Has the entire subprime meltdown been caused by preying on minorities?
by Mortgage Rates on Monday, November 29th, 2010 | 15 Comments
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The so-called sub prime lending crisis exists for one reason and one reason only: short sighted consumers who bought more house than they could really afford. It all comes down to personal responsibility.
yes.
banks gave loans to people who they knew wouldn’t be able to pay them and yes they also systematically preyed on people of color!!!!!
people know longer do what’s best for America… it’s all about the $$$$$$$$ isn’t it? we, ourselves, will be the downfall of America
No it has not. They are given the truth in lending AND a document outlining their costs BEFORE they proceed with any loan. So no they has been no preying. Every minority in this country gets the same education as everyone else, so perhaps you need to look to the education system and the government who has bailed stupid out for far too long.
saw a report in the financial press yesterday estimating that as many as 70% of the subprime loans that are unable to make their pre-rate increase payments were fraudulent from moment one (lied on application). this from a survey of some 3.7 million such loans.
if there’s any truth in this, who was preying on whom?
it was the opportunity for idiots who couldn’t afford to buy a house to get one/ maybe those fools should have hired a lawyer and checked with an accountant like smart people do. then they wouldn’t be Ware they are now. and for your information this was all bush’s idea for every American to have the American dream, that’s right its his fault and he should bail them out with the kickbacks he got and from the profits he and Chaney have been getting from oil////
its strange suddenly the lenders let up on the restrictions they set on loans,theirs a little more to it.and id hv to say in my town reading the foreclosure list minorities hv been hit the hardest
First of all, the article is biased, racist and subjective, not to mention full of speculative information.
The brokers preyed on the ‘poor’ and the ‘uninformed’ that crosses all discriminatory fences, to make a fast dollar. But there are plenty of white, middle class 2 income families that are losing their homes too. many of the black and hispanic people who are losing their homes dealt with black and hispanic brokers, so it was not a plot by ‘white’ america, is was taking advantage of the ignorant.
Lending institutions used to have rules and had to weigh the risks before lending money and historically have refused loans to those who were unlikely to meet the payments over the long haul. The loans are partially backed by the government as they were well aware. There were many foreign investors who wanted to buy into a market, that on paper, looked like they would make a fortune as the interest increased.
This situation resulted from the factors that people wanted homes, the lenders relaxed their lending practices, and the foreign investors pumped their money into what looked like an excellent investment on paper. On top of that the loans were bundled and sold. Some of these institutions can not even claim the foreclosed homes to recoup a portion of their money.
I blame the lenders because they must have known what would happen. These people are in positions of understanding the risks and potential downfalls. There are other programs to buy homes for lower income families that would have better met the needs of the people who are now loosing their homes. Bad business practices have resulted in this situation. The lenders should have just said “no”.
One other thing, the government was pressing for more housing for minorities which added to this problem. I can’t imagine the government had these kinds of loans in mind.
It all boils down to this. We were doing good in a surplus economy. Jobs for everyone. Then the free trade agreements took those blue collar minority jobs away. What did they expect? Economists have known for years that the blue collar workers were the backbone of America. They preach get off of welfare, get a job, work and you can have the American Dream too. What BS. Just when you think you are getting somewhere and you too can share in that pride guess what…they send your job overseas and pull the rug right out from under you.
I go back and forth on this one…I’ve heard debates where people have asked, “What about the American dream?” meaning that they wanted to allow even those who could not afford it the chance to have the house, car, etc.
AND, I do believe in personal responsibility, but, in my occupation (counseling and social work) I see everyday that people just DON’T KNOW what they are doing. They are too trusting of authority figures who they view are trying to help them. (And I would venture to say that someone who determines your loan qualification is viewed as an authority figure with power over your future.) So, we can blame them for not doing their research…frankly, they wouldn’t know where to start.
I think it comes down to things getting bad enough in this economy that someone with crappy credit and low income would even qualify for a housing loan. Things were bad…some took advantage…things got worse.
I believe the statistics that minorities are suffering more than white people…minorities have generational poverty on their side – meaning that they can’t necessarily turn to their parents or siblings to borrow money. It’s complicated. I don’t like trying to simplify it.
Those that are most affected by the current mortgage crisis are women and minorities according to an overwhelming review of the literature. Beyond that such groups are targeting by things like paycheck advance loans and other such wealth sucking tools.
There is also the loss of manufacturing jobs which has pushed those who made ends meet with a 40 hour work week into the working poor with 2-3 jobs and no benefits.
The easiest prevention method for social ills we have is to pay all workers a living wage with benefits. That would cut down on crime, ‘mooching of the system’, SSI, and other such things.
These were “teaser” loans and people that ordinarily wouldn’t get their hands on a mortgage were given them by eager banks. The brokers told the people they could live in a home for very little money…zero interest, etc…and sell them for a tremendous profit in a year or two, never explaining the balloon that would burst over their expectations and bring those payments up higher than they could afford to pay.
In addition, to make matters worse, many of these people have lost their jobs and have been forced to take jobs at lower salaries, those fortunate enough to find any jobs at all! It has culminated in a huge loss for this country and the President has stalled the bail-out for ordinary citizens so long that there is little hope for them at all.
Because so many foreign banks participated in this scam, and because our credit rating depends upon all of this, the banks have been financially helped. But the President’s current economic boost for the citizens equals about an $800 tax write off. Now this will lift a family right out of poverty, won’t it?
On top of that, he has tacked a “permanent” tax cut for the wealthy onto the “temporary” help for the citizens. It’s enough to make one think that this whole mortgage crisis was planned in another move to reduce the circumstances of the Middle Class and punish the minorities for being poor.
What is happening is that all of these homes are being bought up by wealthy investors at very low prices, with auctions being held all over the country. These homes will be held for a while, then resold at tidy profits, another way of making the wealthy a little wealthier and adding to the ranks of the poor.
The entire mess? – NO.
It is just a small part of the mess.
You have to take into account the cost of living increases (See: OIL), the real wage decreases (see: outsourcing), the housing devaluation (pink cloud) and the plummeting dollar (Federal Reserve) as the big 4 reasons for the sub-prime meltdown.
Of course predatory lenders exist among respectable lenders, but they don’t care if you’re black, white or green as long as they’re making a buck. I was one (of the good guys :~) )
they take your money anyway they can get it.
It is disingenuous to imply that banks targeted minority people to exploit them – just as it is disingenuous to imply that because inner – city crime rates are higher and the majority of inner city residents are black therefore black people are more prone to commit crime.
All of these loans targeted people who could not and should not have borrowed the money. No matter what the race – these people were fooled by aggressive sales tactics and the dangling of the “American dream” of owning a house.
The borrowers also bear much responsibility for refusing to use sound judgment in taking on such a huge financial burden.
Race is always going to be an issue in this country but I disagree with groups that go actively hunting discrimination no matter how nascent it is and just use that info to inflame racial tensions. Remember minority officers and execs within these companies were just as responsible for “exploiting” members of their own race as the whites were.
Greed was the source of the problems in this latest economic crisis and poor people got hurt. We should focus our energies on helping them rather than try drumming up rage for yet another “exploitation” of minorities.