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I have read articles summarizing studies that revealed that during the housing boom, even blacks with great credit were offered subprime loans. Does that mean they were offered a variety of loans and chose the subprime because it seemed more manageable and they could get more house? Or does it mean they were offered ONLY the subprime, or the 30-year fixed had a ridiculously high rate? I am willing to bet that the latter occurred more than the former.
Maybe the homeowners did ask questions of the banks and were given untrue or BS answers. Sure, there is a wealth of information in the closing papers one signs. But some information may not be there. For instance, a bank's unwillingness to work with you on modification or refinancing is likely not going to be in there. Another little piece that won't be in there: a bank giving you a trial modification, then refusing to make it permanent and then declaring that the trial modification period was in effect a delinquency period, and they are going to foreclose if you don't pay up.
I have seen information regarding the possibility and chances of your loan being sold, but I didn't see anything stating that the new mortgagor will not work with you. I didn't see anything stating that the bubble will burst sometime in 2007.
I have read about a lot about people (black and otherwise) in dire straits with their mortgages. The above is what I have found. It's more than just people being irresponsible in their mortgage choices. Blacks had fewer mortgage choices, for one thing. Banks weren't entirely truthful in what they were telling people, for another thing. Also, as the economy worsened, people lost jobs, were furloughed, and endured salary freezes and cuts. But it's easier to go on and on about the folks were got into these bad loans and to state that it's their fault and no one else's. Interesting.
It's one thing if an adjustment occurs and you can handle it because you are working and getting raises and your property is increasing in value, so you can refi. It's another if you become disabled, lose your job, become divorced, become widowed, etc. And those who endured such hardships, as well as those who learned their lesson and want to trade into something more manageable, can't.
So, the banks are blameless? BS. If they didn't offer the mortgage products, no one would take them. And let's not pretend that there is no history of predatory lending or redlining against black people and black communities. That's taking political ideology a tad too far.
I would wonder how many of those people that were offered subprime mortgages, exercised their right to shop around? No one is holding gun to anyone's head. If you don't like the rate you are given, there are other fish in the sea. I believe as long as you have your credit pulled within 30 days, you can have multiple lenders pull your credit, which means you can work to get the best deal possible.
I agree that this might have happened to an extent, but I don't think it was a major factor in what has caused this crisis. I'm sorry to say, but there are a lot of people who were getting approved for things that they could not afford. Is that completely the bank's fault? I don't think so. As much as it's the bank's responsibility to make sure that a homeowner qualifies, I believe a homeowner has an obligation to do their due diligence. No one should have a better grasp of your financial situation but yourself. Just using the Post story as an example, if you know that you have an unstable income, is buying at the max of your price range really the best idea? People weren't just foreclosing just because of interest rates, they were foreclosing because they were living beyond their means.
And I don't necessary believe black people have fewer mortgage options. If you have the kind of money that people were spending, money has no color for most of those businesses, especially banks! There are tons and tons of mortgage companies, I just can't believe that we don't have the options necessary to get the best product. There are people who have six figure salaries, very little debt and yet you believe that a majority of them were not able to get options because they were black? You mean a bank would risk losing their money because.....their black? There are a lot of mortgage companies who don't even meet the lender in person. How do you explain that? I have to respectfully disagree with the impact that race really has here.
I would wonder how many of those people that were offered subprime mortgages, exercised their right to shop around? No one is holding gun to anyone's head. If you don't like the rate you are given, there are other fish in the sea. I believe as long as you have your credit pulled within 30 days, you can have multiple lenders pull your credit, which means you can work to get the best deal possible.
I am sure most black homeowners in PG County did not accept the subprime loan products being pushed to them. And continued to shop around until they were offered a better mortgage product. That is beside the point. Which is the trap was set and specifically targeted black home buyers. Many black homeowners fell victim just as many black homeowners I am sure avoided the trap which was set specifically for them. And those homeowners who avoided the subprime trap set for them are several times more likely to still be in there homes. Subprime loans are three times more likely in low income neighborhoods than in high-income neighborhoods. But, homeowners in high-income black areas are twice as likely as homeowners in low-income white areas to have subprime loans.
I think these two articles do a pretty good job of describing the banks' practices toward minority home buyers leading up to the housing meltdown. And is the reason for the high foreclosure rate in PG county.
I would wonder how many of those people that were offered subprime mortgages, exercised their right to shop around? No one is holding gun to anyone's head. If you don't like the rate you are given, there are other fish in the sea. I believe as long as you have your credit pulled within 30 days, you can have multiple lenders pull your credit, which means you can work to get the best deal possible.
I agree that this might have happened to an extent, but I don't think it was a major factor in what has caused this crisis. I'm sorry to say, but there are a lot of people who were getting approved for things that they could not afford. Is that completely the bank's fault? I don't think so. As much as it's the bank's responsibility to make sure that a homeowner qualifies, I believe a homeowner has an obligation to do their due diligence. No one should have a better grasp of your financial situation but yourself. Just using the Post story as an example, if you know that you have an unstable income, is buying at the max of your price range really the best idea? People weren't just foreclosing just because of interest rates, they were foreclosing because they were living beyond their means.
And I don't necessary believe black people have fewer mortgage options. If you have the kind of money that people were spending, money has no color for most of those businesses, especially banks! There are tons and tons of mortgage companies, I just can't believe that we don't have the options necessary to get the best product. There are people who have six figure salaries, very little debt and yet you believe that a majority of them were not able to get options because they were black? You mean a bank would risk losing their money because.....their black? There are a lot of mortgage companies who don't even meet the lender in person. How do you explain that? I have to respectfully disagree with the impact that race really has here.
Ah, but they either didn't have the money (remember the $20k-salary pharmacy tech who bought 16 properties, including several in Fairwood, one of them a million-dollar house? He spoke to NPR about his awesome adverture), or they did and were offered crappy options by the bank. Not all, but I believe many. My answers to your questions above would be "yes" and "yes." You know as well as I do that you don't have to meet someone in person to obtain their racial information. Don't mortgage companies seek this information from you as part of their efforts to ensure compliance with anti-discrimation laws? If you think that the only way a mortgage company will know you're black is by looking at you, I think you'd be surprised.
Yes, we can agree to disagree. But I enjoyed debating with you.
That's my point. This issues doesn't just negatively hurt black people. I don't believe it was just simply a matter of blacks being targeted. I'm sure there were cases, but then you wonder what people say about things like the example you just gave.
But the example does not meet your point that blacks were somehow less responsible and more reckless than any other race in this mess. And the topic is why there are so many foreclosures in PG. And the responses here have mentioned irresponsible blacks trying to keep up with the joneses. As if blacks were the only ones doing this. As if everything is on this perfect, level playing field and blacks are the only ones screwing up.
I do maintain that in mostly-black areas with high income, people were targeted with crappy choices. Some looked at other options and perhaps did better. Some may have explored several options, all of them crappy, and chose the least crappy that was also affordable. The thing with the ARMs is that at the time, before the adjustment kicked in, the homeowner could refi to either a fixed (or another ARM with the adjustment on hold for a number of years), or sell and move elsewhere. Obviously, that backfired with the housing market crashing.
In fact, I don't even think the example above meets your point about blacks not being targeted. Why would banks be so obviously discriminatory?
A ton of white people were hit with the same products and had a similar effect. Just do some research on the real estate market in Arizona (Phoenix and Tuscon) and Las Vegas. Check out the article below. 167,000 abandoned houses in Nevada. The guy in the article bought for $240,000 and the home is now worth $80,000
I am sure most black homeowners in PG County did not accept the subprime loan products being pushed to them. And continued to shop around until they were offered a better mortgage product. That is beside the point. Which is the trap was set and specifically targeted black home buyers. Many black homeowners fell victim just as many black homeowners I am sure avoided the trap which was set specifically for them. And those homeowners who avoided the subprime trap set for them are several times more likely to still be in there homes. Subprime loans are three times more likely in low income neighborhoods than in high-income neighborhoods. But, homeowners in high-income black areas are twice as likely as homeowners in low-income white areas to have subprime loans.
I think these two articles do a pretty good job of describing the banks' practices toward minority home buyers leading up to the housing meltdown. And is the reason for the high foreclosure rate in PG county.
I actually worked for JP Morgan Chase during the same period and sold mortgage products. Certainly the bank pushed us to sell mortgages and home equity lines of credit, that's how they made money. The simple fact of the matter is that many if not most black borrowers I came across had horrendous credit. The decision to put someone in a subprime track was made by a computer using complicated algorithms race is not a factor although we are required by law to note the race of the applicant on a form separate from the app.
The banker in the article is playing fast and loose with the facts.
I actually worked for JP Morgan Chase during the same period and sold mortgage products. Certainly the bank pushed us to sell mortgages and home equity lines of credit, that's how they made money. The simple fact of the matter is that many if not most black borrowers I came across had horrendous credit. The decision to put someone in a subprime track was made by a computer using complicated algorithms race is not a factor although we are required by law to note the race of the applicant on a form separate from the app.
The banker in the article is playing fast and loose with the facts.
I think it's pretty evident from the foreclosure fallout in affluent PG county neighborhoods. That a disproportionate number of black homeowners in PG county with high incomes and good credit scores were placed in subprime mortgages by major banks. When they should have been offered prime mortgage rate products that there income levels and credit scores warranted. A good credit score did not protect Latino and black borrowers | Economic Policy Institute
I think it's pretty evident from the foreclosure fallout in affluent PG county neighborhoods. That a disproportionate number of black homeowners in PG county with high incomes and good credit scores were placed in subprime mortgages by major banks. When they should have been offered prime mortgage rate products that there income levels and credit scores warranted. A good credit score did not protect Latino and black borrowers | Economic Policy Institute
Bad credit is not the only reason to give someone a high interest rate. If you have never owned a home or had any major credit, then it is very difficult to get lower interest rates. It also is depending upon how many accounts someone may have opened up. Also did any of these individuals have other mortgages? There are a lot of factors that can play into this. I'm always a bit leery about statistics because they can easily be skewed to match the argument.
I will say this much, all of the sources that you have sited, have basically said the same thing that I have argued. People were just not educated enough to make smart decisions. You can blame the banks for being predatory, but don't these buyers deserve culpability? I mean buying a house, especially one that cost $300k+ is a huge, life changing decision. Is it really wise or prudent to go into the process without having an understanding of what you are doing? If you go to a car dealership and you buy a car that turns out to be a lemon, is it the dealership fault for selling the lemon or your fault for not doing the research and inspecting the vehicle? To me, you can blame both and that's what I see here. I think the sources that you have sited tend to be more liberal, so naturally they are going to play up the whole victim role, but if you go and make the biggest purchase of your life without preparing yourself, then why should you not take blame?
Another factor that should be worth mentioning that I think was brought up earlier. Maybe the reason why so many blacks and latinos fell victim is because a lot of times we are often the first generation to become homeowners, therefore we do not have a previous generation to guide us or even to have the wealth to bail us out of our mistakes.
I have read articles summarizing studies that revealed that during the housing boom, even blacks with great credit were offered subprime loans. Does that mean they were offered a variety of loans and chose the subprime because it seemed more manageable and they could get more house? Or does it mean they were offered ONLY the subprime, or the 30-year fixed had a ridiculously high rate? I am willing to bet that the latter occurred more than the former.
Maybe the homeowners did ask questions of the banks and were given untrue or BS answers. Sure, there is a wealth of information in the closing papers one signs. But some information may not be there. For instance, a bank's unwillingness to work with you on modification or refinancing is likely not going to be in there. Another little piece that won't be in there: a bank giving you a trial modification, then refusing to make it permanent and then declaring that the trial modification period was in effect a delinquency period, and they are going to foreclose if you don't pay up.
I have seen information regarding the possibility and chances of your loan being sold, but I didn't see anything stating that the new mortgagor will not work with you. I didn't see anything stating that the bubble will burst sometime in 2007.
I have read about a lot about people (black and otherwise) in dire straits with their mortgages. The above is what I have found. It's more than just people being irresponsible in their mortgage choices. Blacks had fewer mortgage choices, for one thing. Banks weren't entirely truthful in what they were telling people, for another thing. Also, as the economy worsened, people lost jobs, were furloughed, and endured salary freezes and cuts. But it's easier to go on and on about the folks were got into these bad loans and to state that it's their fault and no one else's. Interesting.
It's one thing if an adjustment occurs and you can handle it because you are working and getting raises and your property is increasing in value, so you can refi. It's another if you become disabled, lose your job, become divorced, become widowed, etc. And those who endured such hardships, as well as those who learned their lesson and want to trade into something more manageable, can't.
So, the banks are blameless? BS. If they didn't offer the mortgage products, no one would take them. And let's not pretend that there is no history of predatory lending or redlining against black people and black communities. That's taking political ideology a tad too far.
I agree. Before I purchased my home, I attended a home buyers seminar and I distinctly recall the presenter stating predatory lenders target women and minorities. I honestly did not understand what he meant but I knew I had to be careful. The only subprime loan I knew of was FHA. I can not imagine what it must have been like to purchase a home during the boom.
I think we are loosing site of what happened here. If the recession or the housing crises had never happened, would we be sitting here discussing how irresponsible blacks are with their mortgages? Let's be honest, there are extenuating circumstances that has caused this wave of foreclosure. Did we see this phenomenon during other recessions? No. So, I agree with bowian. Blacks just didn't become irresponsible overnight with their mortgages. There is cause and effect. Lenders did get crazy with their lending practices. The strayed from normal practices. Trust me, if you're an originator and you get a percentage off of loans, you'll push as many loans through as possible. That's how you get robosigners, etc. It became more about quantity than quality. If we want to cast blame, I place 70% on banks and 30% on borrowers.
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