Low Income Minorities Did Not Cause the Mortgage Crisis…
April 1, 2009 by Staff
Filed under News, Weekly Columns
(Akiit.com) They say†the foreclosure mess “was caused by government meddling in the business affairs of private banks which forced them to loan to unqualified minority home buyers.â€
Watch the nation’s cable networks and they’ll have you believing that the mortgage debacle is the fault of dark-skinned people from the Association of Community Organizations for Reform Now (ACORN) who got mortgages they couldn’t afford to pay.
But, what if it turns out that the blacks could’ve afforded the properties, only that the banks charged them as if they couldn’t? The NAACP has filed class action suits against Wells Fargo, based in San Francisco and Illinois-based HSBC alleging that the banks used institutionalized, systematic racism against African Americans.†Their evidence shows black home owners were 30 percent likelier to have been issued a higher interest rate than white borrowers with the same credit qualifications.
The NAACP’s litigation against racism in the financial industry began in 2007. The NAACP has filed discrimination lawsuits against Citigroup, JPMorgan Chase and General Electric Co.’s subprime lending unit, WMC Mortgage. The suits cite studies that document discrimination; including a 2006 report by the Center for Responsible Lending that found black people were 31 to 34 percent more likely to receive higher-rate subprime loans. The suit claims the banks violated the Fair Housing Act, the Equal Credit Opportunity Act and the Civil Rights Act.” These banks have a pattern of charging black people more, even though they have good credit, good assets and good incomes,” said NAACP President and CEO Benjamin Jealous.
Wells Fargo and HSBC each have categorically denied the allegations. The TV pundits aren’t in much of a mood for “this kind of nonsense†either. “Sometimes I think the NAACP stands for the National Association for the Advancement of Colossal Paranoia†said a guy on the “fair and balanced†network.
Even when the evidence is clear that black home buyers were given the short shift, there’s shared silence on the subject. In the age of Obama, many ungrateful African-Americans are ambivalent toward the NAACP. Black borrowers are 3.3 times as likely as white borrows to be in foreclosure, but such black and NAACP grievances get little respect or air time. The guys and girls on TV continually illustrate bias against the NAACP, with some labeling the class action lawsuits “a fishing expeditionâ€.
Ironically, many blacks whom the NAACP helped get to middle class status; now are likely to be in league with the TV pundits’ rhetoric and during their time around company water coolers, they too lambaste the organization.
Are African Americans routinely given “the financial shuffle� The NAACP needs to get its swagger back and these banks’ misdeeds may help it. The NAACP contention that during the housing boom, lenders created financial incentives for loan officers and brokers to sell mortgages with higher interest rates and fees than were merited; and coupled that with hefty penalties for borrowers who paid off their loans early. These loans, disproportionately to black buyers, were then sold at a higher profit in secondary financial markets where they were traded as fodder for mortgage-backed securities.
Sadly, few on either side of America’s racial divide say the NAACP will prevail – what say you?
Written By WILLIAM REED