The foreclosure mess just will not go away. Neither will incomplete if not misleading explanations for the crisis, or partial if not ineffective policy proposals. More than 10 million families will lose their homes to foreclosure before the housing market "clears" according to Credit Suisse. Meanwhile, as with the subprime and predatory lending bubbles that led directly to the present crisis, fingers are pointed in several directions as all parties to the debate try to shift blame to their favorite individual and institutional targets. Lost in this discussion is how continuing racial segregation has fueled these developments.
The guilty parties in the foreclosure crisis are many: greedy homeowners, unscrupulous investors, lax underwriters, asleep-at-the-wheel regulators, sloppy mortgage servicers, and more. No doubt all share in the blame. But all these actors played their roles in a context of ongoing racial segregation that greatly facilitated the fraud, deceit, and exploitation that occurred at each stage of the lending process. Research by a variety of organizations ranging from the Federal Reserve to the Center for Community Change reveals that subprime loans were concentrated in, and specifically targeted to, low-income, minority neighborhoods. As a result, foreclosures have fallen heaviest on the most disadvantaged segments of society.
To illustrate, when subprime lending peaked in 2006, just 18% of white borrowers received subprime loans compared to 54% of African Americans. An unfortunate irony, as the Wall Street Journal reported in 2007, is that over 60% of subprime borrowers had credit scores that qualified them for prime loans, underscoring the discriminatory nature of the marketing. Moreover, as reported by the Mortgage Bankers Association, subprime loans are approximately three times more likely to enter into default than conventional loans. As a result, between 2007 and 2009 approximately 8% of homes owned by black or Hispanic families went into foreclosure compared to 4.5% for whites. According a study by the Center for Responsible Lending, these disparities persisted even after taking household incomes into account.
Discriminatory lending patterns do not happen by chance. As the National Community Reinvestment Coalition has reported, in recent years racial minorities and minority communities were deliberately targeted by predatory lenders for subprime lending. The more segregated a metropolitan area is, of course, the easier it is to find exploitable clients. Segregation creates natural pockets of financially unsophisticated, historically underserved, poor minority homeowners who are ripe for exploitation.
It is no surprise to learn, therefore, that a recent study published in the American Sociological Review found that the level of black-white segregation was the single strongest predictor of the number and rate of foreclosures across U.S. metropolitan areas -- more powerful than the overall level of subprime lending, the degree of overbuilding, the extent of home price inflation, the relative creditworthiness of borrowers, the degree of coverage under the Community Reinvestment Act, or the extent of local government regulation.
More than forty years after the passage of the Fair Housing Act, two thirds of all black urbanites continue to live under conditions of high segregation and nearly half live in metropolitan areas where the degree of racial isolation is so intense it conforms to the criteria for hypersegregation. If we had somehow been able to eliminate segregation between blacks and whites in the years since 1968, the average metropolitan area would have experienced a foreclosure rate 80% lower than that actually observed during 2006-2008. Segregation is the reason for the unusual severity of the foreclosure crisis in the United States.
Given the powerful role played by racial segregation causing the current crisis, policy proposals to enact a national moratorium on foreclosures, modify the terms of outstanding loans, make bankruptcy restructuring easier, or undertake other financial reforms largely miss the point. Although such steps might provide short-term relief for some homeowners, speculative housing bubbles will likely recur along racially unequal lines as long as hypersegregation persists as a basic feature of metropolitan America. It is long past time to address the nation's segregated living patterns directly, and several policy initiatives to do so are now on the table.
The Housing Fairness Act (HR 476) would substantially increase the funding of fair housing organizations for nationwide paired testing (where matched pairs of white and non-white auditors approach housing providers to determine if they are treated equally). Such testing would yield much stronger enforcement of fair housing laws.
The Community Reinvestment Modernization Act (HR 1749) would extend the Community Reinvestment Act (a federal ban on redlining) to virtually all mortgage lenders and explicitly require them to be responsive to the credit needs of minority communities. Currently the CRA only applies to depository institutions (which today originate less than half of all mortgage loans). Moreover, the law currently focuses on service to low-income communities without a specific racial or ethnic mandate. Extending the CRA to all mortgage lending would help curb the predatory lending that drove much of the current crisis.
Finally, the U.S. Department of Housing and Urban Development has announced plans to issue a regulation to "affirmatively further fair housing" clarifying the statutory obligation that all recipients of federal housing and community development funds have to use those dollars in a manner that identifies and eliminates discriminatory barriers to equal housing opportunity. The agency should do so sooner rather than later.
Changing the behavior of financial institutions, regulators, and consumers is an important policy objective. Unless the segregated context in which they operate is also altered, however, speculative financial bubbles will persist and their uneven effects will continue to fall on vulnerable communities of color who have long paid the high costs of hypersegregation in the United States, America's own brand of Apartheid.
Douglas S. Massey is the Henry G. Bryant Professor of Sociology and Public Affairs at Princeton University. Gregory D. Squires is Professor of Sociology and Public Policy and Public Administration at George Washington University.
Response from a Banker:
You ungrateful louts!
We bankers worked hard to give the great unwashed masses one helluva “going into bankruptcy” party that lasted for almost four years! We gave a bunch of worthless lumpens an opportunity to live in a house well beyond their means. Now that we have to separate them from the houses and herd them back into the flea infested tenements appropriate to their life’s station, some bottom feeding lawyers have the gall to suggest we don’t have a “legal” right to foreclose. Well I’ll be gob-smacked if that’s not enough to make a grown man cry. As GWB responded when asked about what the Constitution might have to say he retorted, “It’s just a goddamed piece of paper.” We bankers know what we know. And we know these houses belong to our RMBS whether we did everything according to your outmoded rules or not. They belong to us. Get used to it. It’s hard enough to have to explain to some turbaned oil sheik why the 10 million dollars of the RMBS he bought are now worth half that let alone trying to explain why we might not even own the houses that backed the loans. But we want to be fair. So we paid a little overtime plus incentives for a bunch of our backoffice people in India to review the files. By golly they didn’t find a single problem except for one fellow who found over half his cases were problematic. The only good thing about that was we only had to pay him half what the others got. And then we fired him since it was obvious he was a trouble maker.
We bankers are geniuses when we bother to think about it. We managed to turn an $80,000 rathole in the ghetto of Pittsburgh, CA (and that’s 90% of it) into a $280,000 palace in just three years and then sold it to a poor Hispanic cook working at a retirement home. He makes $45,000 a year and his wife works at McDonald’s making $20,000. You should have seen the happy looks on their three kids’ faces at the housewarming. We got them into a great negam loan that only cost $650 a month for the first three years. Sure, it ballooned to $1400 but it looked like that house would be worth nearly a million by then. At least that’s what the Iranian real estate salesman said. And he was their best friend so they certainly thought he was giving an honest opinion. How could he have guessed it would auction for $55,000 three years later? Life is uncertain. And now they’re back in a two bedroom apartment with cots and a sleeper in the living room. I like to think this experience has whetted their appetite for a better condition of living now that they’ve had a first hand experience at “living the dream.” Unfortunately, the refinance mortgage they took out two years in for a half percent better rate didn’t have the “jingle keys” provision so they’re paying back the $250,000 they owe the bank week by week. But you know what? They made a deal with us and they signed the papers. We didn’t have a gun to their head. A deal’s a deal. You gotta respect the law in these matters. That’s very important for you to understand. We expect you to stand by your commitments and read the fine print.
You need to understand that we’re just middle men who go out and put deals together for our “clients.” Our clients are primarily the Sovereign Wealth Funds all sitting on piles of cash accumulating from the obscene profits being made on oil. That money has to go somewhere and it’s our job to create investment opportunities that at least appear to have a better rate of return than T-Bills. We’re just working schmucks like anyone else. Maybe paid a little better – but we earn every dollar! It’s hard working with fools on both sides of the deal. Our tongues are bloody nearly every day.
You all have the gall to want to “rein in” the investment professionals at Goldman Sachs and J.P. Morgan. Do you realize what would happen if you had your way? If our great investment bank’s operations were curtailed, the clients would just go elsewhere to find someone willing to put together a great money making deal like, for instance, buying a 75 year lease on Chicago’s parking meter operation. Suppose that deal hadn’t gone through. An hour’s parking would have remained at two bits instead of a buck. By jacking the rates, extending the hours and making the meters operate seven days a week instead of five we are doing our part in reducing traffic conjestion. And what thanks do we get? None. Shows you just how sincere these “green” people are. All they can do is belly ache about the loss of street fairs because the new meter owners demand fair compensation for the lost revenue. It’s obvious these “street fairs” are losing propositions or they’d make enough money to pay the franchise with money left over. We’re promoting social efficiency by eliminating these economically sterile activities. We have stores if the lumpenfolk want to buy things. In fact we have more “store per person” than any other country in the world – nearly 25 square feet of it. We need to generate sales in those stores so the renters can pay back the CMBS holders. Street fairs are diverting dollars to sales that do not benefit our clients and, therefore, do not benefit our country.
My suggestion is that you folks get back out there and start spending again because, face it, that’s the only task you’re really fit to perform. You are the Great American Consumer and it should make your chest swell with pride. Your consumption is a vital part of the wonderful world wealth making machine. China makes stuff and you consume it and digest it and drop it out your backsides. We have tried to keep you supplied with enough dollars so that you can do your job. But now you have reneged on your obligations. You have failed to heed your wonderful V.P. Dick Cheney’s advice to hold hands and buy an SUV. There is a price to be paid for your stubborn refusal to spend beyond your means. You are now “little people.”
So stop whining about your government catering to the banks. We fund your government. You bitch and moan at the thought of any tax increase so your government has to come to us, hat in hand, every year for a couple trillion dollars in loans. You think a government in that kind of financial condition is in any position to tell us how to run our business? Just keep in mind that the Fed is an independent organization. In fact it can’t even be audited. I advise you entertain a certain meekness when dealing with the organization that owns your government and that your uncharitable understanding of the situation puts the cart before the horse.
bench craft company
Brad Friedman and Desi Doyen: Green <b>News</b> Report: November 4, 2010 <b>...</b>
IN 'GREEN NEWS EXTRA' (see links below): Jan.-to-Oct. 2010 tied for hottest in satellite record; Pakistan's emergency rations to run out in 30 days; Halliburton may be shielded from liability in BP Oil Disaster; Can SCOTUS whale ruling ...
For Fox <b>News</b>, Most Viewers Ever for a Midterm Election - NYTimes.com
Fox News, a favorite of Republicans, averaged 6.96 million viewers in prime time on Tuesday, according to ratings results from the Nielsen Company. Fox more than doubled CNN's numbers, which averaged 2.42 million viewers, and more than ...
Fox <b>News</b> On Christine O'Donnell - Mediate.com
The midterms are over, and while the GOP regained control of the House, the coronation of the Tea Party movement is still up for debate. Sure, a number of Tea Party candidates won their races, but perhaps the most visible -- Delaware ...
bench craft company
The foreclosure mess just will not go away. Neither will incomplete if not misleading explanations for the crisis, or partial if not ineffective policy proposals. More than 10 million families will lose their homes to foreclosure before the housing market "clears" according to Credit Suisse. Meanwhile, as with the subprime and predatory lending bubbles that led directly to the present crisis, fingers are pointed in several directions as all parties to the debate try to shift blame to their favorite individual and institutional targets. Lost in this discussion is how continuing racial segregation has fueled these developments.
The guilty parties in the foreclosure crisis are many: greedy homeowners, unscrupulous investors, lax underwriters, asleep-at-the-wheel regulators, sloppy mortgage servicers, and more. No doubt all share in the blame. But all these actors played their roles in a context of ongoing racial segregation that greatly facilitated the fraud, deceit, and exploitation that occurred at each stage of the lending process. Research by a variety of organizations ranging from the Federal Reserve to the Center for Community Change reveals that subprime loans were concentrated in, and specifically targeted to, low-income, minority neighborhoods. As a result, foreclosures have fallen heaviest on the most disadvantaged segments of society.
To illustrate, when subprime lending peaked in 2006, just 18% of white borrowers received subprime loans compared to 54% of African Americans. An unfortunate irony, as the Wall Street Journal reported in 2007, is that over 60% of subprime borrowers had credit scores that qualified them for prime loans, underscoring the discriminatory nature of the marketing. Moreover, as reported by the Mortgage Bankers Association, subprime loans are approximately three times more likely to enter into default than conventional loans. As a result, between 2007 and 2009 approximately 8% of homes owned by black or Hispanic families went into foreclosure compared to 4.5% for whites. According a study by the Center for Responsible Lending, these disparities persisted even after taking household incomes into account.
Discriminatory lending patterns do not happen by chance. As the National Community Reinvestment Coalition has reported, in recent years racial minorities and minority communities were deliberately targeted by predatory lenders for subprime lending. The more segregated a metropolitan area is, of course, the easier it is to find exploitable clients. Segregation creates natural pockets of financially unsophisticated, historically underserved, poor minority homeowners who are ripe for exploitation.
It is no surprise to learn, therefore, that a recent study published in the American Sociological Review found that the level of black-white segregation was the single strongest predictor of the number and rate of foreclosures across U.S. metropolitan areas -- more powerful than the overall level of subprime lending, the degree of overbuilding, the extent of home price inflation, the relative creditworthiness of borrowers, the degree of coverage under the Community Reinvestment Act, or the extent of local government regulation.
More than forty years after the passage of the Fair Housing Act, two thirds of all black urbanites continue to live under conditions of high segregation and nearly half live in metropolitan areas where the degree of racial isolation is so intense it conforms to the criteria for hypersegregation. If we had somehow been able to eliminate segregation between blacks and whites in the years since 1968, the average metropolitan area would have experienced a foreclosure rate 80% lower than that actually observed during 2006-2008. Segregation is the reason for the unusual severity of the foreclosure crisis in the United States.
Given the powerful role played by racial segregation causing the current crisis, policy proposals to enact a national moratorium on foreclosures, modify the terms of outstanding loans, make bankruptcy restructuring easier, or undertake other financial reforms largely miss the point. Although such steps might provide short-term relief for some homeowners, speculative housing bubbles will likely recur along racially unequal lines as long as hypersegregation persists as a basic feature of metropolitan America. It is long past time to address the nation's segregated living patterns directly, and several policy initiatives to do so are now on the table.
The Housing Fairness Act (HR 476) would substantially increase the funding of fair housing organizations for nationwide paired testing (where matched pairs of white and non-white auditors approach housing providers to determine if they are treated equally). Such testing would yield much stronger enforcement of fair housing laws.
The Community Reinvestment Modernization Act (HR 1749) would extend the Community Reinvestment Act (a federal ban on redlining) to virtually all mortgage lenders and explicitly require them to be responsive to the credit needs of minority communities. Currently the CRA only applies to depository institutions (which today originate less than half of all mortgage loans). Moreover, the law currently focuses on service to low-income communities without a specific racial or ethnic mandate. Extending the CRA to all mortgage lending would help curb the predatory lending that drove much of the current crisis.
Finally, the U.S. Department of Housing and Urban Development has announced plans to issue a regulation to "affirmatively further fair housing" clarifying the statutory obligation that all recipients of federal housing and community development funds have to use those dollars in a manner that identifies and eliminates discriminatory barriers to equal housing opportunity. The agency should do so sooner rather than later.
Changing the behavior of financial institutions, regulators, and consumers is an important policy objective. Unless the segregated context in which they operate is also altered, however, speculative financial bubbles will persist and their uneven effects will continue to fall on vulnerable communities of color who have long paid the high costs of hypersegregation in the United States, America's own brand of Apartheid.
Douglas S. Massey is the Henry G. Bryant Professor of Sociology and Public Affairs at Princeton University. Gregory D. Squires is Professor of Sociology and Public Policy and Public Administration at George Washington University.
Response from a Banker:
You ungrateful louts!
We bankers worked hard to give the great unwashed masses one helluva “going into bankruptcy” party that lasted for almost four years! We gave a bunch of worthless lumpens an opportunity to live in a house well beyond their means. Now that we have to separate them from the houses and herd them back into the flea infested tenements appropriate to their life’s station, some bottom feeding lawyers have the gall to suggest we don’t have a “legal” right to foreclose. Well I’ll be gob-smacked if that’s not enough to make a grown man cry. As GWB responded when asked about what the Constitution might have to say he retorted, “It’s just a goddamed piece of paper.” We bankers know what we know. And we know these houses belong to our RMBS whether we did everything according to your outmoded rules or not. They belong to us. Get used to it. It’s hard enough to have to explain to some turbaned oil sheik why the 10 million dollars of the RMBS he bought are now worth half that let alone trying to explain why we might not even own the houses that backed the loans. But we want to be fair. So we paid a little overtime plus incentives for a bunch of our backoffice people in India to review the files. By golly they didn’t find a single problem except for one fellow who found over half his cases were problematic. The only good thing about that was we only had to pay him half what the others got. And then we fired him since it was obvious he was a trouble maker.
We bankers are geniuses when we bother to think about it. We managed to turn an $80,000 rathole in the ghetto of Pittsburgh, CA (and that’s 90% of it) into a $280,000 palace in just three years and then sold it to a poor Hispanic cook working at a retirement home. He makes $45,000 a year and his wife works at McDonald’s making $20,000. You should have seen the happy looks on their three kids’ faces at the housewarming. We got them into a great negam loan that only cost $650 a month for the first three years. Sure, it ballooned to $1400 but it looked like that house would be worth nearly a million by then. At least that’s what the Iranian real estate salesman said. And he was their best friend so they certainly thought he was giving an honest opinion. How could he have guessed it would auction for $55,000 three years later? Life is uncertain. And now they’re back in a two bedroom apartment with cots and a sleeper in the living room. I like to think this experience has whetted their appetite for a better condition of living now that they’ve had a first hand experience at “living the dream.” Unfortunately, the refinance mortgage they took out two years in for a half percent better rate didn’t have the “jingle keys” provision so they’re paying back the $250,000 they owe the bank week by week. But you know what? They made a deal with us and they signed the papers. We didn’t have a gun to their head. A deal’s a deal. You gotta respect the law in these matters. That’s very important for you to understand. We expect you to stand by your commitments and read the fine print.
You need to understand that we’re just middle men who go out and put deals together for our “clients.” Our clients are primarily the Sovereign Wealth Funds all sitting on piles of cash accumulating from the obscene profits being made on oil. That money has to go somewhere and it’s our job to create investment opportunities that at least appear to have a better rate of return than T-Bills. We’re just working schmucks like anyone else. Maybe paid a little better – but we earn every dollar! It’s hard working with fools on both sides of the deal. Our tongues are bloody nearly every day.
You all have the gall to want to “rein in” the investment professionals at Goldman Sachs and J.P. Morgan. Do you realize what would happen if you had your way? If our great investment bank’s operations were curtailed, the clients would just go elsewhere to find someone willing to put together a great money making deal like, for instance, buying a 75 year lease on Chicago’s parking meter operation. Suppose that deal hadn’t gone through. An hour’s parking would have remained at two bits instead of a buck. By jacking the rates, extending the hours and making the meters operate seven days a week instead of five we are doing our part in reducing traffic conjestion. And what thanks do we get? None. Shows you just how sincere these “green” people are. All they can do is belly ache about the loss of street fairs because the new meter owners demand fair compensation for the lost revenue. It’s obvious these “street fairs” are losing propositions or they’d make enough money to pay the franchise with money left over. We’re promoting social efficiency by eliminating these economically sterile activities. We have stores if the lumpenfolk want to buy things. In fact we have more “store per person” than any other country in the world – nearly 25 square feet of it. We need to generate sales in those stores so the renters can pay back the CMBS holders. Street fairs are diverting dollars to sales that do not benefit our clients and, therefore, do not benefit our country.
My suggestion is that you folks get back out there and start spending again because, face it, that’s the only task you’re really fit to perform. You are the Great American Consumer and it should make your chest swell with pride. Your consumption is a vital part of the wonderful world wealth making machine. China makes stuff and you consume it and digest it and drop it out your backsides. We have tried to keep you supplied with enough dollars so that you can do your job. But now you have reneged on your obligations. You have failed to heed your wonderful V.P. Dick Cheney’s advice to hold hands and buy an SUV. There is a price to be paid for your stubborn refusal to spend beyond your means. You are now “little people.”
So stop whining about your government catering to the banks. We fund your government. You bitch and moan at the thought of any tax increase so your government has to come to us, hat in hand, every year for a couple trillion dollars in loans. You think a government in that kind of financial condition is in any position to tell us how to run our business? Just keep in mind that the Fed is an independent organization. In fact it can’t even be audited. I advise you entertain a certain meekness when dealing with the organization that owns your government and that your uncharitable understanding of the situation puts the cart before the horse.
bench craft company
Brad Friedman and Desi Doyen: Green <b>News</b> Report: November 4, 2010 <b>...</b>
IN 'GREEN NEWS EXTRA' (see links below): Jan.-to-Oct. 2010 tied for hottest in satellite record; Pakistan's emergency rations to run out in 30 days; Halliburton may be shielded from liability in BP Oil Disaster; Can SCOTUS whale ruling ...
For Fox <b>News</b>, Most Viewers Ever for a Midterm Election - NYTimes.com
Fox News, a favorite of Republicans, averaged 6.96 million viewers in prime time on Tuesday, according to ratings results from the Nielsen Company. Fox more than doubled CNN's numbers, which averaged 2.42 million viewers, and more than ...
Fox <b>News</b> On Christine O'Donnell - Mediate.com
The midterms are over, and while the GOP regained control of the House, the coronation of the Tea Party movement is still up for debate. Sure, a number of Tea Party candidates won their races, but perhaps the most visible -- Delaware ...
bench craft company
bench craft company
bench craft company
Brad Friedman and Desi Doyen: Green <b>News</b> Report: November 4, 2010 <b>...</b>
IN 'GREEN NEWS EXTRA' (see links below): Jan.-to-Oct. 2010 tied for hottest in satellite record; Pakistan's emergency rations to run out in 30 days; Halliburton may be shielded from liability in BP Oil Disaster; Can SCOTUS whale ruling ...
For Fox <b>News</b>, Most Viewers Ever for a Midterm Election - NYTimes.com
Fox News, a favorite of Republicans, averaged 6.96 million viewers in prime time on Tuesday, according to ratings results from the Nielsen Company. Fox more than doubled CNN's numbers, which averaged 2.42 million viewers, and more than ...
Fox <b>News</b> On Christine O'Donnell - Mediate.com
The midterms are over, and while the GOP regained control of the House, the coronation of the Tea Party movement is still up for debate. Sure, a number of Tea Party candidates won their races, but perhaps the most visible -- Delaware ...
bench craft company
The foreclosure mess just will not go away. Neither will incomplete if not misleading explanations for the crisis, or partial if not ineffective policy proposals. More than 10 million families will lose their homes to foreclosure before the housing market "clears" according to Credit Suisse. Meanwhile, as with the subprime and predatory lending bubbles that led directly to the present crisis, fingers are pointed in several directions as all parties to the debate try to shift blame to their favorite individual and institutional targets. Lost in this discussion is how continuing racial segregation has fueled these developments.
The guilty parties in the foreclosure crisis are many: greedy homeowners, unscrupulous investors, lax underwriters, asleep-at-the-wheel regulators, sloppy mortgage servicers, and more. No doubt all share in the blame. But all these actors played their roles in a context of ongoing racial segregation that greatly facilitated the fraud, deceit, and exploitation that occurred at each stage of the lending process. Research by a variety of organizations ranging from the Federal Reserve to the Center for Community Change reveals that subprime loans were concentrated in, and specifically targeted to, low-income, minority neighborhoods. As a result, foreclosures have fallen heaviest on the most disadvantaged segments of society.
To illustrate, when subprime lending peaked in 2006, just 18% of white borrowers received subprime loans compared to 54% of African Americans. An unfortunate irony, as the Wall Street Journal reported in 2007, is that over 60% of subprime borrowers had credit scores that qualified them for prime loans, underscoring the discriminatory nature of the marketing. Moreover, as reported by the Mortgage Bankers Association, subprime loans are approximately three times more likely to enter into default than conventional loans. As a result, between 2007 and 2009 approximately 8% of homes owned by black or Hispanic families went into foreclosure compared to 4.5% for whites. According a study by the Center for Responsible Lending, these disparities persisted even after taking household incomes into account.
Discriminatory lending patterns do not happen by chance. As the National Community Reinvestment Coalition has reported, in recent years racial minorities and minority communities were deliberately targeted by predatory lenders for subprime lending. The more segregated a metropolitan area is, of course, the easier it is to find exploitable clients. Segregation creates natural pockets of financially unsophisticated, historically underserved, poor minority homeowners who are ripe for exploitation.
It is no surprise to learn, therefore, that a recent study published in the American Sociological Review found that the level of black-white segregation was the single strongest predictor of the number and rate of foreclosures across U.S. metropolitan areas -- more powerful than the overall level of subprime lending, the degree of overbuilding, the extent of home price inflation, the relative creditworthiness of borrowers, the degree of coverage under the Community Reinvestment Act, or the extent of local government regulation.
More than forty years after the passage of the Fair Housing Act, two thirds of all black urbanites continue to live under conditions of high segregation and nearly half live in metropolitan areas where the degree of racial isolation is so intense it conforms to the criteria for hypersegregation. If we had somehow been able to eliminate segregation between blacks and whites in the years since 1968, the average metropolitan area would have experienced a foreclosure rate 80% lower than that actually observed during 2006-2008. Segregation is the reason for the unusual severity of the foreclosure crisis in the United States.
Given the powerful role played by racial segregation causing the current crisis, policy proposals to enact a national moratorium on foreclosures, modify the terms of outstanding loans, make bankruptcy restructuring easier, or undertake other financial reforms largely miss the point. Although such steps might provide short-term relief for some homeowners, speculative housing bubbles will likely recur along racially unequal lines as long as hypersegregation persists as a basic feature of metropolitan America. It is long past time to address the nation's segregated living patterns directly, and several policy initiatives to do so are now on the table.
The Housing Fairness Act (HR 476) would substantially increase the funding of fair housing organizations for nationwide paired testing (where matched pairs of white and non-white auditors approach housing providers to determine if they are treated equally). Such testing would yield much stronger enforcement of fair housing laws.
The Community Reinvestment Modernization Act (HR 1749) would extend the Community Reinvestment Act (a federal ban on redlining) to virtually all mortgage lenders and explicitly require them to be responsive to the credit needs of minority communities. Currently the CRA only applies to depository institutions (which today originate less than half of all mortgage loans). Moreover, the law currently focuses on service to low-income communities without a specific racial or ethnic mandate. Extending the CRA to all mortgage lending would help curb the predatory lending that drove much of the current crisis.
Finally, the U.S. Department of Housing and Urban Development has announced plans to issue a regulation to "affirmatively further fair housing" clarifying the statutory obligation that all recipients of federal housing and community development funds have to use those dollars in a manner that identifies and eliminates discriminatory barriers to equal housing opportunity. The agency should do so sooner rather than later.
Changing the behavior of financial institutions, regulators, and consumers is an important policy objective. Unless the segregated context in which they operate is also altered, however, speculative financial bubbles will persist and their uneven effects will continue to fall on vulnerable communities of color who have long paid the high costs of hypersegregation in the United States, America's own brand of Apartheid.
Douglas S. Massey is the Henry G. Bryant Professor of Sociology and Public Affairs at Princeton University. Gregory D. Squires is Professor of Sociology and Public Policy and Public Administration at George Washington University.
Response from a Banker:
You ungrateful louts!
We bankers worked hard to give the great unwashed masses one helluva “going into bankruptcy” party that lasted for almost four years! We gave a bunch of worthless lumpens an opportunity to live in a house well beyond their means. Now that we have to separate them from the houses and herd them back into the flea infested tenements appropriate to their life’s station, some bottom feeding lawyers have the gall to suggest we don’t have a “legal” right to foreclose. Well I’ll be gob-smacked if that’s not enough to make a grown man cry. As GWB responded when asked about what the Constitution might have to say he retorted, “It’s just a goddamed piece of paper.” We bankers know what we know. And we know these houses belong to our RMBS whether we did everything according to your outmoded rules or not. They belong to us. Get used to it. It’s hard enough to have to explain to some turbaned oil sheik why the 10 million dollars of the RMBS he bought are now worth half that let alone trying to explain why we might not even own the houses that backed the loans. But we want to be fair. So we paid a little overtime plus incentives for a bunch of our backoffice people in India to review the files. By golly they didn’t find a single problem except for one fellow who found over half his cases were problematic. The only good thing about that was we only had to pay him half what the others got. And then we fired him since it was obvious he was a trouble maker.
We bankers are geniuses when we bother to think about it. We managed to turn an $80,000 rathole in the ghetto of Pittsburgh, CA (and that’s 90% of it) into a $280,000 palace in just three years and then sold it to a poor Hispanic cook working at a retirement home. He makes $45,000 a year and his wife works at McDonald’s making $20,000. You should have seen the happy looks on their three kids’ faces at the housewarming. We got them into a great negam loan that only cost $650 a month for the first three years. Sure, it ballooned to $1400 but it looked like that house would be worth nearly a million by then. At least that’s what the Iranian real estate salesman said. And he was their best friend so they certainly thought he was giving an honest opinion. How could he have guessed it would auction for $55,000 three years later? Life is uncertain. And now they’re back in a two bedroom apartment with cots and a sleeper in the living room. I like to think this experience has whetted their appetite for a better condition of living now that they’ve had a first hand experience at “living the dream.” Unfortunately, the refinance mortgage they took out two years in for a half percent better rate didn’t have the “jingle keys” provision so they’re paying back the $250,000 they owe the bank week by week. But you know what? They made a deal with us and they signed the papers. We didn’t have a gun to their head. A deal’s a deal. You gotta respect the law in these matters. That’s very important for you to understand. We expect you to stand by your commitments and read the fine print.
You need to understand that we’re just middle men who go out and put deals together for our “clients.” Our clients are primarily the Sovereign Wealth Funds all sitting on piles of cash accumulating from the obscene profits being made on oil. That money has to go somewhere and it’s our job to create investment opportunities that at least appear to have a better rate of return than T-Bills. We’re just working schmucks like anyone else. Maybe paid a little better – but we earn every dollar! It’s hard working with fools on both sides of the deal. Our tongues are bloody nearly every day.
You all have the gall to want to “rein in” the investment professionals at Goldman Sachs and J.P. Morgan. Do you realize what would happen if you had your way? If our great investment bank’s operations were curtailed, the clients would just go elsewhere to find someone willing to put together a great money making deal like, for instance, buying a 75 year lease on Chicago’s parking meter operation. Suppose that deal hadn’t gone through. An hour’s parking would have remained at two bits instead of a buck. By jacking the rates, extending the hours and making the meters operate seven days a week instead of five we are doing our part in reducing traffic conjestion. And what thanks do we get? None. Shows you just how sincere these “green” people are. All they can do is belly ache about the loss of street fairs because the new meter owners demand fair compensation for the lost revenue. It’s obvious these “street fairs” are losing propositions or they’d make enough money to pay the franchise with money left over. We’re promoting social efficiency by eliminating these economically sterile activities. We have stores if the lumpenfolk want to buy things. In fact we have more “store per person” than any other country in the world – nearly 25 square feet of it. We need to generate sales in those stores so the renters can pay back the CMBS holders. Street fairs are diverting dollars to sales that do not benefit our clients and, therefore, do not benefit our country.
My suggestion is that you folks get back out there and start spending again because, face it, that’s the only task you’re really fit to perform. You are the Great American Consumer and it should make your chest swell with pride. Your consumption is a vital part of the wonderful world wealth making machine. China makes stuff and you consume it and digest it and drop it out your backsides. We have tried to keep you supplied with enough dollars so that you can do your job. But now you have reneged on your obligations. You have failed to heed your wonderful V.P. Dick Cheney’s advice to hold hands and buy an SUV. There is a price to be paid for your stubborn refusal to spend beyond your means. You are now “little people.”
So stop whining about your government catering to the banks. We fund your government. You bitch and moan at the thought of any tax increase so your government has to come to us, hat in hand, every year for a couple trillion dollars in loans. You think a government in that kind of financial condition is in any position to tell us how to run our business? Just keep in mind that the Fed is an independent organization. In fact it can’t even be audited. I advise you entertain a certain meekness when dealing with the organization that owns your government and that your uncharitable understanding of the situation puts the cart before the horse.
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Brad Friedman and Desi Doyen: Green <b>News</b> Report: November 4, 2010 <b>...</b>
IN 'GREEN NEWS EXTRA' (see links below): Jan.-to-Oct. 2010 tied for hottest in satellite record; Pakistan's emergency rations to run out in 30 days; Halliburton may be shielded from liability in BP Oil Disaster; Can SCOTUS whale ruling ...
For Fox <b>News</b>, Most Viewers Ever for a Midterm Election - NYTimes.com
Fox News, a favorite of Republicans, averaged 6.96 million viewers in prime time on Tuesday, according to ratings results from the Nielsen Company. Fox more than doubled CNN's numbers, which averaged 2.42 million viewers, and more than ...
Fox <b>News</b> On Christine O'Donnell - Mediate.com
The midterms are over, and while the GOP regained control of the House, the coronation of the Tea Party movement is still up for debate. Sure, a number of Tea Party candidates won their races, but perhaps the most visible -- Delaware ...
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Brad Friedman and Desi Doyen: Green <b>News</b> Report: November 4, 2010 <b>...</b>
IN 'GREEN NEWS EXTRA' (see links below): Jan.-to-Oct. 2010 tied for hottest in satellite record; Pakistan's emergency rations to run out in 30 days; Halliburton may be shielded from liability in BP Oil Disaster; Can SCOTUS whale ruling ...
For Fox <b>News</b>, Most Viewers Ever for a Midterm Election - NYTimes.com
Fox News, a favorite of Republicans, averaged 6.96 million viewers in prime time on Tuesday, according to ratings results from the Nielsen Company. Fox more than doubled CNN's numbers, which averaged 2.42 million viewers, and more than ...
Fox <b>News</b> On Christine O'Donnell - Mediate.com
The midterms are over, and while the GOP regained control of the House, the coronation of the Tea Party movement is still up for debate. Sure, a number of Tea Party candidates won their races, but perhaps the most visible -- Delaware ...
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Brad Friedman and Desi Doyen: Green <b>News</b> Report: November 4, 2010 <b>...</b>
IN 'GREEN NEWS EXTRA' (see links below): Jan.-to-Oct. 2010 tied for hottest in satellite record; Pakistan's emergency rations to run out in 30 days; Halliburton may be shielded from liability in BP Oil Disaster; Can SCOTUS whale ruling ...
For Fox <b>News</b>, Most Viewers Ever for a Midterm Election - NYTimes.com
Fox News, a favorite of Republicans, averaged 6.96 million viewers in prime time on Tuesday, according to ratings results from the Nielsen Company. Fox more than doubled CNN's numbers, which averaged 2.42 million viewers, and more than ...
Fox <b>News</b> On Christine O'Donnell - Mediate.com
The midterms are over, and while the GOP regained control of the House, the coronation of the Tea Party movement is still up for debate. Sure, a number of Tea Party candidates won their races, but perhaps the most visible -- Delaware ...
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Brad Friedman and Desi Doyen: Green <b>News</b> Report: November 4, 2010 <b>...</b>
IN 'GREEN NEWS EXTRA' (see links below): Jan.-to-Oct. 2010 tied for hottest in satellite record; Pakistan's emergency rations to run out in 30 days; Halliburton may be shielded from liability in BP Oil Disaster; Can SCOTUS whale ruling ...
For Fox <b>News</b>, Most Viewers Ever for a Midterm Election - NYTimes.com
Fox News, a favorite of Republicans, averaged 6.96 million viewers in prime time on Tuesday, according to ratings results from the Nielsen Company. Fox more than doubled CNN's numbers, which averaged 2.42 million viewers, and more than ...
Fox <b>News</b> On Christine O'Donnell - Mediate.com
The midterms are over, and while the GOP regained control of the House, the coronation of the Tea Party movement is still up for debate. Sure, a number of Tea Party candidates won their races, but perhaps the most visible -- Delaware ...
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Brad Friedman and Desi Doyen: Green <b>News</b> Report: November 4, 2010 <b>...</b>
IN 'GREEN NEWS EXTRA' (see links below): Jan.-to-Oct. 2010 tied for hottest in satellite record; Pakistan's emergency rations to run out in 30 days; Halliburton may be shielded from liability in BP Oil Disaster; Can SCOTUS whale ruling ...
For Fox <b>News</b>, Most Viewers Ever for a Midterm Election - NYTimes.com
Fox News, a favorite of Republicans, averaged 6.96 million viewers in prime time on Tuesday, according to ratings results from the Nielsen Company. Fox more than doubled CNN's numbers, which averaged 2.42 million viewers, and more than ...
Fox <b>News</b> On Christine O'Donnell - Mediate.com
The midterms are over, and while the GOP regained control of the House, the coronation of the Tea Party movement is still up for debate. Sure, a number of Tea Party candidates won their races, but perhaps the most visible -- Delaware ...
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When faced with losing your home, you will want to thoroughly understand the foreclosure process and do everything you can to prevent it from happening. If you are to fight the foreclosure, it is imperative that you first understand the process. Since the foreclosure process varies from state to state, all homeowners need to understand how the process works as well as what the timeline is. Once you see how it all works, you will be able to make a better decision on stopping the foreclosure.
Let's look at the timeline first. The foreclosure timeline begins when the borrower misses that first mortgage payment by only a day. This doesn't bring any penalties yet. The borrower is given another 16 to 30 days to make the payment. Now a late charge will be incurred along with a phone call from the lender wanting to know why the payment was missed.
When the missed payment is 16 days late, an additional debt known as a mortgage late fee will be added to your payment amount. Once it hits 30 days late, you, as the borrower, will be considered in default. This is a fancy way of saying that the mortgage payment is really late now and if it gets too much later, the lender will take away your home. Some lenders will allow the late payment to be caught up in increments. Other lenders will simply demand that payment is made in full immediately.
Heading into Troubled Waters; 45 to 60 days late
Somewhere between 1 and ½ to 2 months a "breach" letter is sent to you explaining the mortgage terms, and giving you 30 additional days to resolve this. During this period, expect to hear from your mortgage collector on a daily basis. If you are offered some payment options during this period, it would serve you well to listen and try to work things out with your lender.
60 to 90 Days
During this time will receive a notice of default, along with having collection fees added on top of the late fees. It is also during this time that the loan will be handed over to the lender's legal department. Someone from there will send documents to a local attorney to begin the foreclosure proceedings. If you are still not trying to resolve this by your 5th month, the Notice of Trustee Sale will be filed and your home will be scheduled to be sold at either a foreclosure auction or foreclosure sale.
As foreclosure proceedings are considered a legal event, there are guidelines that must be met during the process. Once the case has been taken over by the local attorney, public advertising of the impending foreclosure sale must appear in the local papers. You, as the homeowner, certainly have every right to stop the process leading to foreclosure, as most states have laws pertaining to this.
During this last part of the foreclosure process, there are some states that will still give you a chance to buy the property if you are able. However, sadly, most homeowners will be made to leave their homes by the local sheriff's department if they have been unable to catch up their payments by this time.
There are solutions to your financial problems if you don't wait to the very last minute. Many people hope that their issues will work themselves out when in fact, all waiting does it prolongs the inevitable. Call your lender and work things out as soon as you know you've run into financial problems and they will be more willing to help you.
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