Minority Americans were the biggest losers in the subprime mortgage crisis, according to a study by an advocacy organization United for a Fair Economy.
The study concludes that African-Americans and Hispanics lost as much as $213 billion in wealth over the last eight years because of predatory lending. “This was “the most massive loss of wealth for African Americans in U.S. history,” the study said.
The study also pointed to data from the Home Mortgage Disclosure Act, which suggests that 40 percent of African-Americans given subprime housing loans could have qualified for cheaper mainstream mortgages.
Source: Electronic Urban Report 02/09/2009
At least one loan servicing company is retooling mortgages to lower the loan balance as well as the rate in order to keep borrowers in their homes. Reducing the principal on mortgages is “a last resort,” says Paul Koches, executive vice president at Ocwen Financial Corp., a West Palm Beach, Fla., loan servicer. Ocwen has reduced the amount owed on 10,884 delinquent mortgages as of Sept. 30. That’s about 25 percent of all loans modified by Ocwen this year. Dropping the principal has looked like a last resort to many lenders and servicers because they fear investor backlash. Ocwen says the writedowns are generally less than the company’s average loss of $122,000 on a foreclosure. Ocwen is the nation’s sixth-largest subprime-mortgage servicer, according to Inside Mortgage Finance, with about $45 billion of mortgages under management.
Source: The Wall Street Journal, Ruth Simon
The FBI was instrumental in 206 convictions in 2007 for real estate securities and commodities fraud.
According to an FBI report released Thursday, the 1,204 mortgage fraud cases pursued in 2007 resulted in 321 indictments and court orders for $595.9 million in restitution.
The FBI, working in conjunction with the Securities and Exchange Commission, is investigating more than 1,300 mortgage-fraud cases and conducting 19 corporate investigations linked to the subprime lending crisis.
Source: The Associated Press, Marcy Gordon 05/22/08
More than 2 million children will be directly impacted by the subprime mortgage crisis, as their families lose their homes to foreclosure, according to a new report from First Focus, a bipartisan children’s advocacy organization based in Washington, D.C.
“When families lose their homes, kids often lose their schools and access to services. Such changes not only impact their education but their physical and mental health as well,” says Bruce Lesley, president of the organization.
The report points out that parents who face foreclosure are less likely to have money available for health care or insurance, and speculates that children who are displaced will be less proficient in reading and more likely to drop out of school.
First Focus is calling for the government to make keeping children in their homes a priority in federal policy and budget decisions.
Source: First Focus (05/02/2008 .)
I JUST had a discussion about this with a friend today…. The thought of how children were being affected throughtout this mess had me up all night…Past experience, had me up all night. I moved A LOT when I was younger, and never had the feeling of “home” and security . I still find it hard to really allow myself to believe that “I WILL BE HERE FOR A WHILE” . However, for my children, I am determined to provide them with some stability to allow them to grow freely without the worries of adapting to a new surrounding or new people every other year … I am always humbled and amazed when I look at life’s bigger picture, and I’m reminded that the decisions we make impact so many people…. generations we never consider.
My prayers go up for those that are caught in this, especially for the children.
Immigrants Often Targets of Subprime Scams
Immigrants have long been victims of fraud, but the subprime mortgage boom has provided a particularly popular avenue for unethical lenders to take advantage of immigrants.
Housing counselors say they have seen predatory lending to immigrants across the U.S. Among the vulnerable groups: Latinos throughout California, Caribbean and African borrowers in the New York area, and Russian immigrants in Philadelphia.
Immigrants with limited English skills tend to be trusting, especially when people with roots in their own countries offer them what appear to be good opportunities and easy money, says Katrina Vizinau, a counselor at Community Housing Development Corp. in New York City.
Source: The Wall Street Journal, Jonathan Karp, Miriam Jordan (12/06/2007)