Subprime Crash Affects Minority Neighborhoods

Subprime Crash Affects Minority Neighborhoods
The subprime market crash has affected minority
neighborhoods all over the U.S. Why? The reason is because
they were heavily targeted for risky high cost loans. With
millions of Americans who are suffering from inflating
mortgage payments due to adjustable rates, balloon payments
and other unscrupulous sub-prime programs, many people are
now in panic mode, having recently lost their homes or
living in constant fear that their homes will be lost.

United for a Fair Economy, a Boston-based economic policy
group minorities put out a study about subprime mortgage
situation. In the "State of the Dream 2008: Foreclosed"
report, which evaluated subprime lending during the past
eight years, a direct loss from defaulted subprime loans to
range between $365 billion and $605 billion is projected.

Whites hold 55 percent of the bad subprime loans are held
by whites, while minorities hold the other 45 percent,
according to estimates. Borrowers who are African-Americans
are projected to lose between $71 billion and $122 billion
- or about 20 percent of the total projected losses.
Latinos are projected to lose $76 billion to $129 billion
for the same period. This would be about 21 percent of the
burden from subprime defaults.

"It is bad here in New York, and especially in places like
Brooklyn which has a higher number of minorities," said
Rocco Basile, product manager for New York-based Basile
Builder's Group. "Our company's goal is to help answer
questions and provide the community here with guidance and
advice."

According to a January 26, 2008 Bloomberg subprime article,
the communities of Bedford-Stuyvesant and Crown Heights in
New York had a foreclosure rate of almost four times the
national subprime figure of 6.89 percent in October of
2007. One ion four owners who had subprime mortgages in the
11233 zip code areas lost their homes. This was the highest
number since March of 2003 according to the Mortgage
Bankers Association in Washington. Bedford Stuyvesant and
Crown Heights is mostly black, there were 194 foreclosures
out of 770 subprime borrowers, according to Federal data.

It appears that many of these minority families had credit
scores that led them to predatory loans with extremely high
interest. According to a 2006 study of 50,000 mortgages by
the Center for Responsible Lending in Durham, North
Carolina, blacks and Latinos are 30 percent more likely to
be charged a higher rate for a home loan than whites with
credit histories that are similar. What's more, subprime
loans were available to those borrowers with incomplete or
bad credit and these loans carry higher interest rates than
loans to people with good credit histories.

Sharp increases in subprime mortgage loan delinquencies and
also the number of homes entering foreclosure raise
important economic and social questions.

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Kristin Gabriel is an author and social media marketing
professional with clients including Rocco Basile of the the
Basile Builders Group based in New York. Basile is involved
with several charities including Children of the City and
the Joe DiMaggio Committee
(http://www.joedimmagioaward.com)for Xaverian High School