Racial predatory loans fueled U.S. housing crisis: study

[Daniel]

http://finance.yahoo.com/news/Racial-predatory-loans-fueled-rb-1069330785.html?x=0

Racial predatory loans fueled U.S. housing crisis: study
 
The sign for a foreclosed house for sale sits at the property in Denver, Colorado March 4, 2009. REUTERS/Rick Wilking
On Monday October 4, 2010, 12:17 am EDT
By Nick Carey

CHICAGO (Reuters) - Predatory lending aimed at racially segregated minority neighborhoods led to mass foreclosures that fueled the U.S. housing crisis, according to a new study published in the American Sociological Review.

Predatory lending typically refers to loans that carry unreasonable fees, interest rates and payment requirements.

Poorer minority areas became a focus of these practices in the 1990s with the growth of mortgage-backed securities, which enabled lenders to pool low- and high-risk loans to sell on the secondary market, Professor Douglas Massey of the Woodrow Wilson School of Public and International Affairs at Princeton University and PhD candidate Jacob Rugh, said in their study.

The financial institutions likely to be found in minority areas tended to be predatory -- pawn shops, payday lenders and check cashing services that "charge high fees and usurious rates of interest," they said in the study.

"By definition, segregation creates minority dominant neighborhoods, which, given the legacy of redlining and institutional discrimination, continue to be underserved by mainstream financial institutions," the study says.

Redlining is the practice of denying or increasing the cost of services, such as banking and insurance, to residents in specific areas, often based on race.

The U.S. economy is still struggling with the effects of its longest recession since the 1930s, which was triggered in large part by the housing crisis, which was in part triggered by the crash of the subprime loan market.

Subprime lending refers to loans made to consumers with poor credit and others considered higher risk. They tend to have a higher interest rate than traditional loans.

The study, which used data from the 100 largest U.S. metropolitan areas, found that living in a predominantly African-American area, and to a lesser extent Hispanic area, were "powerful predictors of foreclosures" in the nation.

Even African-Americans with similar credit profiles and down-payment ratios to white borrowers were more likely to receive subprime loans, according to the study.

"As a result, from 1993 to 2000, the share of subprime mortgages going to households in minority neighborhoods rose from 2 to 18 percent," Massey and Rugh said.

They said the U.S. Civil Rights Act should be amended to create mechanisms that would uncover discrimination and penalize those who discriminated against minority borrowers.

The study is published in the October issue of the journal.

(Editing by Paul Simao)

[TheCoon]

It is evil what these companies did, but how stupid do you have to be to take a loan out to buy a house and not have money to pay it back. Do these people not understand basic economics? Did they think it was just free money like a welfare check? Did they think Obama was gonna pay it for them? Wait, don't answer that.

[Zelhar]

I am not very knowledgeable in the details but I was under the impression from some articles and listening to Chaim videos, that government policies since the Clinton administration dictated that mortgage firms must lend to minorities without discrimination, even though in fact black are much more likely to default on their loans.

[briann]

Well dUHHHH!!!       Thanks to racists like Jesse Jackson and Al Sharpton pushing affirmative action lending because the Evil Jew controlled banks were not lending to poor Negros, Bill Clinton helped tweak the Community Reinvestment Act into the catastrohpe that we are all living in now.

The wording of the CRA, specifically dealt with this. It was created fort the socalled alleged refusal of banks to lend to residents of poorer urban, often racial-minority areas.

[Rubystars]

If you use any kind of common sense or look at things how they are (realistically), that's automatically "racist". Anything white people do is "racist".

They could eat a banana and it would be "racist".
http://www.highbeam.com/doc/1G1-145681177.html

[TheCoon]

I am not very knowledgeable in the details but I was under the impression from some articles and listening to Chaim videos, that government policies since the Clinton administration dictated that mortgage firms must lend to minorities without discrimination, even though in fact black are much more likely to default on their loans.

That actually makes a lot of sense, thanks.

[Lewinsky Stinks, Dr. Brennan Rocks]

Daniel, what really was the point of this thread?

[Ari Ben-Canaan]

The moral of the story:  Don't buy housing you are not sure you can really afford.

"I was tricked into buying this house because I'm black, dammit!"

[TheCoon]

The moral of the story:  Don't buy housing you are not sure you can really afford.

"I was tricked into buying this house because I'm black, dammit!"

I'm sure people remember the black woman who after Obama won said that he would pay her rent. They're really that stupid.

[angryChineseKahanist]

It be da honkey's fault.
When it was my turn to take out a mortgage, I whipped out a simple four function calculator, a pencil, and paper to determine if I should do it.

I'm no financial accountant but here goes.
What are my current bills? What's my income? What do I have to give up?
What's left over? That's how much I can afford.

[Daniel]

Daniel, what really was the point of this thread?

The point of me posting this article was that I initially was sceptical about Chaim's claim that blacks and other "affirmative action" populations caused the collapse of the economy. But this article confirms what Chaim was talking about. So I figured that this would be of interest to this forum.

[Lewinsky Stinks, Dr. Brennan Rocks]

Daniel, what really was the point of this thread?

The point of me posting this article was that I initially was sceptical about Chaim's claim that blacks and other "affirmative action" populations caused the collapse of the economy. But this article confirms what Chaim was talking about. So I figured that this would be of interest to this forum.

The article makes it sound like minorities were "the victim" here.

[Zelhar]

Well I think the minorities are not to be blamed alone. The financial firms enthusiastically participated in the mortgage bubble. They would lend to every bum that walked into their office, then sell the loan to Fannie or Freddie (which are minority/democrat run corporations), then, Fannie and Freddie through investment banks would securitise the loan into junk bonds that the rating companies gave "A" rating, and sell it to sucker savers and pension funds (i.e middle class people which is mostly non-black).

Eventually, the smarter financial firms like Goldman Sax and Paulson and co, realized the sub-prime market is going to crush, so they bet against it and made more money.

I think if the financial firms weren't so greedy, they could circumvent the affirmative action lending program.

[Kahane-Was-Right BT]

The people who call it "predatory lending" are the affirmative action criminals who are granted loans because of their skin color even though they have zero ability to pay them back and the lenders know it.    Lending is beneficial to the recipient.   We really live in an Orwellian world, don't we?

[TheCoon]

Is it acceptable from a business standpoint to loan money to an affirmative action moron who doesn't understand finances? Probably. Whether it is morally acceptable is another story. Personally, I think it is mainly the fault of the people who got the mortgages. If you aren't 100% sure you will be able to pay back the loan, don't take it.

I definitely think a lot of the blacks will no doubt say the lenders were racist to draw attention away from their own stupidity for taking loans they knew they couldn't pay back. I mean, who takes out money for a house when they don't even have money or a job to help pay for the down payment? It's absurd.

[briann]

Well I think the minorities are not to be blamed alone. The financial firms enthusiastically participated in the mortgage bubble. They would lend to every bum that walked into their office, then sell the loan to Fannie or Freddie (which are minority/democrat run corporations), then, Fannie and Freddie through investment banks would securitise the loan into junk bonds that the rating companies gave "A" rating, and sell it to sucker savers and pension funds (i.e middle class people which is mostly non-black).

Eventually, the smarter financial firms like Goldman Sax and Paulson and co, realized the sub-prime market is going to crush, so they bet against it and made more money.

I think if the financial firms weren't so greedy, they could circumvent the affirmative action lending program.

The firms WERE part of this, they knew the ship was sinking... even back in the 90's, and basically said, well, were gonna go belly up, and ultimately be bailed out, so in the mean time, lets make a SH*T load of money..... Hey, were only doing what the government wants us to do.

[MassuhDGoodName]

Re:  ""predatory lending"

As a completely separate issue removed from the "housing loan" situation, predatory lending most certainly does exist in America today.

The average rates of interest today were flat out illegal before the Clinton years and would have been prosecuted under the laws preventing usury.

The entire global economic fiasco today is almost entirely due to President Clinton's trashing of the legal statutes which had been written to end Wall Street corruption and fraud which caused the Stock Market Crash of 1929.

Clinton declared that the digital revolution heralded a New Age of Economics, where sound financial policies no longer were applicable and where a financial meltdown was no longer possible.

The incredulously stupid and uneducated Americans went right along with his evil, cheering as their "elected representatives" passed new legislation which made legal all the corrupt and fraudulent practices which would have resulted in imprisonment in earlier years.

And the result?

Almost all individual American citizens indebted far beyond any ability to even pay off the interests on their credit card expenditures, a national debt long having surpassed any possibility of being paid, and elitist plutocrats whose wealth has greatly increased throughout this growing debacle and who rely entirely on a slave labor force of illegal aliens and "offshore employment" to maintain their socio-economic and political status.

And the percentage of American GDP resulting from Banking and Finance is now approximately 60% !

Passing legislation to force banks to lend to borrowers on the basis of their race or ethnicity alone, supposedly to end "discrimination", is obviously so insane that if even our worst enemies wouldn't have dared to think they could push that on the American people without facing an armed insurrection.

So we do in fact live in an Orwellian world - one in which we now see a public so dumbed down and brainwashed as to consider greedy and power mad gangsters to be "quality leadership".

*next up:  Laundered Illegal Drug Money from South American narco-traffickers the only thing propping up America's entire banking industry!  Were the total sum of laundered drug money to be suddenly removed, all of America's banks would collapse overnight.  And this is all being done with the full knowledge of those with access to the facts and figures - from politicians to Bank CEOs.  Kind of makes you wonder who among our "leaders" are accepting huge bribes (and blackmail threats) to guarantee that America's borders remain wide open and unguarded.