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About The skanner. (Portland, Or.) 1975-2014 | View Entire Issue (Jan. 27, 2016)
Page 12 The Skanner January 27, 2016 News Foreclosure Crisis Lingers in the Black Community By Avis Thomas Lester Urban News Service A ffluence is no an- tidote to foreclo- sure. In Prince George’s County, Mary- land — one of the United States’ wealthiest major- ity-Black jurisdictions — the foreclosure crisis has hammered several solid- ly middle-class commu- nities. These include Per- rywood, a neighborhood of two-story homes near the county seat in Upper Marlboro; Marleigh in Bowie, where the local homeowners association mows the lawns of fore- closed residences that the banks don’t maintain; and Fairwood, where the median income is $170,000, according to the U.S. Census. “They didn’t under- stand what it meant to take out a second mort- gage, to refinance or to receive a subprime loan, they just made purchas- es,” said Bob Ross, presi- dent of the NAACP chap- ter in Prince George’s County. “So when the bubble burst, they were stuck.” NAACP New York State Conference economic de- velopment chair Garry Anthony Johnson calls foreclosures “an epidem- ic” for people of color. “It’s a troubling reality that African Americans and other minorities continue to experience disproportionately high levels of unemployment, PHOTO BY JEFF TURNER (CC-BY2.0) VIA WIKIMEDIA COMMONS NAACP chapters across the United States are working to support people of color in foreclosure In 2007, the NAACP filed suit against Bank of America, Citibank, HSBC, JPMorgan Chase and Wells Fargo, alleging that these financial institutions had committed unfair lending practices. poverty and foreclo- sures,” Johnson said. Housing counselors and other experts told Urban News Service they blame unscrupulous lenders for the crisis. At a time when many pro- spective buyers were eager to purchase and as home prices skyrock- eted, some lenders took advantage by offering Black buyers discrimina- tory loans, these observ- ers said. “They were products that were predatory in “ essentially living in their investments and rode up the housing apprecia- tion, and everyone want- ed to get into the party.” Zywicki said many of the practices character- ized as fraud — including what he called “teaser” rate mortgages or “com- plex” mortgages, such as negative amortization — contributed little to the crisis. “In the end, what made the foreclosure crisis so bad was not fraud… but that housing pric- You wouldn’t get a loan that was suited to you, but the broker and the lender would make money because they sold it to you. That was their only concern nature where the interest rates were inflated, there were prepayment penal- ties if you tried to pay the loan off or refinance and balloon payments,” said Charles R. Lowery Jr., the NAACP’s director of Fair Lending and Inclusion. “You wouldn’t get a loan that was suited to you, but the broker and the lender would make mon- ey because they sold it to you. That was their only concern.” George Mason Univer- sity law professor Todd Zywicki attributes the largest proportion of the fraud that occurred during the foreclosure crisis to homeowners and lenders conspiring to “defraud” investors. “Driven by very low interest rates and a dete- rioration of underwrit- ing standards catalyzed by government policy, America turned into a nation of real estate speculators,” Zywicki, a senior fellow with the F. A. Hayek Program for Advanced Study in Philosophy, Politics and Economics at the univer- sity’s Mercatus Center, told Urban News Ser- vice. “Consumers were es ballooned and then crashed,” Zywicki said. “When housing prices crashed, many people recognized that pay- ing for a home that was $50,000 or $100,000 un- derwater was no longer a good investment. And the largest driver of fore- closures was the deterio- ration of down-payment requirements and cash- out refinancing, which meant that when housing prices fell, many people fell into negative equity positions, at which point it became rational for them to default and walk away from their homes. This dynamic was no dif- ferent for minority and non-minority borrow- ers.” In 2007, the NAACP filed suit against Bank of America, Citibank, HSBC, JPMorgan Chase and Wells Fargo, alleging that these financial insti- tutions had committed unfair lending practices. The NAACP dropped the suit against Wells Far- go after the bank agreed to invest in a “financial freedom center” to assist homebuyers of color. Read the rest of this story at TheSkanner.com
