The New York Times has noticed a problem. In the poorest minority sections of New York City, foreclosures are highest. The Times opens their story with the usual dramatic breathlessness:
Turn the corner on 145th Street in Jamaica, Queens, and it is as though a cyclone has wheeled through.
One resident, Lakisha Brown, a hospital worker and mother of two, snatched her house back from foreclosure last month, if only temporarily. “We need to sell fast,” she says. “I’m just trying to save what’s left of my credit.” Across the street in this black middle-class neighborhood, Patrick Nicholas, a surgical technician in blue scrubs, shakes his dreadlocks and shrugs. He rents but is moving out. “The owner got foreclosed and told us to leave,” he says.
Six doors away, past two foreclosed and boarded-up homes, a burly man in a blue union jacket declines to give his name but his problem is evident. A foreclosure notice is pasted to the door of his house. His tone is mournful. “Tough times, man,” he says. “Tough, tough times.”
Late to arrive in the Northeast, the foreclosure crisis has swept through the New York region at an explosive pace in the past two years, destroying billions of dollars in housing wealth, according to a New York Times analysis of foreclosures filed since 2005 and federal mortgage data.
It now touches every corner of the region, from estates along the Connecticut Gold Coast to the suburban tracts of Long Island, where 6 percent of all mortgages are at least 90 days delinquent, the point at which foreclosure proceedings usually begin.
But the storm has fallen with a special ferocity on black and Latino homeowners, the analysis shows. Defaults occur three times as often in mostly minority census tracts as in mostly white ones. Eighty-five percent of the worst-hit neighborhoods — where the default rate is at least double the regional average — have a majority of black and Latino homeowners.
In the whole multi-thousand word article, the Times wrenches at your heart with story after story of how broken down the black and hispanic situation is in neighborhoods like Jamaica, Queens. Yet not once in their gigantic swan song that ran above the fold on the front page do they try to examine the causes of this situation; most likely because it’s something people have been pointing out for years and something the Times will undoubtedly find inconvenient.
Firstly, if you’re a bank and you don’t make loans to minorities (regardless of whether or not they can afford the loan or have the income to pay it back) you’re branded a racist boycotted by fat black elvis, er, Al Sharpton. People clamoring to get in front of cameras will sweep onto the local outlets to decry your business practices and the federal government, steeped in its need to make sure that everything is equal whether it should be or not will lean on you to “do the fair thing” and give out loans to people to keep your racial quotas up.
Secondly, as I’ve written on numerous occasions here, the people being given these loans due to their skin color usually can’t afford them to begin with. I’ll requote a story of a hispanic man in LA that I wrote about last year.
Back in August, when the “Subprime Meltdown” was just getting underway and people were trying to figure out what to make of it, I read an article on a blog I visit daily (which one? I don’t remember, honestly, I just remember the article pretty vividly) that talked about a man in the midst of a crisis.
He had just bought a home at an insanely low interest rate. By itself, that isn’t a problem, but the man’s monthly payments worked out to be $2,500 or so a month. That isn’t so terrible, really, for a home, but that $2,500 a month works out to $30,000 a year in mortgage repayment. This guy, who they were talking to, was making $37,000, meaning that if every penny he made came home with him (and we know Uncle Sam isn’t having any of that) he would have $7,000 left for the entire year for food, clothing, utilities, and other essentials for his family of three. His wife wasn’t working at the time, meaning his was the only income.
When questioned about it, the man said he was hoping for rental income from a finished basement that he was hoping to get approximately $700 a month for. If you factor that into the equation, he was trying to pay off an $1,800 mortgage at $21,600 annually if he was able to rent out the basement and if the renter paid his rent regularly.
The bottom line, of course, is that this man couldn’t afford his mortgage. The income bracket he falls into means that Uncle Sam takes 25% out of his paycheck. The minute he “bought” his home, he couldn’t afford it. The minute he turned the key for the first time, he locked himself into hopeless debt that there was no way out of.
As I’ve said in the past there is a certain amount of predatory lending that goes on. Banks know they can squeeze people for a few dollars and then foreclose on a house and take it back when the payments aren’t being made. I don’t think even the most strident capitalists would argue that the banking industry is 100% fair with its customers, but can we acknowledge that part of their zeal to give loans to those same people who couldn’t afford them is based on the fact that they didn’t want to be labeled with the scarlet letter of racism? That whether or not it’s true, the mere stigma of a Fair Lending investigation by HUD is enough to cripple a lender, particularly with the racism industry’s willing accomplices in the media shouting it out truth be damned?
Minority home ownership should never be a goal of any government entity. There should be no push to get people with certain ethnicities with certain skin colors into homes; that pressure creates exactly what the times is breathlessly reporting: a situation where people were given loans they couldn’t afford for houses they shouldn’t be living in by banks who either prayed on their ignorant unpreparedness or ignored their ability to pay the loans back because they were better off giving a loan to a minority tan rejecting it.
If the Times had bothered to examine the causes, the article could’ve been interesting. Instead it was just another “plight of the brown man” article. Ironically, had these banks not loaned to the same people who are being foreclosed upon, the Times would do its racism industry duty and act as a pulpit for anyone wishing to decry the evil racist banking industry, and that’s as much a part of the problem as the predatory loans themselves.