Mortgage Mess Reaches A New Level of Despair

Nearly a million homeowners, disproportionately Black, are losing their properties
Nearly a million homeowners are floundering in the nation’s mortgage monsoon, and there’s no reason to believe the storm will subside anytime soon, experts agree. The latest figures show that more Americans are losing their homes than at any other time in memorable history. A new survey by the Mortgage Bankers Association found that banks have swooped down on 900,000 households. “Declining home prices are clearly the driving factor behind foreclosures, but the reasons and magnitude of the declines differ from state to state,” said Doug Duncan, MBA’s Chief Economist said in a statement. “In states like Ohio and Michigan, declines in the demand for homes due to job losses and out-migration have left those looking to sell their homes with fewer potential buyers, particularly with the much tighter credit restrictions borrowers now face. In states like California, Florida, Nevada and Arizona, overbuilding of new homes created a surplus that will take some time to work through.” Meanwhile, in Illinois, Attorney General Lisa Madigan has subpoenaed Countrywide Home Loans Inc. and Wells Fargo Financial Illinois as the state investigates whether they violated fair lending and civil rights laws by targeting Blacks and Latinos for high-interest, high-risk loans. For the second consecutive year, Illinois’ largest city, Chicago, leads the nation in the number of such loans. And the disparity between minority and White borrowers is stark. A Chicago Reporter study found that Black borrowers were three times as likely as their White counterparts to receive a high-cost loan, while Hispanics were twice as likely as Whites to do so. “The difference in cost between the home loans sold to white borrowers and those sold to African-American and Latino borrowers is alarming,” Madigan told The Chicago Sun-Times. The thing that has civil rights leaders in an uproar is in large part the fact that the wealthiest African-American homeowners are still far more likely than the poorest White homeowners to get strapped with high-cost loans. “The aim of these investigations is to find out the reasons for these pricing disparities, and if those reasons are not based on valid underwriting criteria and creditworthiness to hold the lenders responsible for their actions,” Madigan said.