a home is the single largest and most important purchase that they will make in their lives. If it takes hiring a lawyer or getting some other type of advice, assurance, from someone who has the experience to let them know upfront what they are getting into, then that's what they need to do. KNOWLEDGE IS A POWERFUL THING! Don't get me wrong, buying a home is a wonderful thing; but educate yourself first about interest, fixed, adjustable, & short term rates before buying it. Some people are out only for the money; & really don't care how it affects you. Bottom line - Don't be led around by your nose, do your homework, know your stuff, and make an educated choice, before making a serious purchase like a home.
4. First of all don't blame these 1st time buyers, blame the brokers, leders etc. Homebuyers are not aware of all these differet types of loans, but the brokers, lenders etc. have had some type of extesive training ad they are ALL out to get the most money for themmselves ad not for the homebuyers. They don't care that you won't be able to afford the loan, they were just trying to fatten their pockets. Having a sub-prime loan is not always a bad thing. I work in mortgage and I have seen many people with good credit with sub prime loans. With a sub prime loan, there is less down payments and you don't necessary have to carry a certain type of insurance. If I did not work for the mortgage industry I would have probably been one of those poor people suckered into one of those loans. Some of the blame should come from the homebuyer because that's where you as a person should know your own limits. I purchases my home ad my monthly note is the same as the monthly rent on an apartment. I knew what I was NOT able to afford BEFORE I started looking. Sure I wanted the brand new house on the lake, but in reality, I was not able to afford it, so I settled for less. The agent did try to sell it to me , but I knew better........
5. For the most part these were adults making the decision on what type of loan and house they wanted to buy and pay for. If they would have taken the time to fully read what the "NOTE" said on these loans they would have known exactly what they were getting into. It reminds me of Smokers now blaming the tobacco companies because they smoked and are now sick. Doesn't the label on the Cigarette pack say Warning Maybe hazardous to your health!. If you are willing to take risk, knowing the risk, don't blame anyone but yourself. With that said READ and maybe you could save yourself the problems later on.
6. Blame the brokers, realtors, and lenders for supplying false advertisements to homebuyers. I moved to Atl and I can't get work. Anyone I know people that is interested in moving here I tell them quickly not to come here because the job market is really bad.
7. #6, I totally agree with you. It definitely is hard getting a job in Georgia. When you attempt to go for a job, you are told to go to the web and apply. When you go to the web the site turns you toward the colleges and universities here in Georgia. Hey, don't get me wrong education is beneficial but I've put over 15 years in hard work and my experience should speak for something. Then you are told that for the experience that you have you must possess a degree. In New York, you are not required to have a degree for a lot of jobs and still get good pay. But, here's the catch, you spend it in rent, gas, electricity, and taxes. Wow, you can't seem to win. But today I look at all of this as a hurdle. We will overcome it all, through Jesus, He sees all things. This will some day be laid to rest, all of these interruptions. Anybody agree. W.O.W. word of wisdom
8. WELL I AM GOING TO SAY THIS IS A SHAME AND I DO ME SHAME NOW HERE IS ALL THE LENDERS AND I AM NOT PUTTING THIS ON THEM BUT THEY THE LENDERS COULD HAVE STOP ALL WHEN MYSELF AND MY WIFE SOLD ARE 1ST HOUSE AND GET ANOTHER ONE WE HAD TO DO A LOT OF WORK I MEAN THE LENDER DID ALL KINDS OF CREDIT CHECKS I WAS PISS BUT ANYWAYS I LEARN FROM THE 1ST HOUSE TO GET A FIX SO I KNOW WHAT I HAVE TO PAY EACH MONTH SO I WILL TELL ANYONE TO GET A FIX AND IF YOU CANNOT THAN WAIT BECAUSE WHEN CREDIT IS MESS UP IT IS HARD TO FIX IT SOME FOLKS IT DOES NOT MATTER BUT YOU KNOW FOR OTHER FOLKS IT WILL TAKE YEARS TO FIX SO LEARN FROM THIS EVEN ME THE GAME OF MONEY IS NOT FAIR SORRY FOLKS
9. experience is a dear teacher. It's sad that people seeking "the american dream" were victimized by the subprime mortage scheme. lesson-don't be fooled with the "varieable rate". Do your homework, do the math. If it sounds too good to be true-it's probably a lie. To own a home, you have to save money, to have a down payment. Then make sure you can afford to pay the monthly payments. Plus taxes,and utilities...etc...
10. First, let me say that I feel so bad for the people who are stuck with sub-prime mortgages. I built my home in 1999 and I had a very low 15 yr. fixed mortgage and like a fool I decided 3 yrs. later to cash-out. I was snuckered into taking out a 10 yr variable rate mortgage, which was good for me because I was able to pay-off some high interest credit cards. However, for some reason in 2006 I decided to get out of the variable rate loan. Low and behold the month that I signed the papers my variable rate loan had gone up $200.00 per month. Needless to say if I had not kept a good credit rating I probably could not afford my home today. The morale of this story is that you have to read the fine print and pay your bills on time.
11. I have to disagree with this article. I believe that blacks like anyone else can have good credit. This is what the interest rate is based upon. Color has nothing to do with that. Why don't we as a people take the time to educate our selves in this area instead of playing the blame game for everything. I am 28 years old and I bought my first home last year. I am smart enough and educated enough to know that I had to have good credit to get what I want. And I got just that. The house of my family dreams with a fixed low interest rate. All it takes is a little research.
12. I too purchase a home in 05, 0 interest loan, 2 year arm. my housenote just went up almost $ 600 dollars per month. I have learned a very expensive life lesson. If it don't feel right, don't do it. I did not educate myself in regard to the loan i received. thank god for my family helping me to keep my home. I tried to refinance and was told that i now owed more than the value of my house and in order to refinance i would have to put down a hefty sum. If you purchase a home, read all the fine print and beward of fast talking lenders.
13. IT'S A CRYING SHAME THAT THE HOUSE MARKET IS THE WAY IT IS TODAY. WE HAVE PURCHASED 4 HOMES DURING OUR LIFE TIME AND NOW WE TO ARE STUCK ON A PRE PAY PENTALY LOAN. I FEEL THAT IF THE IDIOT LOOK AT IT IF A CONSUMER IS WILLING TO HAVE OWNERSHIP OF A HOUSE THAT WE ARE WILLING TO PAY THE HIGH ASS INTREST RATES TO GET A HOUSE WHAT DO THEY THINK WOULD HAPPEN IF WE WERE TO GET LOWER FIXED INTREST RATES. WE WOULD ALL BE ABLE TO KEEP OUR HOMES AND BOOST THE ECONOMY IN DOING SO. ALSO THEY NEED TO NOT JUST CUT INTREST RATES THEY NEED TO RAISE THE DEBT TO INCOME RATIO'S WE WERE DIQUALIFIED BY BEING OVER 2% FROM REFINANCING ON A 30 YEAR FIXED 6% INTREST RATE. ANOTHER(FYI) TO KEEP YOU FROM BEING SCREWED BY YOUR CURRENT PRESIDENT THEY NOT GOING TO TELL YOU THIS BUT YOUR REBATE THEY ARE CONSIDERING WILL BE DEDUCTED OUT OF YOUR 2009 TAX REFUND.(EXAMPLE) SAY BUSH GIVE YOU A REFUND IN JUNE FOR 1,200. AND NEXT YEAR YOU FILE YOUR TAXES AND YOU SUPPOSE TO GET A REFUND OF 1,400 BACK WELL BECAUSE YOUR BRILLIANT PRESIDENT GAVE YOU A REFUND IN 2008 OF 1,200 YOUR REFUND NOW WILL BE 200.00 BECAUSE ALL HE;S DOING IS ADVANCING YOU ON YOUR 2009 TAXES SO DO BELEIVE THE HYPE. WE WILL PAY LATER.
14. I think the blame is primarily on the lenders and brokers. Yes, people need to be educated about the home buying process and all that it entails. However, lenders and brokers have a responsiblity to their clients to ensure they are providing them with accurate information. In the subprime market this does not happen. If this were the case more lenders and brokers would have recommended FHA loans to these folks. These loans are insured by the gov't and don't require good credit or large down payments. But lenders and brokers don't make money off FHA loans. Greed was a primary cause and effect for creating the subprime mess.
To #11. Good for you. Kudos even for buying your first home. But to add some perspective it was far easier for someone living where I live (San Fran Bay Area) to get a subprime loan than to come up with $120,000 (20%) downpayment for a house in this area where the avg. house costs $600k. If you are single and make $88k a year, you're considered low-income based on FHA standards. This is a national problem that will impact US ALL. It's already caused one Bay Area city (Vallejo) to file bankruptcy.
1. IF A PERSON CAN'T AFFORD IT THEY NEED TO WAIT OR THE WILL BE BEAT. ITS NOTHING WRONG WITH WAITING
CHOPITUP at 8:36AM on Jan 20th 2008