New York Times tells Foreclosures are racist

I just read that article as well, forcused on Long Island.

What the article says is, in this part of the country minority communities have higher foreclosure rates than others. That's a statement of fact, and it's not a racist statement. It also identifies two mostly white, working class communities in Suffolk with similar stats.

In Michigan where I'm from, the problem is even more severe, and it's in all-white working class neighborhoods.

"Wanting real estate to go down" doesn't make it so and is a statement of self-interest, not racism. The people on Speakeasy can say whatever they want, the market responds to supply and demand, not to them.

I hear your anger and frustration, though. I lived in Hempstead for 7 years. My husband went to a party there (I was outta town) and there are 16 foreclosures on that one street.

The problem is sad, tragic, sickening, frustrating, depressing and a bunch of other things. But it's not a racial problem.

California's Inland Empire is going to become a ghost town.

In NYC, minority neighborhoods have historically had higher foreclosure rates. Currently, I'll be if you did a map of sub-prime mortgages, you'd see a higher percentage also in those same areas.

according to Elizabeth Warren, blacks with good credit and a high income are MORE likely to get a subprime mortgage from their bank than a white person with poor credit and a low income.

racist!!!!!

I have a friend who is black, who just got a good rate on a $5M loan for a $9M place in Tribeca though.

excellent rate, actually!

The article did not comment on CREDIT ratings, just incomes. Can you find a source for the creditt ratings by source claim? I tend to hear that blacks and hispanics with higher incomes may not have the same credit history. Which would explain (at least some) of this article, as opposed to racism. Though it could be both.

I don't have any links. I read it in her book "The Two Income Trap"

What's next? Affirmative action for mortgages? If enough blacks have been foreclosed on, the next few get off scot-free?

I'll tell it like it is and not skirt the issue. Banks are not racist. They are a business and all they care about is credit risk. The best indicator of credit risk is a person's credit history. Bad credit means a higher risk of default which of course would mean a bank will charge a higher interest rate to offset the additional risk.

Unfortunately, minorities, with the exception of Asians, as a whole have poorer credit. Before you call me a racist, I'm not saying everybody who is a minority has bad credit. But generally speaking minorities have lower credit scores.

The solution to this is not to call a bank "racist" or faulting them for making a good business decision by charging higher rates but rather to educate minorities about finances and the importance of good credit scores.

"The solution to this is not to call a bank "racist" or faulting them for making a good business decision by charging higher rates..."

You call that a good business decision? If the stupid banks made good decisisons, they would not be losing billions each year. Did Wachovia, Washington Mutual, and IndyMac make good ddecisions?

"Yes, minorities are suffering from what is going on in the real estate market and the economy and that means all you people wanting real estate to go down and everything to get wors are part of the probloem for minorities. This is racism."

That is the most retarded logic I've read on here in nearly two years. Someone who simply "wants" real estate to go down is racist? What does wanting it to go up make you? This is the kind of bizarre thought process that gets someone suckered into a sub-prime 11% adjustable loan.

Well I am half black and half hispanic and I do think there are cultural reasons for why those two groups tend to have lower credit scores than whites and asians. I don't think its racist to creat an algorythym to guess credit worthy-ness. Blacks and latinos of all income levels have been found to have different savings rates and different spending patterns, so it all seems logical.

It IS racist if blacks and whites with the same income and credit score get sub-prime loans at differnent rates. I have seen enough hidden-camera 20/20s and Dateline NBCs to be 100% convinced that loan officers, mortgage brokers, real estate agents, car dealers, hiring manager, and teachers are OBVIOUSLY racist. At times. The hidden camera exposes are fairly clear.

Agree with you, Jason. I tend to get better deals than the average person because i) I bargain hard and ii) I come from an ethnic group known for driving deals so people don't try to pull the wool over my eyes much.

there have also been numerous hidden camaera cases that showed landlords telling minorities that rental apartments that are advertised have already been taken while the apt. instantly became vacant when a white renter walked into the agent's office.

I think we're getting off topic: what's more important is that in many minority neighborhoods, sub-prime loans were pushed on borrowers who could have qualified for conforming loans. Often less sophisticated (i.e. less history of home ownership amongst family & friends) they listened to "the white guy in the suit"; after all, why would he lend them MORE than they could afford? For most of them, they spent their life getting LESS credit than they thought they deserved, and why would the white guy in the suit lend them money if he didn't think they would be able to pay it back - hey, he's the white guy in the suit; if he says based on our financials we can afford this loan, I guess we can.

For those of you who insist that race is irrelevant in bank lending decisions, did you know that active race-based redlining is still practiced here in New York? Even if we concede the higher incidence of creditworthiness problems among the Black and Latino working class ('cause that's what we're talking about here), that would not justify decisions to charge very borrower buying and/or living in predominantly POC neighborhoods higher rates. Moreover, for obvious reasons & through wno fault of their own, financial illiteracy among the working disproportionately affects POC, who in their gullibility deferred to and didn't know enough to question realtors and banks that were often in bed with one another. This was a huge problem in California, Nevada, Florida, etc. Even Black and Latino borrowers who are creditworthy have been steered toward riskier, higher interest mortgages. The CNBC special "House of Cards" provided several egregious instances of shady steering practices and outright lies about mortgaqe products by realtors and bankers.

TwoCities
about 5 hours ago
ignore this person
report abuse I'll tell it like it is and not skirt the issue. Banks are not racist. They are a business and all they care about is credit risk. The best indicator of credit risk is a person's credit history.

Unfortunately, minorities, with the exception of Asians, as a whole have poorer credit.

And I suppose credit scores are divined?

And cherrywood is correct :The CNBC special "House of Cards" provided several egregious instances of shady steering practices and outright lies about mortgaqe products by realtors and bankers.

as is 30yrsblahblahblah: in many minority neighborhoods, sub-prime loans were pushed on borrowers who could have qualified for conforming loans. Often less sophisticated (i.e. less history of home ownership amongst family & friends) they listened to "the white guy in the suit"; after all, why would he lend them MORE than they could afford? For most of them, they spent their life getting LESS credit than they thought they deserved, and why would the white guy in the suit lend them money if he didn't think they would be able to pay it back - hey, he's the white guy in the suit; if he says based on our financials we can afford this loan, I guess we can.

I was a mortgage broker during this subprime boom. I made a decision then to focus on predominantly A paper/good credit borrowers buying in such areas as Westchester and CT. I worked at a very large mortgage brokerage firm with many brokers who specialized in all types of mortgages.

I saw first hand what mortgage brokers did.

Banks give out rate sheets daily to brokers. Within this rate sheet, it tells the broker how much he gets paid for the type of loans the broker brings to them. There are also adjustments to the interest rate for credit scores and other factors. Then the mortgage broker tacks on anywhere between hundreds of dollars to thousands of dollars as a fee to themselves. But there is another catch, the higher rate a broker sells to a borrower, the more money the broker gets paid by the bank.

It was not unusual for some of these mortgage brokers to go into areas where people had bad credit and were less educated to try and get higher rates and/or add on thousands of dollars in points. And unfortunately, quite a few of these rather uneducated borrowers with low credit scores victims came from high minority areas.

So to call banks "racist" is a mistake. But to call these mortgage brokers "racists" too is also incorrect. Because here is a dirty secret in the mortgage brokerage world. The brokers who preyed on these less educated and subprime borrowers were many times of the same ethnic/racial origins. They would use this commonality to elicit instant trust with the borrower and before long, the poor borrower was paying 2 or 3 points or getting an above market interest rate. As the popular phrase goes, it's not a black or white thing, it is a GREEN thing.

Ergo my emphasis on educating borrowers in high minority areas about finances and the importantance of maintaining good credit scores. The better credit you have the more options you have with going directly to banks and bypassing the mortgage broker altogether.

Why are banks generally better? They tend to cap how much a loan officer can get paid on a single loan. Also, some don't even get paid on how much higher a rate the borrower is paying but rather, how many loans they write. Therefore, the emphasis is writing the most loans which means pricing your interest rate competitively to get the loan.

This is all very anecdotal, and I don't care if the mortgage companies sent one of the homeboys out to rip off their own, it was still racist to provide different people with different quality loans not based on their credit-worthiness but on their perceived defenselessness. The system was set up so that loans only had to perform for an extremely short amount of time for the mortgage brokerage system to be profitable. Which is why, after the first defaults began happening in Florida and California, there was almost an incredibly manic push to continue to write loans before the markets there and elsewhere were cut off. Many of the worst books of loans aren't from those early defaulting books, they stem from later periods, and then the lenders expanded to eviscerate standards for "prime" borrowers as well.

I have come across a number of good analytical discussions of this topic, and will be posting one soon.

Subprime lenders targeted minorities.
How Do we know that?
Simple. Minorites represented a disproportionate percentage of borrowers, even after accounting for income, etc. Nobody should be surprised. Simple statistical analyses has proven this. The subprime lenders additionally failed to alert borrowers to cheaper FHA lending alternatives. The whole thing was criminal.

By the way..william Black does a great piece on how the fraud was perpetrated...
http://larahanna.blog.is/blog/larahanna/video/7955/
http://larahanna.blog.is/blog/larahanna/video/7956/

I love william black. and elizabeth warren.

if you want some idea of how the subprime lending market destroyed people, look at california's inland empire. these will be our modern-day ghost ex-urbs.

and most of the banks set up or acquired mortgage subs. so to say that a bank loan was different than a loan provided by a mortgage provider, is disingenuous at best. yes it was different, but it was by the same corporation.

Aboutready:
It's not about race. It's about how educated a person was or was not. If you knew what your options were, you wouldn't have fallen prey to the higher rates. But to the mortgage broker's defense, if a borrower is willing to pay the points and rate given, then is it really the broker's fault?

If you take mortgages out and substitute it with something else, such as a bottle of shampoo. Is it the fault of the retailer who sells it to a shopper for $5 when across the street, a discount retailer sells it for $2? The same goes for cars, insurance, furniture and almost everything else.

The less you know or the less time you spend shopping around, the more you will most likely pay. In a capitalistic society, is it the fault of a retailer who tries to get the best price for a product/service or is it the consumer who doesn't do their homework?

And with mortgages, the lower your credit scores, the less options you have and the more likely you are to fall victim.

no bid -- as soon as subprime imploded sharpton cries... Racism!! NO ACCOUNTABILITY for the idiots who bought a $300K place on $30K of income. Regardless of race -- poor financial choices. It is unacceptable.

Many subprime borrowers were targeted, plain and simple. It's amazing how in this country if a stock broker puts an investor with $10,000 in an all options strategy he loses his license, but if you put a $50,000 a year earner in $500,000 Option Arm its Caveat Emptor.

And also, it wasn't the mortgage companies sending out one of their own to rip them off. Mortgage brokers are essentially independent contractors. They do what they want, they focus in on the market they want to target. Nobody is telling them to do anything.

The loan officer was clearly in a position to know if the loan had a reasonable chance of being paid back. As William Black would say, he was incentivized not to. We need a little less Black Bart finance and a little more Mr Potter lending...

Also, people pay different prices all the time for the same product. Are the airlines being vilified for charging 3 times as much for a seat on the same flight to different passengers?

twocities, if you think there is no correlation between race and education, well, how about that.

time to shop around implies time to shop around. and opportunity. and availability. and education. and knowledge.

ad btw, middle class people are seeing their credit ratings destroyed (in terms of house buying potential) by bank credit line reductions.

Countrywide & Indymac had their own army of loan officers and furthermore set the standards for their loan products. More to the point they set the price points which encouraged the selling of one product over another by the independent brokers. Wall Street provided the lines of credit to the brokers thus ensuring product for their securisation machines.

again -- no accountability for the buyers?? banks have offered me exploding rate credit cards for years and i choose not to sign on....

If you are going to spend your life savings and buy probably the most expensive thing you will ever purchase in your lifetime, then darn it you better invest the time to research and shop around.

And if you choose not to, then who's fault is that?

Often times when I make a big purchase, I look at ads and research it extensively on the web for the best price. On the rare occasions I don't, I realize if I am paying above market, then it is my fault for being lazy. I don't blame the person who sold me the item EVER. It is MY fault.

twocities, that is the stupidest argument i've ever seen here. the flight one. you need no 30 year loan for an airline ticket.

Why have any consumer protection laws then?

Aboutready:

The airline example was in reference to your comment:

"and I don't care if the mortgage companies sent one of the homeboys out to rip off their own, it was still racist to provide different people with different quality loans not based on their credit-worthiness but on their perceived defenselessness"

Besides mortgages, there are a multitude of products and services, where different people paid vastly different prices for the exact same product.

How are we to judge which is acceptable or not? And who is at fault here? The seller of the service/product or the consumer who agrees to it?

TwoCities, how lovely for you, to have the knowledge and info to make the best decision regarding the purchase of a computer, watch, etc. how sad that so many people were manipulated by people like you who felt that the buyer had the obligation to know all despite all.

Aboutready:

What? I never focused in on the subprime market. All my borrowers were very well educated about loan products and rates. Most of my mortgages were in Westchester and Connecticut.

I will tell you unequivocally who was at fault here. the mortgage originators and the banks who supported them. and i will stand by that statement. if you wish for a twenty to thirty point statement, complete with evidence, it will take me about a week but i will be happy to do it. without the opportunity so many could not have fucked up. without giving people so many opportunities to fuck up, the banks could not have made so much money.

agree with manhattanfox here. Why does no one take personal responsibility regardless of race?

twocities, so you have no personal knowledge of those people in the subprime world? or their loans?

Manhattanfox, This is not a simple question of individual accountability-- as I'm sure you'd find out if you asked the thousands of people who were enticed into these mortgages and have now lost everything they have. I find it stunning that your only way of understanding structural issues of market collusion and industry overreaching is through the narcissistic lens of your individual experience. I too have been offered and rejected exploding rate credit cards, HELOCs and the like. I did so because unlike my more vulnerable cousins, uncles, aunts and siblings who are struggling to hold onto their homes, I am one of a relatively small group of people of color whose education and wealth protected me from unethical realtors and mortgage brokers. I suppose I could sneer at those whose lack of resources, financial illiteracy and naive trust in realtors and bankers who claimed to be working for them have led to economic catastrophe. I'm grateful that unlike you, I am not foolish enough to think that my individual and mostly unearned class privilege doesn't go a long way toward explaining why I'm not in the same position as my hard-working working class sister and her husband, who thought they were doing the right thing by seeking to become members of the "ownership" society and are now about to lose the shirts off their backs because the bank refuses to even consider mortgage modification.

Aboutready: I worked alongside with people who focused on that market so yes, I have a great amount of knowledge.

manhattanfox, it's not just mortgages. people the last eight or so years have been stretched beyond belief. people need to give up this image of the profligate american. for the most part it doesn't exist (unless me, maybe). people are poorer than ever, and they DON'T WANT TO BE. Really, is it so hard to understand that people don't want poverty? do you have any idea what the average cost for health care for an uninsured family in NYC is? about $3000.

On a macro level, everyone with good credit was essentially a home owner already To increase home ownership in our society from the low 60% range to 70% the only way to do that was to target those borrowers who were previously rejected as a class. Was the goal to increase home ownership or mortgage approval? Because these people are clearly not going to be long term home owners. And we're all suffering because we invested in these banks, the mortgage products and so forth.

monthly.

riversider - good point

I don't know the facts/factoids/truthiness of this one, so I won't say it's right and I won't say it's wrong, but...

The opposition party claims that US government pressure on the mortgage industry to increase lending to minority homebuyers, despite color-blind credit-risk analysis, caused the industry to come up with products that tossed aside all the measures of prudence (20% down, standard amortization, income verification, and credit score) that had become the cornerstones of stable, leveraged home-ownership for decades. That they were like lit Acme dynamite in a Road Runner cartoon didn't matter at the time -- until the fuse ran out.

True? False? Discuss amongst yourselves.

cherrywood - Nice slur of conclusions against me... (narcisisstic, foolish... ).

I am not saying that it is binary -- the firm or the individual. But there has to be some accountability for the individual and the thread seems to ignore that concept.

Personal accountability. Owning your choices and the consequences. It is a matter of integrity -- not narcissism.

And frankly where were you -- miss lucky enough to have class privilege and understanding -- in your sister's decision making process? I browbeat my mother and sisters to move their 529B and 401K funds to cash before the drop. Shame on you for not sharing your wealth of education with those you love. I was relentless in my suggestions until they gave in...because I care about their outcome.

Democratic party has always been aligned with housing, same as Republicans and oil. Yes the GSE'S were given a mandate to lend to bororwers below median income, etc, the only way of which was to invest in subprime, funding the loans issued by Countrywide , Indymac etc and a big reason why Fannie Mae & Freddie Mac are insolvent and under government receivership...

> The opposition party claims that US government pressure on the mortgage industry to increase lending to minority homebuyers, ... caused the industry to come up with products that tossed aside all the measures of prudence- True? False? Discuss amongst yourselves.

False. The global savings glut would have caused it anyway. The Democratic party simply surrendered its moral right to blame the Republicans for the problems by encouraging such lending to unqualified parties. However it is benefitting from doing the blaming anyway.

Manhattanfox, I see that you are not only arrogant but presumptuous. I'm not in the business of "browbeating" members of my family, or anyone else for that matter. My sister and her husband made the decision about financing their home purchase without my knowledge or advice. It was only after the bottom fell out of the California residential real estate market (where they live) that I became aware of their circumstance. Fortunately, I have been able to help them avoid the scam artists who're ripping off desperate homeowners by charging exorbitant fees for so-called "assistance" with mortgage modification.

This process was excessivly opportunistic, whether is be by race, class, ignorance, etc. It sought to give loans to people who shouldn't have received the loan they did far and wide. as cherrywood points out, now it has spread to mortgage mods.

crescent22, where did they global savings come from? where? did you see the chart that I put up that showed if you backed out HELOC's, only HELOC's not even mortgage money, the US's GDP would have been flat to negative from 2004-08? the global savings came FROM the housing run up. as did much of the wealth accrued to the top 1/2 of 1% of Americans. this is the ultimate chicken and egg problem. it wasn't real wealth.

Fannie and Freddie did not originate any sub-prime loans. Those all came from fully private institutions - think WaMU, Countrywide, etc. So the canard that the Dems caused the sub-prime crises singlehandedly via supporting Fannie And Freddie is absurd. For many other reasons as well, of course...

Considering the fact that outside of Germany there was a housing bubble all over Europe as well, whether the countries were governed by Liberals, Socialists, Conservatives, whatever...should make one at least consider the whole "savings glut" macro explanation as opposed to these silly U.S.-centric partisan attacks. Clearly, Barney Frank or Hank Paulsen did not cause the Spanish or UK housing bubbles, or the near-collapses of UBS, RBS, etc.

James Kwak's take in Baseline Scenario on the NYT article adds ammunition to argument that race is not irrelevant to the phenomenon of higher foreclosure rates among people of color. I had forgotten about the important Ian Ayres study he cites about the retail automobile industry. The link is

http://baselinescenario.com/2009/05/18/new-cars-mortgages-race/#more-3722

That link does not address whether or not the high-income minorities had the same credit scores. The only smoking gun would be a statistically higher prevalence of sub-prime loans to otherwise identical high income blacks and Latinos with similar credit scores versus whites. High income ALONE proves nothing. And even under my scenario - studies have shown that whites at every income level have higher NET WORTH than blacks - even in the top 1%. Its literally decades and sometimes centuries of inheritance. For example, my roommate and his four siblings just inherited their mom's house which they sold for $1MM. Tax free (too little for estate tax.) Even though my roommate makes half what I do, he immediately tied me in net worth.

Ergo, whites and blacks with the same income level and identical credit scores might STILL not look the same to the bank, if the white person has more liquid assets.

You guys need a smoking gun for this one.

Clilly, you are a moron.

Are taxes racist because white people pay more than blacks?

Net worth should be of no relevance unless the bank is looking for a personal guarantee above and beyond the mortgage, or wants to cross-collateralize the loan.

Again -- not a stitch of individual responsibility?

'Net worth should be of no relevance unless the bank is looking for a personal guarantee above and beyond the mortgage, or wants to cross-collateralize the loan."

No, but it shows how much down payment the buyer can make. Use your noggin. My roomate, who makes half what I do, can now afford to make the same down payment I can. Assuming he got a 100% pay raise, and we had identical credit scores, we would not in fact be identical in terms of buying a house.

The articles mentioned do NOT say how much % down the upper income minorities paid, what there credit score was...Listen, I am the one who mentioned dateline and 20/20 hidden camera shows. I am SURE discrimination happens all the time. But I am also saying none of these posts prove anything.

You're the one who is not making any sense. Any lender with a minimum level of competence knows net worth can fluctuate greatly during the term of a mortgage. The bank looks at the value of the COLLATERAL when making a securitized loan, NOT your net worth. If they're interested in net worth as a determination in making a loan, then they'll want the additional protections I described.

Shouldn't the individual take responsibility and understand if they can afford the house over the life of the loan? Understanding that jobs come and go, markets rise and fall? Rates may rise? Taxes may rise? Food and clothing costs may rise? Gasoline may rise? A parent or child may require extra funds? Your down payment is at risk if you have a series of events move against you. That is part of investing. It is not a right to be "protected". The choice is to not invest.

Too many people are trying to hop onto the blame wagon because their bets did not pay off.

"If you are going to spend your life savings and buy probably the most expensive thing you will ever purchase in your lifetime, then darn it you better invest the time to research and shop around."

How much of your life savings are you putting down when you're getting 103% financing? (yes, the answer is that you're virtually "putting is down" when you sign a recourse loan, but remember tha unlike NY, many states the loans were non-recourse by statute).

"Fannie and Freddie did not originate any sub-prime loans"

This is a bit of setting up a straw man to knock down since they didn't originate and prime loans, either. they didn't originate loans period. It doesn't mean that they weren't the root cause of loan originations: their whole reason for being was to instigate loan origiantions by others.

"Shouldn't the individual take responsibility and understand if they can afford the house over the life of the loan? Understanding that jobs come and go, markets rise and fall? Rates may rise? Taxes may rise? Food and clothing costs may rise? Gasoline may rise? A parent or child may require extra funds? Your down payment is at risk if you have a series of events move against you. That is part of investing. It is not a right to be "protected". The choice is to not invest.

Too many people are trying to hop onto the blame wagon because their bets did not pay off."

I have very mixed feelings on this issue: I think that the people who for the past 15 years have been flipping properties (even if you expand the concept of "flipping" to include people who bought new primary residences every year and a half) do "deserve" to have the excess gains they got from the market run-up erased, because they weren't "earned" in any other way than being an integral part of this whole Ponzi scheme, I don't think it's reasonable to expect the vast majority of Americans, with the level of education they have, to actually have the knowledge base to realize what they were getting themselves into when there was this HUGE "conspiracy" pushing them into it.

You had an environment where even the heads of the investment banks had little idea of what was really going on with the financial instruments which their firms were selling. You had Alan Greenspan and a whole host of other "geniuses" telling these people that they should go ahead and pull the trigger and take that loan: the biggest one the could afford, and "professionals" (i.e. bankers making the loans, talking head on TV, etc.) telling them they could afford what they were taking on.

I am a HUGE believer in personal responsibility. However in this case I think you have at least a reasonable amount of people who were led to believe that they were taking substantially less risk than they were (and we can see how even the very most sophisticated investors were done in by the same exact thing: thinking they were taking less risk than they actually were) and actually were not able to see past a laundry list of "experts" telling them to go ahead and do things which they shouldn't have done. yes, they said "yes", but I think that while their own personal greed played a part (as always), most people just plain did not have the level of sophistication to realize what they were getting themselves into. NB: I HATE saying this or taking this position, because I spent this entire time NOT pulling the trigger on countless deals and watching Bozos take risks which I refused to take because I DID see the risks and watched them reel in profits because the music was still playing and their were plenty of chairs left. But this is a very strange case because the "corruption" of risk was so institutionalized. And that's exactly why we are in the mess we are in today (and I am a firm believer that this mess is a hell of a lot worse than most people currently think it is, and that I am going to end up paying for the deals other people did which I rightly stayed away from).

30 yrs -- I agree. i have several friends who have stayed away from real estate and and I moved out of the stock market a year before the bust. I was willing to forgo the last 8% of the ups to miss the 40% drop. I have mixed feelings too as the institutions really did get out of hand, that said --- I cannot believe that the individual is purely a victim -- all parties have their hands dirty.

30yrs, thank you. And with the downturn many people who didn't have enough savings, but weren't necessarily high risk, also find themselves underwater and underincome. And enough savings may soon become at least a year's worth, as home prices plummet and job opportunities don't exist for those who find themselves unemployed.

i am in the same position, i sold in 2004 because i didn't want to be unable to sell in the future. i have wanted to buy since, but i have resisted. but i think that many people simply overreached somewhat, thinking that they'd catch up with income over time. awful decision-making process, especially in hindsight, but not the profligacy that is being condemned here.

i found myself stretched in 2004, and i consider myself relatively cautious. i reacted appropriately and downsized immediately because i couldn't stand the feeling. many people didn't have that option, as there was no one to buy the property they couldn't afford.

yes, 30yrs, i agree, this is a perfect shitstorm, and we will pay for deals we didn't do. but as you point out, it wasn't just the buyers who did the deals, it was the people financing them.

and i'm a bit more cynical than you. i think there was more much more knowledge. i've talked to md's who've told me that it just wasn't even an option to express doubts, you'd be gone, but that there were plenty of doubts to go around.

Uhhh, no dummy. People with higher net worth can afford a higher down payment. A higher down payment means a better loan term. Dummy. 20% down gets you a better loan than 5% down. For all we know, even with the same credit score and income, the white purchases paid 20% down and the black ones all 5% down. Why is that so hard to understand?

Jason, are you talking to me? I had 20% down. And still I was stretched, and this was before the expansion period.

Btw jason, i'm not going to go forth and research, but i'm fairly certain that the racism issue is alive and well and easily documentable in California. Predatory lending, btw, is not the same, necessarily, as subprime (althoug certainly included).

Jason,
Do you even read what you write ? Upthread you try to assert that with the same down payment and income, someone with a greater net worth should be more favored by the lender, all else being equal. When I point out that banks aren't looking at net worth in making lending decisions you now try to assert, without any evidence, that one can assume white people with similar credit and income profiles will put down significantly more than black people thus resulting in disparate loan terms. Frankly, it is bit disturbing to see someone who is an Afro/Latino professional go through such rhetorical contortions in order to rationalize racist lending practices. Your whole discourse in this thread sends out strong vibes that you have "issues."

The New York Times is, by its very existence, proof that racism is folly. I say this because what is written in the NYT is mostly the nonsensical imaginings of sub-par intellects, and it's mostly written by white people...

No I did NOT say same income AND same down payment. I said same income, same credit score, same net worth. I said nothing about same down payment. Why don't YOU read what i wrote.

With the same income and credit score, a borrower with a higher liquid net worth can afford a higher down payment. Whites, on average, have many times the net income of blacks - even in the top 10% of income levels.

And if you actually read what I wrote i said multiple times that there is racism - in every aspect of life, most certainly in real estate. However, none of these posts has shown what would be OBVIOUS proof of it in this particular case.

Do I think loan officers have been racist? Probably often. Probably enough to create the sort of results we have discussed.

Has anyone shown a link to an article that would demonstrate this statistically? No.

That is what I want. Something to affirm what I believe to be true. You are the one with issues - assuming things about me that are frankly absurd.

In other words, this NYT article says blacks and whites with the same income level have different rates of getting loans with bad terms - blacks and hispanics being more likely than whites. This fact in and of itself proves nothing, since loans would be based on income, how LONG you have had this income level, credit score, and the down payment you make. The acrticle mentions only one of these things.

jason10006 - re: "Do I think loan officers have been racist? Probably often. Probably enough to create the sort of results we have discussed"

From a mortgage broker who work side by side with many who specialized in the subprime market in high minoritiy areas, the loan officers whom you call "racist" were of the same ethnic background of the people they preyed upon. They often used it as a way to gain their trust. I hate to break it to you...

And what pisses me off about your stupid "issues" comment is that the same studies that show whotes at every income level have higher net worth than blacks attribute it to CNETURIES OF RACISM...you idiot.

Ad for twocities - two responses. First those 20/20 hidden camera shows I was speaking of? They often show blacks being racist towards other blacks. For example the show where they showed IDENTICAL transcripts to teachers, but changed the picture attached to it, founf that white AND black teachers were FAR more likely to label borderline transcripts with black pictures as "remidial" students than whites. Like 2 to one. Similar for the ones with hiring managers.

Two, even in some world where there is not internilized racism among blacks and lationos (and I hate to break it to YOU, but that is a huge issue, one Oprah spent many shows on), just the white loan officers alone are enough to skew the data. Or latinos being racist towards blacks and visa versa.

And two cities response is why I say you need ACTUAL statisitical evidence, HDLC you dummy. Simply asserting it will never convince some people.

If OBVIOUS proof was the standard to determine whether racial discrimination exists, then very very few civil rights laws could be enforced. This is 2009, not 1959. Discrimination today does not usually manifest in OBVIOUS form. If institutions are engaging in practices that have a disparate impact on minorities, that in itself could be very strong evidence of discriminatory conduct even if there is no racist intent. And it does not matter whether the agents carrying out the conduct are minorities. And yes you do have issues because even old white men who sit as judges on civil rights cases have ruled in favor of minorities in the absence of OBVIOUS proof.

...even some who were Republicans !

Seriouly, the NYT is an opinion page not journalism. Why in the world does anyone care about what is publishes? And judging by its complete circulation collapse I'm not alone in this view. With that said it is interesting reading (on a free basis via the internet) just as the National Enquirer and World News. You can predict how the NYT will slant every bit of news and then read the article and have it confirmed...and lo and behold two days later will be an editorial referencing the "news" article as support - its like Pravda and the Communist Party.

I have to second HDLC's point about the validity of viewing racial disparity as evidence of racial discrimination. It's notoriously difficult to prove purposeful discrimination (which was one reason the Supreme Court required it in its decisions on the 14th Amendment Equal Protection Clause, although the Constitution itself nowhere says that it only forbids denials of equal protection that are intentional). The Supreme Court has even go so far as to say that it's not unconstitutional to knowingly adopt a policy that a governmental official knows will have a disproportionately negative impact on people of color, if that official does "in spite of" and not "because" it will have that effect. The law I mention only applies to government actions, but I think it pretty much captures the way we have come to conceive of purely "private" racist practices as well. Many people don't accept the idea that racial discrimination only occurs when the discriminator consciously intends to discriminate. A decision not to offer lower rates to buyers who purchase in black and Latino neighborhoods on the grounds of regional "risk aversion" is still an act of discrimination against the otherwise credit-worthy buyer of color who is steered toward higher loan products. Racial steering both with respect to what realtors show people of color and the loan products mortgage (income, wealth and credit-worthiness). At some point, the statistical and experimental evidence has to create a presumption that when one sees racial disparities in putatively "color blind" markets those disparities are due to racial discrimination.

ENOUGH ALREADY!! If you got a worse rate than an equally qualified white guy you got it because you were stupid not because you were black or brown or yellow or purple. You took a worse rate because you were and are stupid. It's called the stupid tax. Plenty of whites pay the stupid tax too. Get over it.
People scream red lining out of one side of their mouths and then out of the other side they scream predatory lenders. Which is it. Do banks lend too much to minorities, not enough to minorities, or both or neither?
The bankers/brokers lent money if they could make money for themselves in the short term and buyers signed on to loans they couldn't afford because they were stupid/greedy. Now the bankers are screwed because they were so short sighted and they lost their jobs and the borrowers are screwed because they now have a house they can't afford. This greed and stupidity came back to haunt everyone including me as it's my tax dollars (and my kid's tax dollars) who will bail these idiots out.

And Clilly the fall of real estate prices will hurt more white people than minorities so I don't understand your cries of racism.

"If OBVIOUS proof was the standard to determine whether racial discrimination exists, then very very few civil rights laws could be enforced. This is 2009, not 1959. Discrimination today does not usually manifest in OBVIOUS form. If institutions are engaging in practices that have a disparate impact on minorities, that in itself could be very strong evidence of discriminatory conduct even if there is no racist intent. And it does not matter whether the agents carrying out the conduct are minorities. And yes you do have issues because even old white men who sit as judges on civil rights cases have ruled in favor of minorities in the absence of OBVIOUS proof. "

I've seen the stats before.... in the end, the adjusted default rates match for blacks and whites... meaning that the standards are correct. That not discriminatory, thats accuracy.

Just fully read this thread (which I probably should have continued to avoid) and I'm actually not sure what's scarier; the flippant "homeboy" talk and comments like those from crescent22 about affirmative action, or the actual issue.

First off I think clilly was sarcastically baiting, and it clearly worked.

jason10006-I have no idea where you are coming from but your first few posts seem to try and justify the imbalance of subprime loans with the assumption that blacks and Hispanics, on average, have lower credit scores and you say the article didn't discuss this but the article said:

"Roughly 33 percent of the subprime mortgages given out in New York City in 2007, Mr. Donovan said, went to borrowers with credit scores that should have qualified them for conventional prevailing-rate loans."

TwoCities-You said a few things I have questions about but this really stood out:

"to the mortgage broker's defense, if a borrower is willing to pay the points and rate given, then is it really the broker's fault?"

Yeah it is. If you can tell me the same broker would have gone into a white neighborhood and tried to pawn off these loans in the same way then fine, all's fair … or at least equally unfair, but we both know that's not the case. If you are preying on a certain group of people it's unethical. The truth is I think a lot more white people would have had subprime loans if those loans were made available to them in the same way they were made available to other segments of the population. White people are not above being conned, which brings me to my next point-

manhattanfox-I wonder if you think the people who willingly gave their money to Madoff (the wealthy and educated) are victims, or do you consider them to be the same idiots you call the people who signed off on subprime loans. It's clear both groups should have done more homework but it's an interesting game of perception.

30yrs_RE_20_in_REO- you said:

“I think we're getting off topic: what's more important is that in many minority neighborhoods, sub-prime loans were pushed on borrowers who could have qualified for conforming loans. Often less sophisticated (i.e. less history of home ownership amongst family & friends) they listened to "the white guy in the suit"; after all, why would he lend them MORE than they could afford? For most of them, they spent their life getting LESS credit than they thought they deserved, and why would the white guy in the suit lend them money if he didn't think they would be able to pay it back - hey, he's the white guy in the suit; if he says based on our financials we can afford this loan, I guess we can.”

I actually think a lot of the problem was the MISTRUST of the “white guy in the suit” and legit (if any of them are) financial institutions because of years of discrimination and redlining (the article touches on this). As much as I hate to say it TwoCities was not wrong about shady brokerages sending out emissaries of color to help gain the trust of homebuyers of color. Although I don’t think you intended to offend I found it a little disturbing how you made black and Hispanics sound like little children willing to accept anything a “more sophisticated” white person says as gospel.

And jazzman-It'd be nice if there actually was a stupid tax. We could solve all of Albany's problems if you were charged for some of your posts. Your kid’s future tax problems will have a lot more to do with the last administration’s war and policies than the millions of Americans who lost everything due to con artists. Yeah some of the people who signed off on these loans were greedy and just looking to flip, or they carelessly overextended themselves (plenty of whites are guilty of doing the same) but a lot of them were just trying to finally get ahead and get a piece of the American dream (and there are plenty of white people in this boat as well).

The article nor any links provided in this post would prove that racism is the cause of TOP issue. I think it probably is racism, but can't make any sort of coherent arguemtn based on any of the fact presented. Even when you cut an paste "Roughly 33 percent of the subprime mortgages given out in New York City in 2007, Mr. Donovan said, went to borrowers with credit scores that should have qualified them for conventional prevailing-rate loans." THIS does not indicate if these loans were given disproportionately to blacks and latinos.

I am firmly pro-affirmative action and a democrat and liberal on all social issues. I just like argueing with actual facts and a simple, easy fact based arguemt COULD be made if one showed that blacks and latinos with similar income, simlar credit scores, and the same down payment amount got sub-par loans far more often than whites. This seems like it would be an easy study to conduct and would in fact have been what the editor of the story in TOP should have asked the reporter to dig up.

jason10006-I copy and pasted that section of the article because you specifically said "The article did not comment on CREDIT ratings, just incomes" when clearly the article did.

I honestly don't know what you are arguing for or against from your posts or if you are arguing just to argue. If you are saying that subprime loans were NOT given disproportionately to blacks and Hispanics then we aren't even having a logical conversation. Google subprime loans and race and you should have your fill of statistics. If you are saying that these loans were given disproportionately with good reason then you are saying that blacks and Hispanics are inherently more of a risk for banks and therefore generally don’t qualify for traditional loan products. If that's what you think just say it and stand by it.

Does not surprise me that foreclosures are racist with all how racist some people here are. The risk is in you people's heads.