Monday, November 05, 2007
Subprime Mortgages & The African American Community
Although home equity represents the only real net wealth for many homeowners, it represents much more to some families. It represents status and the important title of "homeowner." However, relinquishing the renter title for the homeowner title can be devastating, lead straight to bankruptcy and virtually eliminate any possibility of building wealth. Some say the subprime loan is the culprit. But is this true? Wasn't there a big push for more minority and low-income homeownership over the past decade? Didn't Fannie Mae and Freddie Mac develop dynamic programs to get more minorities to be homeowners? Was there anything wrong with these programs? Do the same loans that were promoting minority and low-income homeownership now represent predatory lending?
We doubt that research can isolate the mortgage loan defaults by race, but we do know that many families are losing their homes. Published reports say that some of the highest predatory lending and mortgage foreclosures have been in Prince Georges County, the richest majority Black county in the country. Blacks are mostly wage earners and do not own commercial and industrial businesses. Of course, there are some notable exceptions to this rule. However, even for upper income Blacks, life can get precarious real fast in moving from renter to homeowner. Just be careful and do not allow a marginal credit rating to turn into a disastrous rating in your quest for homeownership. Consider saving more money and purchasing a home you can easily afford. (More) (And from Black Enterprise)