By Chris Levister

Remember those ads on the radio and TV that said, No credit? Bad credit! No problem! Subprime loans gave shaky borrowers a chance to buy a home and venturesome lenders the opportunity to earn astronomical returns. Unfortunately many of those borrowers and their lenders are skidding into bankruptcy.

But as the evolving subprime meltdown torpedoes the stock market and captures the national spotlight, there is an untold story.

In 2005 Black and other minority borrowers made up the fastest growing group obtaining new home mortgages. Current subprime lending woes could drive many “healthy” borrowers out of the market.

 "From the time I was a little girl I dreamed of owning my own home." In 2004 she applied for a conventional home loan with Bank of America.

With a credit rating under 620 she was denied. Still she was convinced if given a chance she would work hard, make the mortgage payments and realize what many African-Americans have long been denied - the chance to own a piece of the American Dream.

Today with the help of a subprime loan from Countrywide Mortgage Melanie owns a home valued at $465,000 in Riverside's sprawling Woodcrest community.

Records show she's never missed a payment or paid late. "They gave me an opportunity when none existed. They saved my dream."

Minority home buyers like Melanie formed the fastest growing group obtaining new home mortgages last year according to the U.S. Census Bureau.

Statistics show minority loan percentage in "high volume areas" combined was three times higher than White households in the top 20 mortgage growth metropolitan areas including the Inland Empire.  The increase for African-Americans, Hispanics and Asian loans was five times greater.

"The 2005 Minority Home Buying Surge" report released by Genworth Mortgage Insurance and Compliance Technologies agrees with the Census data.

"Despite the nationwide cooling in home buying, minorities, represented a significantly larger percentage of new purchases in 2005 than in 2004," said Kevin Schneider, president of Genworth Financial's U.S. mortgage insurance business.

Add yet another twist to the subprime lending woe. A new study of high cost or subprime mortgages unearthed a surprising fact: The loans are most prevalent among minorities with substantial incomes.

Around 70 percent of African-American and Latino borrowers with incomes between $92,000 and $152,000 took out mortgages with high interest rates in 2005 according to Jim Campen, an economics professor at University of Massachusetts and a long time analyst of mortgage lending to minorities.

For example in greater Boston nearly half of all African-American and Latino borrowers in 2005 with incomes above $152,000 used a subprime loan to buy a home.

High cost mortgages typically have interest rates at least 3 percentage points above conventional mortgages; fixed rate 30-year mortgage rates are currently around 6 percent.

The higher rates cost these borrowers an additional $4,200 to $10,000 - or more - a year than if they had a traditional, 30-year fixed mortgage, Campen said.

Linda Shear, a realtor and private consultant to southern California minority home buyers points to a systemic culture of bias in mortgage lending. "It's no secret for many many years prior to the rise of subprime lending, minorities complained bitterly about the discriminatory practices of traditional lenders." She says federal data paints a harsh picture of minority borrowers systematically rejected by mainstream banks based on lending bias or checkered credit histories, which cuts across all incomes.

Shear agrees predatory mortgage lending is one of the biggest threats to increasing minority homeownership. Still she says there are several good subprime lenders who serve a need in our society to help people who are at a somewhat higher risk receive loans.

Shear recalls a Black physician whose medical practice revenues plummeted in 2004 when the feds made steep cuts in Medicare payments. The physician refinanced his office building and expensive home with a subprime loan. Like Melanie Chawkins and thousands of other minority borrowers. His mortgages remain in good standing.

Shear says subprime woes will almost certainly trickle down to dampen the healthy rise in Black and other people of color homeownership. Last week Freddie Mac announced it will no longer buy common types of subprime mortgages. The Center for Responsible Lending, AARP, Consumer Federation of America, NAACP and the National Fair Housing Alliance publicly commended Freddie Mac for taking the action.

Recently Rev. Jesse Jackson, founder and president of Rainbow/PUSH Coalition weighed in on the subprime dilemma saying, "for years, homeownership has been the best bet most families have for improving their economic position. The disgraceful business practices that are common in the subprime market today have turned a good bet into an unacceptable gamble."

As for homeowner Melanie Chawkins who used a subprime loan to advance a fleeting dream. She believes, "In an industry still fraught with racist lending practices that reject hard working minorities who deserve a first or second chance, unfortunately in some cases it's the only gamble in town."