Today’s Winston-Salem Journal suggests there is some kind of competition among papers over who can be the most obnoxiously liberal while pretending to report news. Today’s top front-page story by Sean Mussenden and Bertrand M. Gutierrez carries the following headline and byline:
Minorities Most Affected by Foreclosures
For risky loans, a lesson in black and white
Oh. My. God. Can you believe those evil lenders are actually taking people’s houses away on account of the color of their skin rather than the contents of their
character bank accounts? I can’t believe that in 2008, lenders would actually foreclose on houses just because the owner checked “black” (or worse, “I do not wish to furnish this information”) on the original loan application.
Oh wait, that’s not what they’re doing after all, never mind. Apparently, it’s the subprime mortgages that cause foreclosures. Give a man a regular mortgage at a good rate, and he’ll never default. Give the same guy a subprime mortgage, and we will:
Mortgage lenders were more likely to sell subprime loans to Hispanics and blacks than to whites during the recent housing boom. As a result, minorities are at a greater risk than whites of losing their homes as the real-estate downturn accelerates.
Silly me, I always thought that the causal arrow between subprime mortgages and high foreclosure rates pointed the other direction, but what do I know?
No word yet from the evil industry, who must be hiding in the shadows somewhere, so here’s the obligatory sob story instead:
[Current homeowner and non-foreclosee Terri] Martin nearly lost her $71,300 home in the Waughtown area of Winston-Salem two years ago after the interest rate on her subprime mortgage jumped to 11 percent, leaving her with monthly payments of more than $800. A lawyer helped her renegotiate the terms to avoid foreclosure.
I’m sure my California readers are heartbroken to read that a monthly mortgage payment adjusted all the way up to $800 and beyond. I mean, that’s almost as much as I paid for a two-bedroom apartment while living on student loans in law school!
“If I did not have God on my side, I probably would have committed suicide,” said Martin, a school-bus driver and mental-health worker. “I was fighting to keep my house, and all my income that I did have coming in was going to pay my mortgage and to keep my other bills here going, so, yeah, it was rough.”
Rough indeed, for someone living on an income that in many parts of the country won’t qualify you to own a home at all.
So why did Ms. Martin’s non-foreclosure almost happen? You have to go to the bottom of page 16, well after the “jump,” to find out. We’ll get to Ms. Martin’s details in a minute, but first a more general announcement from the don’t-confuse-us-with-factivists:
Fair-lending advocates and civil-rights groups see parallels in the current subprime gap to other racially tinged historical lending patterns.
In past years, blacks and Hispanics have had difficulty getting mortgages, in part because some banks were reluctant to build branches or loan money in minority neighborhoods, especially poorer ones. The practice is known as “redlining.”
Right, ‘cuz everybody knows that if there’s one thing lenders like better than making as much money as they possibly can, it’s deliberately making less money by intentionally withholding services from a discrete segment of otherwise qualified borrowers. That worked great for decades, but eventually, a few lenders lost religion and started making even more money by selling subprime loans to the same people again. Now the whole industry is in the crapper, in no small part because they now own a gazillion crappy houses no one wants to buy in crappy neighborhoods no one wants to live in. All because a few lenders stopped “redlining” and started selling loans to whoever could (barely) qualify for them.
Near the bottom of p. 16, the authors take a quick breather and allow a little tidbit of token reasonableness as a special reward for the highly motivated readers who made it all the way through the lengthy article:
Mortgage-industry officials say that economics – not racism – explains the subprime gap. On average, minorities have lower credit scores, smaller incomes and fewer assets than whites, making them riskier customers in the eyes of the industry.
Wait, let’s see if I understand this. People with lower credit scores, smaller incomes and fewer assets are riskier customers to lend money to than people with high credit scores, higher incomes and more stuff? Really? Apparently so, at least “in the eyes of the industry,” even if the rest of us know better.
“Race is not a factor,” said Jay Brinkmann, the vice president for research and economics of the Mortgage Bankers Association, the leading industry group. “I’ve often wondered how you would ever get an entire industry to collude on a discriminatory practice.”
Oh, that’s easy. Just get Jesse Jackson, Al Sharpton and a few of the other usual suspects to make the allegation at least three times, and voilà, the lie becomes the truth.
Finally, finally, at the very end of the screed they explain what got Martin in trouble in the first place. Hint: it’s not race (unless, of course, you think “clueless” is a race):
Martin bought her house in the Waughtown area eight years ago. She didn’t know back then the difference between a fixed rate and an adjustable rate. She just liked the brick house on a corner lot.
In other words, it’s that evil, racist lender’s fault that for eight long years, Martin couldn’t or wouldn’t figure out on her own that fixed-rate mortgages have rates that are fixed, while adjustable rate mortgages have rates that can be … oh, I dunno …. adjusted?! Suddenly I’m having no trouble at all understanding why polls show this country on the brink of electing a President who doesn’t know that Al Qaeda In Iraq is either (1) part of al Qaeda, or (2) in Iraq. It is still “we, the people,” right?
[Full disclosure: I have never worked in the lending industry, but have worked for two companies affiliated with major lenders. No, I won't tell you who they are, and no, I sure as hell don't speak for them or any other employer, past or present.]