|For minorities, the pain is still severe decade after housing peaked|
|Subprime mortgages, foreclosures drain assets|
|Published Saturday, June 25, 2016 8:38 am|
WASHINGTON — When the U.S. housing bubble peaked a decade ago, soon to burst with far-reaching consequences, the pain was particularly severe for black and Hispanic Americans.
A disproportionate number of minorities succumbed to subprime mortgages and foreclosures and lost their homes. Their collective loss of home equity and shift toward rental housing could widen America's racial and ethnic divides well into the future, according to researchers and housing advocates.
The drop in home ownership has grown so severe that it could impede wealth creation for generations of minority families, said Antoine Thompson, executive director of the National Association of Real Estate Brokers, the nation's oldest minority trade association.
"We lost a lot of wealth," Thompson said. "We are reaching epidemic and crisis levels in black America."
The decline dovetails with a broader shift toward renting in the aftermath of the housing bust. An analysis by The Associated Press has found that rising rental costs and stagnant pay are making it harder to save to buy a home. Longtime homeowners, by contrast, have enjoyed rising home equity and lighter mortgage bills resulting from lower mortgage rates.
The problem is most pronounced among minorities who already had lower ownership rates before the bubble. Actions such as "redlining" — which for decades denied loans to minorities — excluded black neighborhoods from government-backed mortgages. This made it harder for minorities to buy even as the U.S. economy surged after World War II and overall home ownership rates climbed.
Many minority homeowners who bought or refinanced during the bubble eventually became trapped by predatory mortgages, some requiring no money down and monthly payments that eventually ballooned.
Just 41.5 percent of black households own their homes, down from nearly 50 percent in late 2004, according to the Census Bureau. The share of Hispanic homeowners dropped to 45.3 percent from roughly 50 percent. Both drops were sharper than the decline in white home ownership — to 72.1 percent from roughly 75 percent.
The Urban Institute forecast last year that Hispanic home ownership will rise slightly through 2030 but that black homeownership will tumble to 40 percent by 2030 if U.S. economic growth is about average and 38 percent if growth is slow.
A series of sudden emergency expenses cost Carmen and Ricardo Ramirez their one-bedroom condominium in Washington Heights, a neighborhood near Manhattan's northern tip.
The couple had bought their home in 2005 for $299,000 with an adjustable-rate mortgage that was popular during the bubble and destructive during the bust once the interest and principal payments were adjusted higher.
Life seemed manageable until 2010, when the recession forced them to close their steakhouse restaurant. Then Ricardo suffered a traumatic brain injury during a fall in 2011, and Carmen suffered a back and leg injury in 2012. Her parents later died, and the funeral costs caused the couple to miss mortgage payments, triggering fees for late payments that led to foreclosure.
"Have you ever heard the saying, when it rains, it pours?" said Carmen, 61. "Well, it was one after the other with us."
Bankruptcy failed to save the condo, which their board refused to let them sell at a loss.
Now, the couple is out of their home and in an assisted living facility after receiving relocation help from the Center for New York City Neighborhoods, which promotes affordable homeownership.
"We got nothing back — except a tax bill," Carmen said.
Without home equity, it has become disproportionately hard for minorities to borrow to start a business, send their children to college or finance a retirement.
In the Boston area, nearly 80 percent of whites own homes and enjoy a median net worth of $256,500. By contrast, just one-third of African Americans own a home, and their median net worth is a mere $700, according to a report last year by the Boston Federal Reserve.
In Los Angeles, Mexican Americans have a median net worth of $5,000, and only 45 percent of them own homes, according to a similar analysis by the San Francisco Federal Reserve. Contrast that with the $355,000 median net worth for whites living around Los Angeles, 68 percent of whom own homes.
Even as homeownership rates were rising during the bubble, there were signs that homeowners who had refinanced with adjustable-rate mortgages were being pushed out.
Starting in the 1990s, these mortgages, with balloon payments or other onerous terms, were pushing black homeowners back into rentals, according to research by a pair of sociologists, the University of Buffalo professor Gregory Sharp and Cornell University professor Matthew Hall. It marked a striking reversal from the gains made after the 1968 Fair Housing Act, which barred discrimination based on race, religion or sex.
Sharp and Hall's 2014 paper found that blacks were 50 percent more likely than whites to lose their homes and become renters. This trend had begun as minorities either bought or refinanced with the sub-prime mortgages that lenders had marketed to them. The two sociologists adjusted their data for income, debt loads and life events. They found that race was the leading explanation for why people lost homes they owned and turned back to rentals.
"It's a clear story of persistent and growing racial stratification in the housing market, a shift from exclusion to exploitation," Sharp said. "That's not just income. That's race. That is going into segregated neighborhoods and sort of preying on people."
|First, Countrywide was not owned by BoA until AFTER the burst, so no cahoots. Secondly, this article, like most of the previous ones, nicely skip detailing the real reasons. The problem started with then President Bill Clinton sending an ultimatum to Freddie Mac and Fanny Mae stating that no prospective homeowners were to be denied, hence the "no income verification" loans. No bank/mortgage company was allowed to assist people in determining whether they could truly afford what they were buying. This led to lying on applications about income in the desperate search for home ownership. So, the real problem begins with education and not in the schools, but the parental support from homes of minorities-it is well documented that parental involvement produces students with higher grades; higher grades lead to better and higher paying jobs, and so on. The foreclosure rate was higher because the majority of minorities had the no income verification loans, and found quickly that they couldn't make the payments, on & on. Lastly, to single out 1 family who had a series of bad luck is way off the mark, as all of us have series of bad luck! It is just that the higher paid are better prepared-health insurance and my wife & I have always worked hard and even before the mortgage, we pay our life insurance premium so as not to destroy our children's lives. So who is responsible for people getting their priorities right? I know that you can cremate someone and bury them for $5000.00 or less and this low of a policy is mere pennies if purchased when healthy. But many would rather ignore the need.|
|Posted on June 26, 2016|
|: Fannie Mae, in cahoots w/bank of america, fka Countrywide, lied about modifications in regards to their ponzi scheme loans , bundled up the loans instead , but not before forging owner's signatures and adding falsified endorsements, fabricated some assignments and then handed them over to others, such as Ditech (FKA GreenTree), who then handed the fabricated documents over to their handy dandy substitute trustee attorneys who skipped and still are skipping to the courthouses across the country and turning in their fabricated evidence to foreclose on thousands of homeowners, who were NOTHING , but bamboozled from the start. But it's ok because evil bank of america dished out anywhere from $300-$2000 per homeowner a few years ago as their hush hush punishment. Then the games began...lies about modifications, lies about trial payments, lies about lost modification applications....all to stall and then bundle them up again with the newfound forgeries and falsifications. But it's ok because after Fannie Mae kicks the defrauded homeowners to the curb, they'll make up for it by selling the home to minorities or small time investors. Sorta like if a child molester rapes a child and then on the way home stops by the candy store to buy a gumball for a kid on the street. How pathetically evil! Anyone who believes the wall street bailout ended in 2008 is sadly mistaken.|
|Posted on June 26, 2016|
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