In order for low income borrowers and Blacks to have had a role in this mortgage meltdown, then it has been brewing for over 30 years. Let's see what happened. The right to Equal Housing did not guarantee the right to equal loans. It was not until President Carter signed the Community Reinvestment Act in 1977 that lending opportunities began to open up for low income people. Nineteen seventy-seven was a mere 13 years after the signing of the Civil Rights Act and nine years following the Equal Housing Act prohibiting discrimination of housing based on race, gender, age, physically ability and the ability to pay. Less than 150 years after the signing of the 14th Amendment that gave blacks citizenship in America, were many allowed to own homes. It is safe to say that the thinking of lenders and many in our great nation, had not kept pace with the laws, so the realization of home ownership by low income and African Americans (not the same group, by the way) remained illusive. Thus, the Community Reinvestment Act, which encouraged community banking in low income communities.
Keep in mind, many of the communities were in urban areas which were still smoldering from the riots of 1968 and remained undeveloped. It was like the story of the two competing shoe salespersons who both canvassed a town where the people did not wear shoes. One reported her observations back to the home office and was advised to leave and return home while the home office of the other advised their salesperson to open up business. It took the leadership of President Jimmie Carter’s administration to advance the idea that there was a market for loans in low income communities and if companies and banks were to invest some of their profits back into these communities, everyone would benefit.
Oversight of the CRA went into warp speed by the Federal government and public groups alike. It had a four tier oversight system (which is way more than the so-called “bail out” has) and the current urban boon in these other wise depressed cities, is evidence of the success of CRA.
In fact, the program was so successful that both the Democratic and Republican administrations built on it to the point where the first Bush Administration redefined small community banks to “intermediate small banks” therefore, banks with billion dollars assets started to play and as we can see, they played too much. “The Clinton administration stirred in Freddie and Fannie and the pot has subsequently boiled over. In early 1993 President Clinton ordered new regulations for the CRA which would increase access to mortgage credit for inner city and distressed rural communities.[6] The new rules went into effect on January 31, 1995 and featured: requiring numerical assessments to get a satisfactory CRA rating; using federal home-loan data broken down by neighborhood, income group, and race; encouraging community groups to complain when banks were not loaning enough to specified neighborhood, income group, and race; allowing community groups that marketed loans to targeted groups to collect a fee from the banks.[5]”
According to a United States Department of the Treasury study of lending trends in 305 U.S. cities between 1993 and 1998 467 billion dollars in mortgage credit flowed from CRA-covered lenders to CRA-eligible borrowers. The number of CRA mortgage loans increased by 39 percent. Other loans increased by only 17 percent.
As the earning potential for low income groups, African Americans and immigrants grew, the desire to supply housing, sell loans and increase investment profits in the mortgage and other lending games grew along with it. As with all aspects of our society, predators came out of dark corners, swooped down from high places and even jumped out of our television sets with offers of “no doc” loans and rescue opportunities for anyone who had gotten in over their heads. The desire for home ownership can be as strong as the desire for food and in America, has the same result--over-consumption and gluttony.
Who doesn’t want a home for their family or food on their table? Food and shelter are the basics of life and those who benefit from the provision of them have a due diligence responsibility.
So, indeed had African Americans, low income and other groups of people, who had heretofore been denied access to the housing market, not forced fair housing laws, or increased their wealth, and demanded equity in the American Dream, things would be different. The predators would have remained lurking in their dark places and we would not be in this mess. We would be in another mess -- still fighting, rioting, protesting, burning down cities and otherwise demanding equity.
Consider this: Is America at parity yet or do some secretly blame African Americans and low income borrowers for the housing mess? How Congress offers to help home owners could well reveal the answer.
Thursday, October 2, 2008
How low income and Blacks Are Responsible for the Financial Crises f 200
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The right to Equal Housing did not guarantee the right to equal loans. It was not until President Carter signed the Community Reinvestment Act in 1977 that lending opportunities began to open up for low income people. Nineteen seventy-seven was a mere 13 years after the signing of the Civil Rights Act and nine years following the Equal Housing Act prohibiting discrimination of housing based on race, gender, age, physically ability and the ability to pay. Less than 150 years after the signing of the 14th Amendment that gave blacks citizenship in America, were many allowed to own homes. It is safe to say that the thinking of lenders and many in our great nation, had not kept pace with the laws, so the realization of home ownership by low income and African Americans (not the same group, by the way) remained illusive. Thus, the Community Reinvestment Act, which encouraged community banking in low income communities.
Keep in mind, many of the communities were in urban areas which were still smoldering from the riots of 1968 and remained undeveloped. It was like the story of the two competing shoe salespersons who both canvassed a town where the people did not wear shoes. One reported her observations back to the home office and was advised to leave and return home while the home office of the other advised their salesperson to open up business. It took the leadership of President Jimmie Carter’s administration to advance the idea that there was a market for loans in low income communities and if companies and banks were to invest some of their profits back into these communities, everyone would benefit.
Oversight of the CRA went into warp speed by the Federal government and public groups alike. It had a four tier oversight system (which is way more than the so-called “bail out” has) and the current urban boon in these other wise depressed cities, is evidence of the success of CRA.
In fact, the program was so successful that both the Democratic and Republican administrations built on it to the point where the first Bush Administration redefined small community banks to “intermediate small banks” therefore, banks with billion dollars assets started to play and as we can see, they played too much. “The Clinton administration stirred in Freddie and Fannie and the pot has subsequently boiled over. In early 1993 President Clinton ordered new regulations for the CRA which would increase access to mortgage credit for inner city and distressed rural communities.[6] The new rules went into effect on January 31, 1995 and featured: requiring numerical assessments to get a satisfactory CRA rating; using federal home-loan data broken down by neighborhood, income group, and race; encouraging community groups to complain when banks were not loaning enough to specified neighborhood, income group, and race; allowing community groups that marketed loans to targeted groups to collect a fee from the banks.[5]”
According to a United States Department of the Treasury study of lending trends in 305 U.S. cities between 1993 and 1998 467 billion dollars in mortgage credit flowed from CRA-covered lenders to CRA-eligible borrowers. The number of CRA mortgage loans increased by 39 percent. Other loans increased by only 17 percent.
As the earning potential for low income groups, African Americans and immigrants grew, the desire to supply housing, sell loans and increase investment profits in the mortgage and other lending games grew along with it. As with all aspects of our society, predators came out of dark corners, swooped down from high places and even jumped out of our television sets with offers of “no doc” loans and rescue opportunities for anyone who had gotten in over their heads. The desire for home ownership can be as strong as the desire for food and in America, has the same result--over-consumption and gluttony.
Who doesn’t want a home for their family or food on their table? Food and shelter are the basics of life and those who benefit from the provision of them have a due diligence responsibility.
So, indeed had African Americans, low income and other groups of people, who had heretofore been denied access to the housing market not forced fair housing laws, and increased their wealth, things would be different. The predators could have remained lurking in their dark places and we would not be in this mess. We would be in another mess -- still fighting, rioting, protesting, burning down cities and otherwise demanding equity.
Is America there yet?
The right to Equal Housing did not guarantee the right to equal loans. It was not until President Carter signed the Community Reinvestment Act in 1977 that lending opportunities began to open up for low income people. Nineteen seventy-seven was a mere 13 years after the signing of the Civil Rights Act and nine years following the Equal Housing Act prohibiting discrimination of housing based on race, gender, age, physically ability and the ability to pay. Less than 150 years after the signing of the 14th Amendment that gave blacks citizenship in America, were many allowed to own homes. It is safe to say that the thinking of lenders and many in our great nation, had not kept pace with the laws, so the realization of home ownership by low income and African Americans (not the same group, by the way) remained illusive. Thus, the Community Reinvestment Act, which encouraged community banking in low income communities.
Keep in mind, many of the communities were in urban areas which were still smoldering from the riots of 1968 and remained undeveloped. It was like the story of the two competing shoe salespersons who both canvassed a town where the people did not wear shoes. One reported her observations back to the home office and was advised to leave and return home while the home office of the other advised their salesperson to open up business. It took the leadership of President Jimmie Carter’s administration to advance the idea that there was a market for loans in low income communities and if companies and banks were to invest some of their profits back into these communities, everyone would benefit.
Oversight of the CRA went into warp speed by the Federal government and public groups alike. It had a four tier oversight system (which is way more than the so-called “bail out” has) and the current urban boon in these other wise depressed cities, is evidence of the success of CRA.
In fact, the program was so successful that both the Democratic and Republican administrations built on it to the point where the first Bush Administration redefined small community banks to “intermediate small banks” therefore, banks with billion dollars assets started to play and as we can see, they played too much. “The Clinton administration stirred in Freddie and Fannie and the pot has subsequently boiled over. In early 1993 President Clinton ordered new regulations for the CRA which would increase access to mortgage credit for inner city and distressed rural communities.[6] The new rules went into effect on January 31, 1995 and featured: requiring numerical assessments to get a satisfactory CRA rating; using federal home-loan data broken down by neighborhood, income group, and race; encouraging community groups to complain when banks were not loaning enough to specified neighborhood, income group, and race; allowing community groups that marketed loans to targeted groups to collect a fee from the banks.[5]”
According to a United States Department of the Treasury study of lending trends in 305 U.S. cities between 1993 and 1998 467 billion dollars in mortgage credit flowed from CRA-covered lenders to CRA-eligible borrowers. The number of CRA mortgage loans increased by 39 percent. Other loans increased by only 17 percent.
As the earning potential for low income groups, African Americans and immigrants grew, the desire to supply housing, sell loans and increase investment profits in the mortgage and other lending games grew along with it. As with all aspects of our society, predators came out of dark corners, swooped down from high places and even jumped out of our television sets with offers of “no doc” loans and rescue opportunities for anyone who had gotten in over their heads. The desire for home ownership can be as strong as the desire for food and in America, has the same result--over-consumption and gluttony.
Who doesn’t want a home for their family or food on their table? Food and shelter are the basics of life and those who benefit from the provision of them have a due diligence responsibility.
So, indeed had African Americans, low income and other groups of people, who had heretofore been denied access to the housing market not forced fair housing laws, and increased their wealth, things would be different. The predators could have remained lurking in their dark places and we would not be in this mess. We would be in another mess -- still fighting, rioting, protesting, burning down cities and otherwise demanding equity.
Is America there yet?
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