Posted on 06/24/2008 7:08:48 PM PDT by reaganaut1
Uncovering the roots of the disastrous home mortgage bubble that popped last year will keep economic historians busy for decades. Yet, one factor has so far been largely overlooked: the bipartisan social engineering crusade to drive up the rate of homeownership by handing out more mortgages to minorities.
More than a negligible amount of the blame for the mortgage meltdown can be traced back to multiculturalism: government-mandated affirmative-action lending, demographic change, illegal immigration, and the mind-numbing effects of political correctness.
The chickens have finally come home to roost.
About half of all mortgages for blacks and Hispanics are subprime, versus roughly one-sixth for whites. Not surprisingly, the biggest home price collapses have occurred in heavily Hispanic cities such as Las Vegas, Miami, Phoenix, and Los Angeles.
(Excerpt) Read more at takimag.com ...
If the author develops the idea into an abuse of ill-conceived racial quotas and the mentality they foster in society, then he might be on to something.
imHo.
The author argues that since most of the defaults come form the bottom half of the income curve, then blacks and Hispanics are to blame for this crisis.
Uh, like there are no upper income black or Latino home owners? Like there are no white folk in the bottom half?
This piece is pure feces.
PING = 4 LATER
I was thinking about this after reading Paul Krugman’s column yesterday - one of the handful of Krugman’s pieces that didn’t make the veins pop out on my forehead. He actually made the reasonable point (that has been made before by others such as Sam Zell) that perhaps the correct level of home ownership is really 62% and that by artificially jacking it up to 68-69% we have just bought a foreclosure crisis that, oh-by-the-way, is about equal to 7% of households. Granted that will play out over time, probably 3-5 years, but it is a big chunk to swallow.
I practiced law in Atlanta for 7 years, until last September. I saw an incredible level of mortgage fraud perpetrated by blacks, using black straw buyers and involving black brokers and appraisers, etc. The banks and other lenders seemed to lose their normal and critical risk analytic function as if they were looking the other way in order to achieve some other (i.e., CRA/Minority Lending) objective.
Now that it is unraveling - there is Pulitzer waiting for someone to unravel the internal decisioning at the major lenders (Washington Mutual, Countrywide, etc.). Did they explicitly accept paper they knew was going to default or had fraudulent documentation in order to satisfy some goal established by outside organizations (Operation PUSH, etc.) or the federal government? There would be one hell of a shareholder suit out there if it could be shown...
Sounds like the work of 3 Stooges - Clinton, Reno, and Deval Patrick.
I recall many years ago talking to an Asian man who worked at Bank of America in CA. He was disgusted that he had to help give out loans to Blacks who clearly would not qualify for a loan if they were Asian. It was part of the Community Reinvestment Act. In the name of affirmative action, they gave money to Black people who should not have gotten the loans. Yes, there are other faces of people who have gone bankrupt, but this was promoted by the government just for Blacks.
Statistically speaking, you are incorrect. On average, blacks and hispanics are considerably less credit-worthy. This led to claims that they were turned down for credit more frequently or charged higher rates due to racism.
Repeated studies showing that exactly the same disproportion recurred whenever files were reviewed with all racially identifying information removed were ignored.
If you give blacks and whites mortgages on equal terms, ignoring their incomes and credit histories, the only way to extend exactly equal treatment to the races, the monorities will default at much higher rates.
I would not be unbearably surprised if minorities with equal credit ratings also defaulted at somewhat higher rates than whites, but have seen no data on this.
[whistles between teeth].
Whatever blows your skirt up.
Thank you.
I had no idea I had my own lagoon.
You should get out more.
...or - How Illegal Immigration Helped Cause the Housing Crisis
“On average, blacks and hispanics are considerably less credit-worthy.”
If you adjust this to a comparable white peer group — income levels, education levels, etc — is that true?
Or if this is true, is this because many from those groups find themselves in the bottom half due to lower income and education levels?
bttt
Good article. Extremely good. Long, but extremely good. Thanks.
I think you answered your own question — the reason minorities tend to be less credit worthy is because they have less education and lower incomes.
They stated that black net worth at $11,800 as 10% of white net worth.
They stated illegitimacy rates at 71% for blacks, 50% for hispanics and 27% for whites.
It is the cultural differences among the races that it is at the core. They tried to pretend that low-income black women with illegitimate children would have the means and discipline to pay like educated white people. It just wasn’t possible.
Witness their example of the Hispanic woman who was duped into paying $3,000/mo. The point is, this Hispanic woman didn’t have the social, intellectual, financial, language and economic tools to understand a loan. How could she purchase a home in that environment, yet the Clinton and Bush administrations wanted to treat here like middle-income, well educated people.
It was foolhardy and now it has blown up in their faces and you and I get to pay their bailout with our ever-increasing tax burden. Oh joy!
save
The primary reason is that the average minority group member has a lower income and education. There may also be some cultural influences involving thrift, obligation to repay debts and all that, but these are by comparison pretty minor.
That blacks on average are considerably more likely to be unmarried (just one earner in the family) or in jail certainly doesn’t help.
I would like to stress that none of these statistical averages has any meaning at all for any individual within any of the groups. That’s not the way statistics work.
But if each white or black individual is approved (or not) for credit as an individual, significantly more blacks will be turned down or charged higher rates.
Or you can insist that blacks be approved at the same rates as whites, which requires ignoring their individual credit histories, and you will eventually have a lot more defaults.
Your choice.
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