Posted on 11/26/2007 12:26:52 PM PST by 2ndDivisionVet
LOS ANGELES (Reuters) - In May, Alvin Clavon received a foreclosure notice on the simple, Spanish-style house in South Los Angeles that he shares with his wife and three boys.
Clavon bought the place in 2003 with a fixed-rate loan. They painted the walls, fixed the yard and made friends with the neighbors, who let the Clavon boys pick their basil.
In 2005, he worked with a mortgage broker to refinance his home with another fixed-rate loan. But on the night before signing, the family was offered an interest-only, adjustable-rate mortgage.
Clavon, a 35-year-old executive assistant at a bank, said he felt stuck. The ball was rolling, he trusted his broker and so the next day, he signed the loan.
"Turned out to be the worst thing I could have done," said Clavon, who like so many others in danger of losing their home to the U.S. housing crisis, is African American.
The Clavons live in a zip code, 90047, with one of the largest black populations in the city, and also one of the highest rates of foreclosure -- a common combination.
Researchers agree minorities are more likely than whites to get high-cost mortgages, but analysts can't agree why.
Does the 90047 zip code have a high foreclosure rate because African Americans were forced into high-cost loans? Or is the area's foreclosure rate the result of economics?
Either way, say some minority and housing activists, the fact that minorities are disproportionately hurt by lending practices in the United States is real -- and so are its consequences.
RACE OR RISK?
Study after study show that minorities are more likely than whites to get subprime mortgages, which are high-cost loans made to people with poor credit. In its heyday earlier this decade, the subprime market was cheered as an avenue through which historically shut-out borrowers could get loans. That frequently meant minorities.
So long as home prices rose, the subprime market seemed a positive example of how to increase home ownership, but as the housing market weakened this year, many began to question whether the loans were fairly priced.
In September, the Federal Reserve released a study that found 52.8 percent of African-Americans got a high-cost home loan when they refinanced in 2006, compared to 37.7 percent of Latinos and just 25.7 percent of whites in the same year.
A similar study by the Association of Community Organizations for Reform Now, known by its acronym ACORN, in September found the same pattern even when income was equal.
According to ACORN, upper-income blacks were 3.3 times, and Latinos 3 times, more likely than upper-income whites to have a high-cost loan when purchasing a home in 2006.
"I keep hoping one day I'll do a study where race doesn't play a part," said Liz Wolff, author of the ACORN study.
"But clearly, there is a racial bias," she added.
Jay Brinkmann, vice president of research and economics at the Mortgage Bankers Association, disagrees.
He believes that if researchers could account for all the factors that go into pricing a mortgage, they would find race doesn't matter.
"The pricing is based on risk, not race," said Brinkmann.
THE AMERICAN DREAM
The answer may be decided in court.
In July, the National Association for the Advancement of Colored People, or NAACP, filed a discrimination suit against 11 of the country's largest lenders, saying minorities are steered toward high-cost loans more often than whites, even after all risk factors are considered.
The ACORN study found that high foreclosure rates cause higher rates of crime, lower tax revenue and property values. In other words, whole minority communities, not just individuals, are hurt when houses go under, said Hilary Shelton, director of the Washington D.C. Bureau of the NAACP.
"The individual stories are heart-wrenching," said Shelton. "Part of the American dream, is being able to have a safe secure home where you can raise your family."
"But if we go beyond that and see how it affects entire groups ... we know there is a racial factor," said Shelton.
Despite the foreclosure notice on his house, Clavon still owns it. He'd like to sell, but can't find a buyer.
"The facts are there. So-called minorities are disproportionately represented in these loans," Clavon said about subprime lending.
"You can make out of that what you will."
Yep : )
“In 2005, he worked with a mortgage broker to refinance his home with another fixed-rate loan. But on the night before signing, the family was offered an interest-only, adjustable-rate mortgage.
Clavon, a 35-year-old executive assistant at a bank, said he felt stuck. The ball was rolling, he trusted his broker and so the next day, he signed the loan. “
So because he made a moronic decision (going from fixed to interest only? WHAT!?!), we should feel sorry for him? And what does race have to do with a poor decision?
And he was.....................
Clavon, you signed the ARM. Too bad so sad. You should have known to have kept a fixed rate loan. Don’t expect us to bail you out dude.
Rich vs. poor
Black vs. white
Woman vs. men
Capitalism vs. environment
bla bla bla
This is just another story to this end. Another class warfare story, brought to us by another communist thinking group. It is also no coincidence that these left groups pounce on these stories the way they do! Global warming as is their playing of the race game serves their social re-engineering agenda. Are you surprised?
Um, what about women and children?
Rooters is just stating it outloud in the headlines now. LOL.
Most people find it easier to 'qualify' with the interest-only loan, as their recurring monthly debt added on brings their 'back ratio' [percentage of gross monthly income comprised of TOTAL mortgage payment-PITI (principle, interest, taxes, insurance), plus homeowners association fees/condo fees ...beyond Fannie Mae or Freddie Mac guidelines.
Most people like to have some disposable income during the month for that whopper with cheese, etc..
Then...the rate adjusts upwards because the initial rate was a 'teaser rate', and all hell breaks loose. The borrower tries to refinance but finds the market value of the home is less than his outstanding mortgage balance(s).
I don’t understand how anyone “got stuck.” The rate on loans has steadily cycled DOWN for better than 18 months.
Race is a coincidental factor in the current subprime mortgage brouhaha. The real problem is that far too many Americans are financially illiterate, bought into the lie that housing prices would go up forever, and took out exotic mortgages that they could not possibly pay for.
Seriously, the financial institutions could care less about the color of a person's skin. All they see is an opportunity to make money...and, believe me, they will take it.
He worked at a bank, but being a minority according to the press and Democrats means you have NO ABILITY to make your own decisions or be responsible for the consequences of such.
You are a victim who should always get a pat on the back, a government job or welfare, as long as you vote DEMOCRAT.
I shudder to think that fairly soon, some Drooling, iDiot, Democrat will propose some form of affirmative action in the banking and loan industry.
ACORN Leftist Group Under Investigation For Voter Fraud
http://www.traditionalvalues.org/modules.php?sid=1979
Exposing America’s Enemies: The ‘Social Justice Seeking’ Communist Left
http://www.postchronicle.com/commentary/opinion/article_21218247.shtml
I believe you can lay the subprime loan BS at the feet of the self-proclaimed Black leadership.
And the Clintons.
God decided He was finally fed up with the human race and decided to end it for good. He called up a reporter at the New York Times to tell him the news: The world would end the day after tomorrow.
The reporter tried to talk God out of it, but God was firm and wouldn’t be swayed. The reporter then asked if he had an exclusive. God said that He was going to call three other newspapers.
Headlines the next day:
The New York Times: “God says world to end tomorrow; story and analysis on page B11.”
The Wall Street Journal: “God says world to end tomorrow; market to close early”
USA Today: “IT’S OVER!”
The Washington Post: “God says world to end tomorrow; women and minorities hardest hit.”
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