Report Calls Subprime Lending Ruthless, Racist
US mortgage lenders targeted minorities and people with low incomes in recent years as the "best candidates" for subprime home loans, with devastating economic consequences, a report claimed Tuesday.
The report by United for a Fair Economy (UFE) advocacy group said subprime mortgages, home loans issued to Americans with scant finances, were "ruthlessly hawked" and that a "solid majority of subprime loan recipients were people of color."
Hundreds of thousands of families lost their homes to foreclosure last year after failing to keep up with mortgage payments, a hefty chunk of which were subprime loans, amid a national housing downturn that shows no sign of easing.
UFE researchers said Detroit, Michigan has been hit by more foreclosure filings than any other city in the one hundred largest US metropolitan areas, and that it ranks third among cities with the largest black populations.
The report's authors said many blacks and poor Americans were deliberately targeted by lenders marketing a range of money-making home loans that were sometimes confusing for borrowers to understand. Some lenders...steered customers into taking out subprime loans when they could have qualified for better terms, the UFE said.
The report estimated the total loss of wealth "for people of color" including Latinos to be between 163 and 278 billion dollars for subprime loans taken out during the past eight years.
"Communities across the nation are being torn apart. As mortgages go into foreclosure, people move out, houses are boarded up, crime and fires increase, neighboring properties are devalued, and the tax base erodes," Brenda Cotto-Escalera, one of the report's co-authors, said.