Race and Foreclosure
There is a pronounced racial disparity in foreclosures, as many news articles have noted. Foreclosure rates are far higher in minority communities. Blacks are more likely to receive high cost loans than financially similar whites. And as a study by Howell Jackson of Harvard Law School has noted, blacks and Hispanics are more likely to pay yield spread premiums than whites.
But there’s another angle to the racial disparity in foreclosures that has arguably greater social consequences, as my Georgetown colleague Emma Coleman Jordan has observed: a far higher percentage of black wealth is invested in homes than white wealth, despite higher homeownership rates for whites than blacks.
According to Melvin Oliver and Thomas Shapiro, housing equity represents 62.5% of black assets, but only 43.3% of white assets. This indicates that foreclosures have a much more serious impact on the accumulation of wealth within the black community and its intergenerational transmission. As Henry Louis Gates, Jr. recently observed, past family wealth appears to be a major determinant of success for African-Americans.
As we try to find ways to address the mortgage crisis, we should be cognizant that what is at stake goes beyond simple allocation of financial losses and to the character of our society.
The real oppression of minorities comes when you lend to them more generously, and because of the increased risk of the loan (due to lower qualification requirements), charge higher interest rates. This "generosity" results in higher foreclosure rates.
Access to loans is not economic support, it is economic oppression. The solution is finding ways to improve education and skill development, and then using that "human capital" to increase wealth. Printing it out of nothing, and then charging interest on it decreases wealth in the economy.
Jim Anderson
The Truth About Credit
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Ministry WebsiteDecember 22, 2007 11:24 AM | Reply | Permalink
The thought occurred to me reading this: how much of this was fueled by speculation by buyers using exotic loans in the expectation that a "bad" neighborhood might "gentrify" in the foreseeable future? (In the "old days," government tried to create other incentives to do that, it was called urban renewal. :-) Then they found out that poor are gradually forced out when actual real homeowners move in....but the poor have to live somewhere, they don't disappear...)
December 23, 2007 11:39 AM | Reply | Permalink
WOW!!! no comments on this important hard news story of international earth shattering importanhce.And check out this link too it will really help you out...
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Jack Brosnan
foreclosure auctions
October 31, 2009 6:17 AM | Reply | Permalink