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 don’t 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 buyer’s mortgage was linked to her income, not her house’s 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 didn’t 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 ...
To be fair, you don’t really own your home until you pay off your mortgage.
Tell me how much of your home you own when you fail to pay property taxes for a few years. After the government comes in with their armed goons to force you off “your” property
Doing a search says this thing is a woman?
Not sure on that count. Even if it looks like one, you never know these days.
https://www.youtube.com/watch?v=mzJmTCYmo9g
Bird and Fortune comedy routine on the subprime crisis. Of course, the best comedy is based on the truth.
Note that this is from the most recent crisis - it sounds like Nixon’s plan was a bit different.
From memory the guy explains the bundling of mortgages. 3:00 it begins. And while funny - it is true. (And therefore sad). They use actual names of the portfolios,
CEO comments.
“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?”
Combination of the two. Sadly, bankers are NOT saints, and if they don’t think they have any risk, they simply will not give a damn who they lend money to, as was the case in 2008, as most of those borrowers were not EEOC types, but instead simply poor/middle class whites who wanted more than they could afford. But the banks were able to immediately sell-off the loans, so they didn’t care, and in the end we got stuck with damages, which continue to this day in the level of federal spending that shot up in 2008, but never came back down.
Moving out is flight. Moving back in is gentrification.
And even then you still don’t own it due to property taxes.
The Fed's took over student loans years ago, so YES.
And what were the whites fleeing?
And that was bad why? What's so great about being around white people?
You mean, “Keep Me From Killing White People”.
You don’t really own your home after you pay off your mortgage - try not paying taxes on the house; find out how long you “own” the property … 60 days? 90 days? It will be taken from you by law …..
I was about to make the same statement. And the real problem is-that varies by state and within a state. Taxes are very affordable one county over from me-and even within the county I live in. But my local city has gone nuts. I own my home, valued at about $180k. But I pay $5k a year in taxes just to keep it and I have no kids in public school-never have (we’ve always Home schooled).
Combination of the two. Sadly, bankers are NOT saints,
YES! When politicians and socialists start writing banking laws it’s time to run.
When a bank denies a loan to a black person who does not qualify, that is RACISM!
When a bank grants a loan to a black person who does not qualify and the black person does not pay it back, that is PREDATORY LENDING!
Win-win for the racial entrepreneurs!
“Another thing that changed was the secondary market for loans. Write them and move them on to hungry investors wanting risk.”
They weren’t a risk, they were AAA RATED!!! Nothing was as safe as a mortgage.
It’s funny. The only time in my life when I made money in the stock market was when I shorted financials just prior to the 2008 (including Countrywide, which went to $0). All that I did was look at the terms of a handful of loans being made in South Florida (which were public record, at the time) and it was clear that they could NEVER be paid back, as they were “Option ARMs” and designed to have their payments EXPLODE after 5 years (as in tripl, say from $1500/month to $4500/month). And that would have been fine...except they were qualifying people based on the pre-explosion payments, with the understanding that they would simply ‘re-finance’ before the explosion - well, once property values started falling, no more re-financing, and it was game over for them.
at the same time the government built low income rental housing in predominately white neighborhoods all over the country.
The governmentbuilt Interstate highways out of the city, built gorgeous new schools in the suburbs and made a down payment for every white person fleeing the city. Didn’t you get your share?
Government involvement in lending. What could go wrong?
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