Home : Blogs : Rebecca Levinson-R.E. Blogger/Connect2Agent : Blogging in the rain

Springing forward toward fair housing month

As we are turning the corner toward April we are also heading toward Fair Housing Month. I am digging up an older post that I had originally posted on my corporate blog for Connect2Agent.

Here is the original post from September 14,2007 titled,"Has the subprime market hurt minorities' success in homeownership?"

Is the American dream for everyone?

Homeownership is known as the "American Dream." Is the cost of owning the American Dream set too high for minorities? Judge Greg Mathis thinks so.

In his article, "Housing crisis reduces Black wealth", Mathis speaks of the subprime market as a betrayal to African-American families who get home loans. Mathis makes a case against subprime lending stating,

"These predatory lending practices are chipping at the hard-earned wealth our people are building. If the subprime lending industry is not regulated quickly, the wealth gap between whites and blacks will only grow and the economic development of the Black community will be set back several decades."

Is this doom and gloom that Mathis predicts just more hype? One study suggests otherwise.

The Center for Responsible Lending published a report May 31, 2006 titled, "Unfair Lending: The Effect of Race and Ethnicity on the Price of Subprime Mortgages". This report finds,

"...for most types of subprime home loans, African-American and Latino borrowers are at greater risk of receiving higher-rate loans than white borrowers, even after controlling for legitimate risk factors".

As a single black mom, it saddens me to know there are situations where unsuspecting, hard-working Americans are receiving this kind of financial disparity. The report found higher pre-payment penalties and higher-interest rate loans for minorities.

Pre-payment penalties are a burden for home buyers who want to pay down their mortgage loan rate. A homeowner could face steep fees that could stop them from refinancing or selling their home. This situation also increases the likelihood of foreclosure.

How can this situation be corrected?

Mathis recommends the creation of a task force to investigate the high number of minorities in these risky loans and the reasons behind it. Suggestions from the Center for Responsible Lending involve action by lenders and policymakers and include:

Requiring fair pricing standards.
Creating more regulations for lenders and brokers.
Requiring better disclosure on the pricing and the risks related to high subprime loans.
Creating enough resources to enforce fair lending laws.
Creating market incentives that encourage equality to minority homebuyers.

I encourage you to make a difference by contacting your local government representative or member of congress. Equality in homeownership effects everyone. I welcome any comments or suggestions on this issue.

Posted by Rebecca Levinson-R.E. Blogger/Connect2Agent on 03/29/2008 11:22 AM

Comments (3)

connect2agent, fair lending act, predatory lending, subprime loans, minorities and homeownership

3 Comments on Springing forward toward fair housing month

Great post Rebecca! It's definitely saddening & disappointing to hear. I don't believe the "American dream" was originally meant for everyone, but the "American dream, revised" still needs more revisions.

03/30/2008 12:19 AM

by Eugene Jones (Royster Real Estate)

Although we are real estate agents, we take extra care with all of our buyer clients to fully explain various financing options they may be offered and their consequences. We consider this a large part of our responsibility to our clients. Our goal is not merely to have clients acquire properties. Our goal is to help our clients acquire property AND happily keep that property for a long time.

03/30/2008 08:53 PM

by Rosario Lewis, GRI ~ DDR Realty, Orange County, NY (DDR Realty)

Eugene- Thank you. It is a work in progress,isn't it.

Rosario- That is the most important, the advising. Then in the end it is your well informed clients decision.

03/31/2008 09:46 PM

by Rebecca Levinson-R.E. Blogger/Connect2Agent (Connect2Agent)