That's apparently how Alan Greenspan describes the progress that African Americans have been making in getting home loans:
About 29 percent of African Americans who bought or refinanced homes last year ended up with high-cost loans, compared with only about 10 percent of white Americans, according to an a consumer advocacy group's analysis of new data from 15 large national lenders.
About 15 percent of Hispanics received such loans offered to borrowers with damaged credit, known as sub-prime loans, according to the analysis conducted by the National Community Reinvestment Coalition, which represents 640 nonprofit organizations.
...At the conference, Federal Reserve Chairman Alan Greenspan defended the higher interest rates paid by some consumers as a positive development because those people at least are receiving loans.
"Where once-marginal applicants would simply have been denied credit, lenders are now able to quite efficiently judge the risk posed by individual applicants and to price that risk appropriately," he said in a speech. "These improvements have led to rapid growth in sub-prime mortgage lending; indeed, sub-prime mortgages account for roughly 10 percent of the number of mortgages outstanding, up from just 1 or 2 percent in the early 1990s."
I think I'll take issue with Mr. Greenspan over whether these loans are "appropriate" since it's clear that lenders are willfully exploiting minorities and immigrants who may be less educated about mortgage products or otherwise vulnerable: (article is archived in their non-free section, sorry!)
Recent immigrants and minorities, who will make up the bulk of new households and about half of first-time home buyers in coming decades, are far more likely than whites to take out subprime loans -- and appear more likely to be victimized by predatory lending. Federal data show even affluent minorities are more likely than whites to take out subprime loans, and some consumer groups say minorities are unfairly diverted to the subprime market.
because older homeowners have built up years of equity. AARP has a major initiative to combat The elderly population, too, is growing and may be vulnerable to predatory lending,predatory lending through education and litigation.
"Most of our clients don't go looking for loans," says Jean Constantine-Davis, an AARP attorney in Washington, D.C. "It very often starts out with a home-improvement loan. . . . People think they're getting a loan for a chimney, (but) they've refinanced the house, rolled credit cards into it."
In Memphis, consumer advocates say predatory lenders, including firms owned by blacks, have targeted African-American neighborhoods, resulting in a rash of foreclosures. Data from Boston and Chicago also show concentrated subprime lending in minority neighborhoods.
How do lenders respond? By crying to Congress, of course, which is now poised to sweep aside the state protection laws with their own, watered-down versions authored by the lending industry.
The strong words seem to take the long-running debate over how to crack down on predatory lending back to where it has been for years, with a deadlock between lenders pushing for federal preemption of tougher state laws and consumer and civil rights groups arguing that proposed GOP fixes are too weak. The new twist this year, however, is that Democrat Kanjorski and three black Democrats on the committee have co-sponsored the bill with Ney.
...The civil rights groups contend that the Ney-Kanjorski approach falls far short of what is needed to stop abusive lending targeted at minorities, the elderly and immigrants and instead removes protections in existing federal law and in state and local regulations. The states and local jurisdictions have been passing laws since about 1999 as lending to subprime, or higher-risk, borrowers has exploded. Although not all subprime lending is predatory, complaints about abusive lending, with hidden or excessive fees and deceptive practices, have skyrocketed as higher-cost, subprime loans have become available.
As someone who is now buying a home, the connection between personal wealth and homeownership is now pretty clear to me. This connection between housing policy and social mobility is a worthwhile one that deserves more exploration and sadly, will not thanks to the GOP and their Democratic enablers.
The notion that getting bad loans is better than no loan at all is a despicable and disgusting position. Then again, Chairman Al is excelling at that these days...
A little late, but I completely agree. Perhaps Big Al thought someone repealed the Civil Rights Act. Title VIII of the CRA, better known as the Fair Housing Act was designed to prevent this type of discrimination from happening. In regards to Mortgage Lending, it states:
No one may take any of the following actions based on race, color, national origin, religion, sex, familial status or handicap (disability):
-Refuse to make a mortgage loan
-Refuse to provide information regarding loans
-Impose different terms or conditions on a loan, such as different interest rates, points, or fees
-Discriminate in appraising property
-Refuse to purchase a loan or
-Set different terms or conditions for purchasing a loan.
From (http://www.hud.gov/offices/fheo/FHLaws/yourrights.cfm)
This act was supposed to be enforced to prevent redlining, but it really hasn't changed/prevented much from happening. Shumer (D-NY) did a study and found that even banks like Wells Fargo are systematically targeting low income neighborhoods, and even those who have good credit are getting suckered into these sub-prime loans. One of the things that always gets me is these lenders boast on how low a default rate they experience on their subprime loans, while at the same time reporting huge differentials in interest rate. If the differences in interest rate aren't justified by the risk (i.e. money lost in defaults), then what's the operative point of justifying the different treatment -- race and class, I would say.
Before folks couldn't get a home, now their getting 'em and then losing 'em; which is worse? Kinda reminds me of slavery vs. sharecropping ... but maybe that's a bit extreme. Now that corporations like Morgan Chase and Citibank have Congress tethered by their balls, no one's looking out for us. It's as if Well's Fargo's stagecoach is being driven by a shark, pulled by Chairman Al, Ney (R-OH) and Kanjorski (D-PA).
Posted by: windy | May 19, 2005 at 12:29 PM
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Posted by: loan | June 06, 2005 at 10:17 PM
Three phrases should be among the most common in our daily usage. They are: Thank you, I am grateful and I appreciate.
Posted by: | November 29, 2005 at 08:38 PM