by Charlene CrowellNNPA News Service Every 13 seconds another foreclosure occurs. African-Americans continue to suffer disproportionately.
As Wall Street financiers defend multi-million dollar bonuses after receiving taxpayer-funded billion dollar bailouts, families on main street continue to struggle to keep their piece of the American dream.
A recent analysis by the Center for Responsible Lending (CRL), an independent nonprofit research and policy organization, studied first-lien, owner-occupied mortgage loans made to African-Americans. Of the 50 states, Florida had the largest number of African-Americans in foreclosure, with 58,474 foreclosures projected for 2009, followed by California with 32,297.
However when CRL analyzed foreclosures as a percentage of each state’s total foreclosures, a different pattern emerged. African Americans were likely to fare worst in the District of Columbia, Maryland, Georgia, Mississippi and Louisiana. In 2009 alone, 301,500 African-American families are expected to lose their home to foreclosure. By 2012, foreclosures woes will affect an estimated 1,115,200 African-American families.
They are left to ponder one question: Were they simply victims of the free-falling financial system, or rather the targets of unlawful, abusive lending practices?
“Empirical research shows that the leading cause of the problem was the characteristics of the market and mortgage products sold, rather than the characteristics of the borrowers who received those products,” Keith Ernst, CRL Director of Research, said in sworn testimony to the Joint Economic Committee of the U.S. Congress.
He added, “Even more troubling, originators particularly targeted minority communities for abuse and equity-stripping subprime loans, according to complaints and affidavits from former loan officers alleging that this pattern was not random but was intentional and racially discriminatory.”
For example, according to the Baltimore Sun, between 2005 and 2008, foreclosures involving one lender, Wells Fargo, accounted for 71 percent of foreclosed and vacant properties in mostly Black neighborhoods. The same news report also claimed that Wells Fargo made subprime loans to 65 percent of its black customers; while only 15 percent of whites received subprime loans.
In response, civil rights organizations, as well as state and local government officials are pursuing legal action against lenders and mortgage servicers that engaged in predatory practices This spring, the NAACP and other advocacy groups filed separate class action lawsuits in U.S. District Court against several of the nation’s largest lenders including JP Morgan Chase, Citigroup, and Wells Fargo.
More recently, Illinois Attorney General Lisa Madigan filed a lawsuit alleging that Wells Fargo Bank and its subsidiaries discriminated against African-American and Latino homeowners by selling these consumers high-cost subprime mortgage loans while white borrowers with similar incomes and credit ratings received lower-cost loans.
In a statement announcing the lawsuit, Attorney General Madigan said in part, “As a result of its discriminatory and illegal mortgage lending practices, Wells Fargo transformed our cities’ predominantly African-American and Latino neighborhoods into ground zero for subprime lending.”
Madigan, along with several other attorneys general, also successfully negotiated an $8.4 billion, multi-state settlement in a predatory lending lawsuit against Countrywide, similar to a $10 million settlement this June in Massachusetts. Massachusetts Attorney General Martha Coakley successfully fought subprime lender Fremont Investment & Loan for its lending practices.
The City of Baltimore also has filed foreclosure-related legal action. And the Memphis City Council and the Shelby County Commission have endorsed plans to sue mortgage lenders for practices that target African-American and poor neighborhoods with practices that local officials label predatory and discriminatory.
Yet, while the nation’s justice system slowly and deliberately unfolds, many African Americans continue to suffer everyday from disproportionately high unemployment.
Some are angry federal intervention and, in some cases, local and state scrutiny did not arrive until long after the financial foreclosures virus had spread from black and Latino areas into white neighborhoods.
As the holiday season unfolds, many homeowners are wondering if they will have a home come January – and, if so, for how long.
(Charlene Crowell is the NNPA financial writer.)
