The heat is now on lenders as foreclosures rise and questions arise even faster. Friday’s “Borrowers Sue Subprime Lender, allege race bias” reports a suit against Countrywide. But the real news to me is the data behind the suit.
James Campen, a mortgage analyst, has very damning data about the loan industry. Based on 2005 lending data, he concludes that:
“70 percent of African-Americans and Latino borrowers with incomes between $92,000 and $152,000 bought homes with subprime mortgages in Greater Boston, compared with just 16 percent of whites.”
Holy Cow! This is so unlike the example of the couple described on July 12th, who earned $32,000 yet borrowed $529,000. Mr. Campen’s info says nearly three-quarters of all African-Americans or Latinos in a very good income bracket were considered bad risks for a loan. These are middle-class people, probably a lot like my buyers. Yet an astounding number of them have been put into sub-prime loans, where they pay more to borrow money.
My heart has resisted believing that the foreclosure problem was created by masses of people getting greedy and stupid on the same day. I have also resisted the idea that lenders are followers of Voldemort. However, I think I just saw a Dark Mark somewhere over a nearby lender...
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