As we continue to recover from the worst economic downturn since the Great Depression, it is clear that every American family has been touched in some way by the recession -- a recession sparked in many ways by the irresponsibility and recklessness on Wall Street over the last decade.
From Ponzi schemes to health care scams to mortgage fraud, too many Americans have experienced the pain of this crisis in one form or another. African-American and Latino families have been hit especially hard. Between 2005 and 2009, fully two-thirds of median household wealth in Hispanic families was wiped out.
And from Queens, New York, to Oakland, California, strong, middle class African-American and Hispanic neighborhoods saw nearly two decades of gains reversed in a matter of months. Most outrageously, these communities so devastated by the crisis were also targets of many of the practices that helped cause it -- including discrimination, predatory lending and fraud.
One of the federal government's most important tasks is to hold accountable those responsible for such abuses and that is what this administration has done in achieving the largest fair housing discrimination settlement in U.S. history -- a $335 million settlement with Countrywide on behalf of over 200,000 African-American and Latino families across the country.
At the core of this case is a simple story: If you were a qualified African-American or Hispanic borrower who received a mortgage from Countrywide, you likely paid more simply because of the color of your skin.
Moreover, if you were African-American or Hispanic, you were far more likely to be steered into an expensive and risky subprime loan than a white borrower with equal creditworthiness and financial situation.
As a result of these predatory practices, the odds of an African-American or Hispanic borrower receiving a subprime loan instead of a prime loan were more than twice as high as those for non-Hispanic white borrowers with similar profiles. Indeed, Countrywide forced over 10,000 Hispanic and African-American borrowers into subprime loans -- even though non-Hispanic white borrowers with similar credit qualifications were able to obtain prime loans.
As a result, minority borrowers who were steered into subprime loans paid, on average, thousands of dollars more for their loans and experienced additional harm as a result of increased risk of prepayment penalties, credit problems, default and ultimately foreclosure. Nothing can undo the damage that hard-working, responsible families suffered as a result of these outrageous practices.
However, the $335 million in relief for victims of discrimination will not only address their financial loss, it will make it abundantly clear that this kind of behavior will not be tolerated.
Since President Obama took office, this administration has worked to tackle the foreclosures that are harming families and devastating our communities.
We've pushed the banks hard to keep responsible families in their homes -- and because we have, foreclosure notices are down 45 percent since early 2009. The Federal Housing Administration (FHA) has withdrawn the approval of over 1,600 lenders to participate in FHA programs -- more than four times the number during the entire tenure of the previous administration.
In 2009, President Obama formed the Financial Fraud Enforcement Task Force, chaired by the Justice Department, to wage an aggressive and coordinated effort to investigate and prosecute devastating financial crimes, like this one.
And, through the Wall Street reform law President Obama signed into law last year, we created a Consumer Financial Protection Bureau -- the sole mission of which is to protect ordinary Americans from abuses like these.
With this fair housing discrimination settlement, we are ensuring that help will go to some of the families who need it most. We are telling irresponsible banks and mortgage servicers that the unfair practices of the past will no longer stand.
And most of all, we are reaffirming the basic tenets of who we are as Americans and what we believe. That this country succeeds when everyone gets a fair shot, when everyone does their fair share, and when everyone plays by the same rules.
Eric Holder is the attorney general of the United States and Shaun Donovan is the secretary of Housing and Urban Development.
Originally published at TheGrio.com
Follow Shaun Donovan on Twitter: www.twitter.com/@HUDnews
This post is about a lawsuit related to lenders giving loans to minorities who had THE SAME credit scores and employment as whites, but instead of giving the minority borrower a prime rate, as they did the white borrower, they forced the minority borrowers into sub-prime loans with higher interest rates.
So, while it's true that there are lots of white folks with a house and a job finding it hard to make their mortgages. The point of this article is that black and brown folks had THE SAME HOUSE and THE SAME JOB as a white home owner, but found it much harder to pay their mortgage because the banks were making them pay MORE for the same thing simply because of the borrower's race.
Oh, and Citywide settled the lawsuit.
When last I had my license in IOWA, the two worst offenders for ARM's were National Chain Bank and a Local state Bank. My E-Mail was flooded with "Incentive" Offers in the form of Lender Fee reductions (these could be as much as $1-1.5 thousand on top of processing and closing fees.) to bonuses on the discount points if I were to "push" their Sub-Prime Products. There you have it-different problem-same villains!
The Solution: Dramatically Lower Housing Prices
The Solution is coming to every city town and state in America.
Holder is not making things better - for ANYONE - black, brown, white, yellow.
Speaking of rasicm, Holder never said anything about all the poor White folks who had forclosures; I guess poor can be divided into classes of race too in this administration.
Partisan piffle.
The people that lost their homes because of this have my sympathy, as do the people that had to refinance for medical bills, schooling, or to update their homes. Anyone else who is underwater on their homes because they were using it as a credit card for vehicles, vactions, land or bigger houses that they didn't need deserve what they got.
The only crime committed here was by our own politicians for pushing banks to make those loans and allowing Fannie and Freddie to finanace them.
The government did not "force" banks to do squat. If you think they can, you misunderstand power in America.
Why? Because people like President Obama took lenders to court (or at least threatened to do so), forcing them to provide home loans to people would never have been approved in the first place. The Community Reinvestment Act was abused by radicals to enable the poor (in particular African Americans) to become home owners, a noble, but misguided goal. Now that their homes have been foreclosed, which was inevitable, people like Eric Holder wish to hold the lenders accountable. This is insane and this is coming from the Attorney General of the United States.
Please research the facts regarding racially motivated redlining in the US. Here is a good start:
http://en.wikipedia.org/wiki/Redlining
I mention this because I was once a hard-core libertarian who believed that the CRA was undue government interference imposed on bankers' abilities to make a profit. Part of what changed my mind was watching the American Experience documentary, The World That Moses Built, on Robert Moses. You can watch it YouTube starting here:
http://www.youtube.com/watch?v=lUmI6mUzSH8
But I also read up on the research literature while preparing to teach university-level courses in financial institutions and markets (I have a Ph.D. in Business Administration), I became convinced that too many bankers were guilty of using their ability to control lending markets in order to advance strongly held but publicly quiet racist policies.
But also, if you'd like to understand better my thoughts about my own racists sentiments, I encourage you to check out this post to my personal blog:
http://thetightwireguy.com/2012/01/17/some-videos-i-watched-on-mlk-day/
Because I truly did not understand this about myself not so long ago.
Thank you for listening.
The Tightwire Guy
For every urban grandparent with a paid off mortgage who remortgaged their house unknowingly, my heart goes out: But they haven't been helped. The fact of the matter is that, and I know it may be hard to admit, the majority of people of whatever race, for every "subprime" borrower who was wrongfully given a chance (and I can't even believe that statement makes sense, "wrongfully given a chance?") there are ten subprime and non-subprime potential borrowers today who can't get financing now on any terms. And don't even consider the "alt-a's."
When are the investigations of Mr. Frank and Mr. Dodd going to occur?