Skip to comments.When the Dream of Owning a Home Became a Nightmare
Posted on 10/19/2019 4:22:22 PM PDT by karpov
When tens of thousands of African-Americans held the keys to their first homes in the early 1970s as part of a new federal program that encouraged black homeownership, they thought they were about to fulfill the American dream. Instead they got an American nightmare.
The story begins with the urban uprisings of the late 1960s, which were reactions to decades of poverty, racism and a lack of opportunity. According to the Kerner Commission, a major cause was government-sponsored housing segregation that had confined African-Americans to rental housing in urban neighborhoods while subsidizing white flight to the suburbs. Black people, too, wanted to enjoy the benefits of homeownership and the uprisings pressured Washington to take that seriously.
Richard Nixon gave voice to a shift in government policy in 1968 when he declared that people who own their own homes dont burn their neighborhoods. The Housing and Urban Development Act of 1968 created policies that let low-income black renters, long excluded from conventional mortgages and other standard ways of financing homes, become homeowners.
At the core of the law were three components: A down payment cost only $200; a buyers mortgage was linked to her income, not her houses value; and the interest rate on the loan, subsidized by the federal government, was capped at 1 percent.
It was a boon at least for banks and the real estate industry.
The Federal Housing Administration backed mortgages arranged through this program and bankers didnt have to worry about foreclosures or defaults because if buyers fell behind on their payment, Washington would simply pay off the loan. An unprecedented number of black renters in Philadelphia, Detroit, Chicago and other urban centers became homeowners.
But the program was troubled from the start. The conditions that allowed for homeownership also set the groundwork for fraud.
(Excerpt) Read more at nytimes.com ...
I thought the banks were ordered to make loans with lower financial standards so that it would ‘be fair,’ against their better business sense but mandated by the House, no?
Someone overturned a scrabble box to pick out a name?
Then,about 15 years later,the chant changed to "predatory lending".
Banks just can't seem to get it right in the opinion of the Rat Party.
See Post #6
The rest of us get to pay for those bad loans.
Well, that theory has been disproven.
Wow...wish I could have gotten that deal.
Ahh, the days when reporters had names like "H.L. Mencken."
Which is why we must get rid of the Federal Reserve. Bank decisions should benefit or cost the bank officials, board directors, and stockholders only. American taxpayers must stop the nonsense of bailing out bad decision makers.
If you don’t lend to them, you’re a racist.
If you DO lend to them, you’re a predatory lender.
= No Win
Bankers will make a lot of bad loans if you insulate them from the consequences
This is the mechanism behind “student loans”.
Seems to be a whole lot of anger there, just a guess.
Is part of what’s going on, that people misunderstand what’s involved in home ownership?
For example, this house in the article needed lots of repairs and maintenance. The mother in the story may not have realized that it is her responsibility, her money needed, to maintain the home. If someone has been a renter their entire life, they may not understand/appreciate the fact, that the homeowner pays for all repairs out of pocket.
Lots of “Keep Me From Killing People” drugs going on in THAT head!
To be fair, you don’t really own your home until you pay off your mortgage.
Yup,I believe the Community Reinvestment Act was a big part of that...as was Attorney General Re No.
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