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
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