The Neediest Get Hurt The Most In Mortgage Crisis


Here are some mighty strong words: “The subprime lending debacle has caused the greatest loss of wealth to people of color in modern U.S. history.” That is the conclusion of the lead author of a new report by United for a Fair Economy, Amaad Rivera, as quoted in an excellent article in the Christian Science Monitor.

The report, says the paper, also concludes that “Black/African-American borrowers will lose between $71 billion and $92 billion in the current foreclosure crisis…” Add another loss for Latino borrowers of another $75 billion to $98 billion, says the paper.


The paper reports that a little more than half of African-Americans and 4 in 10 Hispanics back in 2006 got subprime mortgage loans. And, as we all know, defaults on subprime loans were the spark that ignited this entire economic mess that now is taking down the banking system along with the real estate one.

When viewed in this light, it is apparent who is getting hit the hardest–as a group–by this awful downturn.

Says the paper, “There’s broad support on Capitol Hill for shoring up government-sponsored home-mortgage giants Fannie Mae and Freddie Mac: They’re too big to fail, many say. But there’s much less consensus over what to do about people who are losing their homes,especially in poor, inner-city neighborhoods–or even over how to understand their plight.”

I interviewed earlier today an African-American woman who is an example of this very issue: She holds down one full time and two part time jobs, works seven days a week, is a widow, is supporting a live-in 17 year old niece, and, this week, will probably lose the home she long lived in with her husband in a “mixed” neighborhood, as she puts it, of Southern California.

To listen to her story, is to listen to all the stories out there of those suffering the worst housing downturn since the Great Depression: The value of her home dropped by nearly $100 thousand over a year and a half period, she says. She had to refinance several times to pay the bills. She tried in vain to get help from her lender. She started falling behind on her monthly mortgage payments. She has lost this battle!

Of course there are many white Americans who are in the very same place as this woman–also in dire need of a helping hand from the government…from somebody!

But she represents more…she represents a tidal wave of economic destruction that is tearing about entire neighborhoods in this country. Places where people who may have started on a lower rung of the ladder bought into the American dream only to get ripped off by greedy lenders who cared less about reinforcing the matrix of a community than about selling the loan to some other agency, some foreign bank perhaps, in the form of a repackaged security.

When the woman in question tried to extract an ounce of empathy from her lender — a lender now, itself, under government scrutiny for its home loan practices, she was told it no longer owned her mortgage…months later, she still hasn’t been able to find out exactly who does!

And so, this week, she will put pen to paper and leave behind for good a place she once came home to every night to eat dinner with her husband; a place she once watched her now fully grown son mature; a place she once took pride in; a place she once thought she’d live in till the day she retires; a place that, within days, will no longer belong to her.

She will visit it from time to time now that she has moved into a nearby rental unit. She will pass by it in her car but not turn into its driveway. She will keep on going because the American dream has now passed her by. Some dreams just don’t happen twice.

About Author

Charles is currently reporting for KNX Radio in Los Angeles, is the co-author of the book No Time To Think, and can be found commenting about the news on his blog, The Feldman Blog, as well as on The Huffington Post.


  1. LimbaughSucks on

    “She had to refinance several times to pay the bills. She tried in vain to get help from her lender. She started falling behind on her monthly mortgage payments. She has lost this battle!”

    This below is coming from a very liberal and very NON prejudice person..
    I am only using the (SHE) to refer to the example of race, class and or sex in the article. I don’t reallt care if it were he or she or it.

    SHE probably got suckered into a bogus lone from the start that SHE could NOT really afford!

    SHE had a basic human instinct called WANT and probably jumped through hoops to get the original loan.

    SHE had access to mortgage calculators and consumer counselors the whole time and 10 minutes could have given her a clear picture of the risks.

    SHE had wants and desires and CHOOSE to RE FINANCE several times BECAUSE the HOME APPRECIATED and BECAME HER BANK!

    SHE saw a GIANT credit card with a minimum payment required and like ALL HER FRIENDS around her, SHE JUMPED ALL OVER the chance to pull as much CASH out as often as possible.

    I just don’t buy how this or any person working 3 jobs was able to afford and buy these homes in the first place and make it, but when EQUITY came into play and LOANS were a plenty, ALL these people suddenly and DESPERATELY “needed” access to CASH? Up to 115% of market value????

    I think this FALSE EQUITY became like CRACK COCAINE and man, woman or whatever, PEOPLE are tempted by material things and MORE things. Sure for people who had lower incomes and never had much, the PIGGY BANK was perhaps just way to tempting.

  2. LimbaughSucks on

    And YES the LENDER targeted and TEMPTED (SHE) every chance they got.
    There are SO many factors to this mess and I could argue my own post above with ease. So, grain of salt here folks… And another cup of coffee for me!

  3. Not much sympathy here. Anyone who buys into an obvious bubble will reap what they sow. Anyone who thinks that an asset whose price doesn’t move from decade to decade can suddenly and irreversibly appreciate 10% per year ad infinitum is a fool.

    The article’s protagonist should have been a renter these last several years. You gotta live somewhere, but that doesn’t mean you have to buy.

    And the American dream is still there. It’s about opportunity and freedom, and it’s still around today. For all of us, including the lady in the article. It’s too bad she used that freedom to make serious mistakes, but that’s the price of freedom (that and vigilance).

  4. Pingback: Bridget Magnus » Odds and Ends 9

  5. This is the opinion of Robert Sheridan, the CEO of Sheridan & Partners, a Chicago real estate & development company.

    Not All Financial Woes Are Created Equal
    The failure of Indymac Bank – according to The New York Times the largest lender to fail in more than two decades – can be laid squarely at the feet of the lax (or nearly non-existent) underwriting that is part of (a big part of) the sub-prime mess. The chickens simply came home to roost.

    The troubles of Fannie Mae and Freddie Mac are quite different. Freddie and Fannie underwrote loans carefully; their difficulties are a result of the unprecedented decline of home values.

    In 2006, going against the conventional wisdom that single-family home prices never decline (they might stop rising for awhile, but they never decline), we predicted that single-family prices could decrease 10 to 20 percent. Painfully, that forecast turned out to be very correct – but also optimistic. We’re in a cycle now in which housing declines already are greater than at any time since the Great Depression of the 30s. And we’re not at the bottom yet.

    If you don’t want to be disappointed by housing performance in the near term, disregard forecasts that the bottom is just around the corner – unless that corner is in Timbuktu. The bottom is NOT coming soon. And when it does arrive, it will not be obvious, like the bottom in the chart of the DJIA. The housing “bottom” will become apparent only in the rear-view mirror, when you realize that prices have stopped falling. Don’t expect a sharp rebound.

    We will stay at the bottom for quite a while. How long that lasts will vary, as always, market-by-market.

  6. Brock –

    What does buying into a bubble matter if you live in your home long enough to pay off the mortgage? Those intending to flip got what they deserved, but a bubble doesn’t matter to a long-term homeowner.

  7. Excuse me, but the ability to afford your mortgage payments each month is a separate issue from the value of the house changing. At least it should be in a common sense world. Most of the “Billions” being lost by homeowners these days were never real to begin with, and for people who took on a mortgage with no real down payment, they never owned the place to begin with, so they aren’t the ones losing.

    If loans had been restricted to people who could actually make the payments, home prices would not have skyrocketed like they did and we would be much better off all around.

    But no, the mortgage, financial and real-estate interests structured everything so they could take their commissions, and pass the default risk on to someone else by severing all connection with the long-term performance of the loan. This to me is the fundamental problem of all of this mortgage securitization scheme. Each party in the lending process needs to retain some liability in case the mortgage payments are not made. That way they would have something to counter their greed motivation that dominated the last 5-6 years or so.

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