Why is the mortgage crisis in America disproportionally affecting African Americans .?

Question

For every white American family losing a home we have a family of color losing theirs .
Now since people of color make up less then 25% of our population it seems as if they are twice as likely to have problems .

Why is this in a nation that claims to be fair and honest in its dealings with people .


Could it be they lured Minority people into purchasing homes , taking their meager savings from them, and rolling them into the mortgage with , finance fees , commissions , and dozens of other hidden and suspect charges to cheat the unsuspecting working minority class yet again out of its money .

Answer 1

As a 'semi-retired Real Estate INVESTOR' ( NOT- NOT a Realtor), I, along with thousands of other INVESTORS screamed long and loud, (back in the mid 1990's) that this was a BAD TRAIN WRECK, LOOKING FOR A TIME TO HAPPEN!!!!!! BTW, An INVESTOR is a person who puts their money where their mouth is, whereby a "Real Estate Professional" only "rights contracts for percentage / commission", if the property sells !!!
Well, NOW is that time, when the train wreck is happening !!!!!
Many , many times, a mortgage company / lending bank, would approve someone (called mortgage approval) for $XXXX.XX a month payments, P. & I. (Principle and Interest ) , and with "Creative Financing", i.e. Interest only, a future Balloon note, delayed interest increasement, etc. and with the 'additional' money's available, the buyer would "Qualify under the approved financial quanitive', for a larger / more expensive home !!
I. E., a 30 year mortgage(360 months), at 5 % INTEREST ONLY, $150,000.00, the INTEREST ONLY payment is $650.00 a month.
Now, 2 to 12 years later, the 'conditions of the stipulated contract amendmends' are here, and the payments, on that same home is:
360 months (30 years), at 8,5% Interest, p.& i. $150,000.00 Principle, the payments are now $1153.37 A MONTH !!!!!
Now another sceniro, the same figures to begin with : Lets say that the family / buyer qualifies for a monthly paymant of $1153.37 a month (p&i) and the REAL ESTATE PROFESSIONAL (BTW, I hold the majority of REAL ESTAE PROFESSIONALS involved in these transactiuons, JUST AS GUILTY AS THE MORTGAGE COMPANIES / BANKS ) show the buyers a home priced at $230,882.72, @5.99 %, (interest only pmts).
The payments now, at 30 years, 8.5% P. & I. = $1775.29 !!!!
AND PLEASE BEAR IN MIND THIS FACT , YES FACT :: THE C.E.O., AND EXECUTIVE OFFICERS OF THE MORTGAGE COMPANIES / BANKS, VOTED THEMSELVES MANY MILLIONS OF DOLLARS IN "" BONUSES"" AND HAVE NOW RETIRED !!!!!!!!!
If I went on much more, I would "SCARE THE SHITZ OUT OF YOU READERS, AND BE CALLED A NUT CASE" !!!!
TODAY, WE ARE SEEING ONLY THE TIP OF THE ICEBERG!!! DO NOT BELIEVE THE SCATOLOGY OF THE "FINANCIAL GURU'S" WHO SAY THE HOUSING FINANCIAL MARKET IS OVER !!!!!!! In South Texas Ranch Lingo, We Would Simply Say ""BULL SHITZ, YOU AIN'T SEEN ANYTHING, YET"" !!!!!!!!!!!!!!!!!!!!!!! " STAND BY TO RECEIVE SALVO" !!!!! C.Y.A.

Answer 2

Huh? I saw in Detroit one of those poor, abused ladies. She is 68, black and a few years ago had a mortgage for $8,000. She is now in danger of losing her house because her mortgage is now $116,000 and she can't afford it. She was "preyed upon" by the evil loan officers. She was complaining about it on TV.

The good news is there was a balance to the story. After she was done with her side of the story, about how these evil people convinced her to sign these documents, the reporter told the rest of the story.

Why was her mortgage up so high? She was taking the loans out on the equity in her house. Over the last 10 years, as her mortgage had increased, she had received $113,000 in cash. Where the *&^% did that money go?

The bottom line is personal responsibility. She looked at all that "free" money and took it. The loan company is going under and so maybe is she. A pox on both houses. It is not racist, it is greed.

And don't forget the other side of the story. In years past, when loan companies turned down loans to minorities, cries of racism abounded. So they were forced to give these marginal loans so the lawyers wouldn't sue. Now these people can't pay and guess what, the lawyers are going to sue.

Answer 3

This is a dumb question. You are placing color and finances in the same argument which are two very different things and suggesting that ALL blacks are both inferior and poor as opposed to whites. I really couldnt care about either race but its up to the individual to know their finances when they purchase a home. no one MAKES you buy a home just as no one makes you put Christmas gifts before your obligatory dues at the end of each month. People dont lose their homes because they are minorities, they lose it because they go outside their means..it could happen to a person who suddenly bought a home after getting a raise or dont plan ahead before making a commitment. Just like buying a car. So you have money for a down payment but will you have money for every payment for the next 3-6 years not including gas which can run from 100-300 per week, maintance, insurance, etc....does anyone think of that before they get the car? If they dont its not because you are a minority, it's because you are a bad planner, consumer and were simply looking to having a cool object to show off.

Answer 4

Banks were allowed, (and in fact in many ways were encouraged) to write mortgages for people who probably could not afford them.

Not surprisingly, a large percentage of these people cannot now make the payments and are in default.

I can't quote the statistics, but I believe that people of color make up a large percentage of of the lower income bracket that these mortgages were intended for.

I don't believe there was a racial conspiracy involved, but I do believe that these banks should have know better and did a major disservice to these people. They had to have know what the final outcome would be.

Answer 5

I would guess that African Americans have a lower average income than whites, and therefore are more of a credit risk when looked at as a group. Therefore a higher percentage of them would have been taking out subprime mortgages.

I would prefer to judge each person individually rather than making generalizations about race. But your question addresses African Americans as a group, and so by necessity my answer does also.

Answer 6

You've answered your own question.

Greed and lax regulations allowed unethical lenders to make ridiculous amounts of money from those that just didn't know better. Buying a home is a somewhat complicated process and a lot of trust has to be placed in the party you're dealing with (unless you have the $$$ to hire an RE attorney, which most don't).

A lot of those companies have since gone under but they made out like bandits while the boom was going on. Regulation have to be passed so that this doesn't happen again.

Answer 7

becuase most of them had never purchased a house before and got roped into these "affordable" loans so they could buy into "The American Dream" and many didnt have the experience to know that not every deal is as good as it looks

these subrime loaners did target city neighborhoods especially and always bragged about how they had signed up so many of youre neighbors (before i kicked them out my door)

they did target certain people knowthing they could prey on thier trust and lack of experience

just like the used car salesman that sell you a car for twice its value on the idea this way you can establish credit and he's the ONLY one that can give you this awsome loan

Answer 8

How can you tie this to race. This is based on decisions these people made for themselves, some white man didn't make these decisions for them.Stop looking for racism where it doesn't exist!By the statement you made above about people luring them into purchasing homes, are you saying they are not smart enough to keep from getting scammed? Now that's a RACIST comment!

Answer 9

doesnt matter what color you are, if you are an adult you have no excuse for being "lured" into anything. if you made a bad decision about you finances then its on you. i dont like it when people think that black people are fooled easier, they arent stupid, if they made a choice then they knew what it meant, its has nothing to do with the intelligence of a race. perhaps culturally some people take more financial risks than others, but it has nothing to do with intelligence or them being tricked.

Answer 10

Because the sub prime loan market was aimed at the black community.
It was open to all but it was touted as a way to get previously disenfranchised people into their own homes.
Good idea Good Intentions.
You know where good intentions lead.