By Chris Levister
Crisis Puts Brakes on Years of Black Home Buying Progress
By every measure the Campbell's are the prefect home buying couple: educated, good incomes, conservative spenders, money in a saving account and two children in private school.
"We're just trying to stay positive. Standing in the yard of their rented Rialto home Laura a music teacher holds up a hair brush. "It's my therapeutic microphone." These days her favorite catharsis is performing a line from singer Richard Harris' 1968 epic ‘Mac Arthur Park'.
"It goes like this says Laura pointing to one of nearly a dozen foreclosure signs dotting their quiet neighborhood.
"...Some one left the cake out in the rain and I don't think that I can take it ‘cause it took too long to bake it, and I'll never have that recipe again - oh no!..."
Since 2006 the Campbell's have been nesting away a chunk of their monthly income to fulfill a family tradition of owning a piece of the American Dream.
"We're working on the third generation of homeowners in this family. It's a right of passage," laments Jonathan.
"This whole homeowner dream is a great idea if you can afford it, if you've got a down payment, if you've got the income or assets to make the monthly payments, particularly when those payments are going to go up."
That was Attorney General Jerry Brown's harsh reminder earlier this month after he filed an expanded lawsuit against Countrywide Financial. He says the nation's largest mortgage lender systemically made loans to people it knew couldn't really pay the money back.
After years of Black homeowner growth the Campbell's both African-Americans find themselves caught in a catch 22.
"We're doomed by the bad PR. There's an unfair assumption that all minorities have or will default. If you're a person of color looking for a home loan now, there's a bulls eye on you by every lender," says Laura.
According to consumer buying statistics, Black homeownership soared 40 percent during the 90s as more Blacks moved into the nation's middle and upper class.
Brown's suit against Countrywide cited not only sub-prime loans to the riskiest borrowers, but also loans made to borrowers with good credit, including complex adjustable-rate mortgages known as ARMs as well as home equity lines of credit.
Angelo Mozilo, (the lender's founder, chairman and chief executive and his associates) "crafted mortgage instruments that did great harm to individuals and the communities, and they persisted in expanding these damaging mortgages over a number of years," Brown claimed.
Study after study show that minorities are more likely than whites to get sub-prime mortgages, which are high cost loans made to people with poor credit. In its heyday earlier this decade, the sub-prime market was cheered as an avenue through which historically shut-out borrowers could get loans. That frequently meant minorities.
So long as home prices rose, the sub-prime market seemed a positive example of how to increase home ownership, but as the housing market weakened, many began to question whether the loans were fairly priced.
In 2007, the Federal Reserve released a study that found 52.8 percent of African-Americans got a high-cost home loan when they refinanced in 2006, compared to 37.7 percent of Latinos and just 25.7 percent of whites in the same year.
A similar study by the Association of Community Organizations for Reform Now, known by its acronym ACORN, found the same pattern even when the income was equal.
According to ACORN, upper income Blacks were 3.3 times and Latinos 3 times, more likely than upper-income whites to have a high-cost loan when purchasing a home.
I keep hoping one day I'll do a study where race doesn't play a part," said Liz Wolff, author of the study.
"But clearly, there is a race bias," she said.
Critics dispute such studies saying that if researchers could account for all the factors that go into pricing a mortgage, they would find that the pricing is based on risk, not race.
Still couples like the Campbell's are feeling squeezed by the fallout. They say even with the latest homeowner rescue bill signed by President Bush this week the housing correction will take precious time.
"We're throwing money away on rent. Home prices are falling, people are walking away, somebody has to fill those abandoned properties," insists Jonathan. On the brighter side he said, it just means "people like us will be in a better position financially when the clouds clear." He warns as financial desperation grows many lenders will fall to the temptation to cut corners by over promising. "You got to do your homework"
Laura Campbell picks up the ‘hairbrush microphone', "Do you remember the classic Smokey Robinson song, where the Mother cautions her son on the best way to find a girl that won't break his heart?" She takes a deep breath and breaks into song, "You Better Shop Around... ..yea, yea! You better..."
|< Prev||Next >|