Subprime mortgage crisis, the African-American community, loansharks, loans, credit
Let us first say that the financial disaster which has just recently occurred has effected the entire world, regardless of race, color, or creed. It is perhaps a testament to the new levels of equality and interconnectedness that what may have started out primarily among certain populations can have consequences this disastrous all around the country and the world. However, too much of the discourse around the scandalous lending policies which began the chain of events which ended in catastrophe for the investment banking industry has ignored the racial element of these scandals. In reality, the subprime mortgage crisis did not at first affect all areas of our society equally.
[...] As a result, these dangerously deceptive lending practices were not only outside of the realm of experience for many African-Americans, but also for many their first and only contact with the possibility of a housing loan. Given these facts, how could one have expected such people to be appropriately suspicious or critical of their lenders or of their mortgage terms, much less to turn these mortgages down? In addition, among those blacks who were "on the cusp," the dream of owning a house was strong in a way that few others could recognize. [...]
[...] I personally remember seeing some of the subprime mortgages advertised on television long before it was popular to complain about them. Throughout the decade, various schemes such as "interest-only" or "variable- rate" mortgages would reach me on my television, and I couldn't help but laugh at the idea of such deals: anyone who needed such a loan clearly could not afford their house and clearly was doing little more than signing away their home to a bank which would inevitably foreclose. [...]
[...] Works Cited Bajaj, Vikas and Ford Fessenden. "What's Behind the Race Gap?" New York Times 4 Nov 2007: WK 16. Barker, Cyril Josh. "NAACP denounces subprime scandal." The New York Amsterdam News Jul 2008: Kirchhoff, Sue and Judy Keen. [...]
[...] The reasons why are complicated. The simple explanation is that, as suggested earlier, poorer communities, which in America are too often communities of color, contain many people who are on the cusp of being able to afford their own home but aren't quite there yet, and thus they felt they could almost afford to take on the loan. However, a traditional bank would never offer them a line of credit which was all but unsecured, since they didn't really have the ability to pay it back. [...]
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