Smart Borrower Blog

Blacks & Hispanics Are Led Down The Garden Path

Feb 9th, 2009 @ 4:52 PM by Alden Smith

Image by bobster1985 via Flickr

Here is a real legacy for you.   During the Bush administration, minority Americans lost up to $213 billion in wealth during the eight years that Bush was in office.   It was attributed to the so-called subprime mortgage crisis.   The Boston-based social advocacy organization United for a Fair Economy recently released this study.

The report, entitled Foreclosure Date of the Dream, focused on the fact that many Blacks and Hispanics were put in this situation due to predatory lending in which the buyers were stuck with loan terms and increasing costs that they did not fully understand.

It is my belief that a lot of the advocacy groups and political action organizations are to blame for a great deal of this.   I have read time and time again in the papers and seen on TV leaders of these organizations speaking out for the American Dream.   These leaders push for housing for people of these groups without fully educating them on what they were getting into.   I don’t care what your level of education is-if someone thoroughly explains to you exactly what you are getting into, and has your best interests in mind, then there isn’t any reason for you to get into a situation where you will not be able to pay.   Articles attesting to this can be found almost anywhere on the Internet.

I have also read of such shady practices as lenders discussing with Hispanic people the loan the parameters and everything else it takes to get them to the closing table in their native language.   At the closing table however, business was handled in English instead of Spanish, effectively blocking out any communication with the borrower.   to my way of thinking, this smacks of criminal activity.

The study concludes that the homes lost by Blacks represent the most massive loss of wealth for African-Americans in US history.   Back-to-back with that data, the home mortgage disclosure act suggests about 40% of blacks given these extensive subprime loans would have qualified for cheaper mainstream loans such as a 30 year fixed rate.   There is something really wrong with this picture.

This current economic crisis is far from being over.   Many more companies will close their doors, and banks will fail before we ever see bottom.   The nightly news is filled with gloom and doom.   President Obama is struggling to pass an economic stimulus package.   Yet just this week, bankers from across the country met in Las Vegas at the Venetian Hotel for suppose it conference.   Representatives at this gathering included many major banks that received bailout money.   The images from this grand hotel were mind boggling.   All of this of course was paid with taxpayer dollars, no matter how you want to paint it.   This sense of entitlement by big bankers is making very many taxpayers angry.   Yet nothing seems to be done to stop this from happening.   Until the government clamps down on this foolish spending and sense of entitlement, we will never see a clear end to the situation we face now.   I am reminded of Jesus driving the money changers out of the temple.   I can almost picture President Obama doing exactly that.   Somehow, even though I fully support the president, I just do not see that happening.