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Bamboozled by financial systems

By Barbara Reynolds
Trice Edney News Wire

Suddenly it dawns on you that you lost your home, your life savings and your credit rating tanked not by accident, but by design of predatory lenders, vultures that circled Black communities looking for prey and you, a highly-educated, middle-class Black woman, fit the profile.

I am among those in that profile of Black women who played by the rules that were passed down for generations through our families. We graduated from college with advanced degrees; we side-stepped instant spending gratification for prudent savings and investing in real estate. We paid our bills early to keep our credit scores above 700. But now at advanced ages, because of the sub-prime housing implosion instead of enjoying the fruit of our labor, our finances are in shambles and we are forced to find ways to start all over again.

Data show that people of color and their communities were stalked, singled out by those who are now profiting over their loss by buying up properties cheap and renting them out at inflated prices. Hit hard by high unemployment, foreclosures, lack of cash and credit, African Americans are suffering from more than an economic crisis. It is also a betrayal; a psychological meltdown and a cultural implosion resulting from being bamboozled by financial systems they thought were trustworthy. Some like Carolyn Holbrook, 67, of Minneapolis admits she is in therapy to cope with her grieving over the townhouse she lost two years ago. “It is more than just losing a house it is like losing a part of yourself, like a part of you died. My home was where my children and grandchildren came.”

Dr. Avis Jones-DeWeever, executive director of the National Council of Negro Women, says. “We are looking at intentional draining of Black wealth that has set us back generations. Driven by the housing crisis, Black wealth has dropped 52 percent in four years during the recession which is the largest loss of Black wealth since Reconstruction following the Civil War, a huge tragedy.”

Looking at the status of Black women, Dr. DeWeever analyzed federal data in the Home Mortgage Disclosure Act. It showed that middle to upper income African American women in 80 percent of the 100 cities surveyed were most likely to receive a high-cost subprime loan than other groups. Our own survey found that often Black women were given subprime loans when they could have qualified for regular, fixed rate loans.”

Overall, African Americans and Latinos were 30 percent more likely to receive high-rate subprime loans compared with white borrowers. These practices are estimated to cost African American and Latino families about $200 billion in assets due to foreclosures between 2006 and 2008, but could cost those families another $370 billion between 2009 and 2012, according to a study released in May by Charlotte Otabor of Howard University and Dr. Jessica Nembhard of the City University of New York.

Statistics, however, can’t begin to show the emotional burdens of those, such as Sylvia McDonald- Kaufman, an attorney with a master’s degree in Divinity, who saw her dream of home ownership crudely snatched away.

In 2004 Kaufman moved from Fairfax, Va. to Prince George’s County, Md. “Using prevailing wisdom I put down 50 percent on a $405,000 home in Fort Washington in order to pay off the mortgage quickly and put some money away from retirement,” she said. Shortly after the move, she received a reduction in pay after a transfer between departments at her job at Howard University. She asked her lending institution to tack on a couple of months’ payment to the back of the loan. They did so, but then raised the mortgage $300. “That was when I learned I had a sub-prime mortgage.”

Kaufman said when she lived in Fairfax she asked her bank if she could be 15 days late. “They cordially gave me three months of payments to tack on the end without my asking for it. So in a white, highly educated county, where I only put 10 percent down on a house I received in excess of what I needed, but in a predominately Black county where I put 50 percent down, my mortgage payment was not only raised but I was reported late each month to the credit bureau, which damaged my credit. Then the bank suspended the ‘tack-on,’ refused to work with me and I was pushed out of the home.”

With savings drained from trying to meet unreasonable housing payments, credit shot, the family’s income cut, the Kaufmans now live with friends. For the first time in decades, she is now a tenant instead of a homeowner. “I have to admit I went through a period of grief, feelings of personal failure, because my family has always been landowners. But I came to myself and said enough of that. I have a value system based on faith in God. My outlook for the future will always be positive. “

The Obama administration is cracking down on institutions involved in discriminatory lending. On July 12, the Justice Department filed the second largest fair lending settlement in the department’s history to resolve allegations that Wells Fargo Bank, the nation’s largest residential home mortgage, engaged in a pattern or practice of discrimination against qualified African American and Hispanic borrowers in its mortgage lending from 2004 through 2009. The settlement provides $125 million in compensation for wholesale borrowers who were steered into subprime mortgages or who paid higher fees and rates than white borrowers because of their race or national origin.

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