everything you said then they charge them more or give them fucked up deals:
Princeton University sociologist
Douglas Massey and research associate
Jacob Rugh, who in a new study
found that racial segregation and discriminatory lending made U.S. minorities "uniquely vulnerable" to the housing bust:
Foreclosures are hitting African-American and, to a lesser extent, Hispanic communities across the U.S. harder than white neighborhoods, the researchers found. As an aside, this isn't to downplay the damage to anyone, regardless of creed or color, who faces losing their home. But it is to recognize that in the years preceding the housing crash,
predatory lenders targeted certain groups more than others.
Indeed, until the 1990s many minorities couldn't even get a mortgage. That changed during the housing boom. And interestingly, it was for reasons directly related to shifts in the financial industry that contributed to the ensuing bust.
Before that time, banks were reluctant to lend to borrowers with weaker credit because of concerns that such loans would go bad. But the rise of securitization, in which loans are sliced up and sold to investors, encouraged lenders to get into the subprime business because they were no longer on the hook if the mortgages underlying the securities ultimately defaulted. To use the industry jargon, the "originate-to-hold" lending model largely gave way to an "originate to distribute" approach.
That had two effects: Lenders saw a reduced risk of pooling high-risk mortgages into
CDOs and other financial instruments; and banks needed to find more borrowers to satisfy the growing demand for mortgage-backed securities.
As a result of these developments, from 1993 to 2000 the share of subprime mortgages going to minority households leaped from 2 to 18 percent. So when the housing bubble popped, the damage was most intense in these areas. The foreclosure rate for subprime mortgages in 2009 was nearly 16 percent, compared to 4.6 percent overall. Say the researchers:
It's easy to assume that the higher level of foreclosures in larger cities and collar suburbs reflect the lower incomes of residents in such communities. That's false, say Massey and Rugh, who did a statistical analysis of the 100 largest U.S. metropolitan areas. African-American borrowers with similar credit profiles, down payment ratios and other demographic characteristics were more likely to receive subprime loans than white borrowers, they found. Minorities were also far more likely than whites to get mortgages with unfavorable terms, such as a prepayment penalty.
Such findings are consistent with
lawsuits against lenders alleging that they preyed on minorities. A former senior executive with
Wells Fargo (WFC) last year described the banking giant's efforts to
push subprime loans on African-Americans. Consistent with Massey's and Rugh's findings, she also said company loan officers had financial incentives to steer minority borrowers into subprime loans
regardless of their credit or income.
In the years leading up to the housing bust, banks and mortgage originators preyed on minority borrowers, according to new research. Today, discriminatory lending is a major cause of foreclosures.
www.cbsnews.com
so its more than just folks living above their means in many cases their ENCOURAGED TO DO SO...because the broker tells them they can.
Lets be honest we all agree that MOST people are bad with money and if thats the case then MOST people don't know their true financial worth nor do they understand the finer details of mortgage and home loan dealing but its more than straight ignorance its also purposeful deception. People trust financial officers in the same way they trust their doctors... ASSUMING they're doing something that's in their best interest and not using them as guinea pigs.
Minorities are especially vulnerable to this for a number of factors.
