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Foreclosures topples hard-won success for minorities

By Catholic Online (NEWS CONSORTIUM)
January 31st, 2012
Catholic Online (www.catholic.org)

With foreclosure running rampant throughout the United States, even the most affluent neighborhoods are being emptied out of families. The mass evacuation is perhaps not as noticeable - many exclusive communities forbid "For Sale" signs being put in yards as par of their beautification efforts - but the crisis is hitting black and Hispanic families especially hard, particularly those who have fought hard for their part of the American dream.

LOS ANGELES, CA (Catholic Online) - While white families held mortgages on the vast majority of the roughly 4.2 million homes that have entered foreclosure since the housing bubble popped in 2006, black and Latino families have been almost three times as likely as whites to lose their homes.

According to a report released late last year, that's due largely because minority homebuyers with good credit were often steered into high-interest loans, adjustable-rate mortgages and other risky arrangements.

Bank of America agreed to pay $335 million in victim compensation to black and Latino borrowers pushed into unfair deals by its notorious subsidiary, Countrywide Financial last month. The settlement will mark the U.S. Justice Department's largest-ever residential fair-lending penalty for "widespread" discriminatory steering.

At the height of this shady lending, 2004 to 2008, the greater Washington area ranked among Countrywide's top 10 targets, according to the Justice Department.

"One of the reasons everyone should be more than a little alarmed here is that for middle-class families, whether they be black or white, housing is the primary form of wealth," Lawrence Mishel, an economist and president of Economic Policy Institute said. "When the wealth from a house is gone, everything a family has is in real jeopardy."

According to an EPI report published last September, foreclosures have expanded the wealth gap between white and black households in the United States to levels unseen since the early 1980s. In mid-2009, the recession's official end, U.S. median household wealth -- total assets minus debts -- sat at $97,900 among white families, compared to $2,200 for black families, the report found.

"It's like somebody opened a drain on most of the economic progress made by black families in the last 30 years," Mishel says. "That's three decades down the drain."

"Committing to equality in mortgage lending is not as easy a concept as saying you are a great admirer of Martin Luther King or support the ideas in 'I Have a Dream,'" Beryl Satter, a Rutgers University-Newark historian says. Satter is the author of "Family Properties: Race, Real Estate, and the Exploitation of Black Urban America."

Satter points out that many politicians, including Republican presidential contender Mitt Romney, have blamed the mortgage crisis largely on bank regulations that didn't apply to its most infamous players. That's a deflection, Satter says, that fails to account for the country's entrenched legacy of discrimination.

"Institutional racism and the way businesses have taken advantage of it to make money are absolutely at the root of this crisis," she said.

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