Crisis of Foreclosure: Racial Injustice?

Foreclosures

CNN recently reported that the plan of foreclosure prevention by President Obama, which was meant to keep tons of American homes through offering incentives to banks to refinance their mortgages, does not work. Actually, only 6% out of every eligible household has gotten any assistance.

This failure’s impact is a catastrophe since tons of homeowners are continuing to fall into foreclosure. Colored people are the hardest-hit by this crisis, as they face disproportionate foreclosure rates and higher unemployment levels. This recession has further deepened the divide of race.
Because of this, it seems strange to others that the economy of the globe is allegedly back to normal. If we continue to fail in addressing the hardships of people who work and turn a blind eye to racial inequity structures that aided us in going into recession, returning to normal life will not mean much.
At the beginning of the year, I went all over the country – from Washington to Rhode Island, Arizona to Michigan – researching about the recession and race. I met a woman near Detroit who had lost her teacher’s assistant job recently and somehow had to support four children on her own.

She got laid off last year due to cuts in the state budget. Her benefit of unemployment ran out, so she asked the government for some cash assistance. One month after that, her checks of welfare ran out, too, and she no longer had any income whatsoever.
She ended up falling behind on payments of mortgage for their house. Now, she realized that she got sold into a subprime loan with adjustable rates. Her house was foreclosed. Without any kind of wealth to help her, she has no idea what to do.
Since colored people were saddled disproportionately with loans that were predatory, colored neighborhoods bear the hurdle of more foreclosures. Latino, Black, American-Indian and Asian families have become stripped of a lot of wealth that they carefully saved through the years. This loss impact is sure to last for several generations.
The fact that colored people are faced with higher foreclosure rates is not a coincidence. Up until the 70s, colored communities were widely left out of owning houses due to “redlining” practices of race and agreements of neighborhoods that were racially restrictive. After that, discrimination was ended when it came to lending. Then, racial exclusion and redlining became illegal and colored people slowly started to gain access to prime loans.

However, late in the 90s, Congress deregulated the industry of mortgage and Wall Street, completely opening the industry space to get over the CRA. They were the exact same anti-regulatory methods which made subprime security possible.
While the CRA became weaker and the incentives grew to sell loans that were subprime, colored neighborhoods offered fertile ground to sell faulty merchandise. Since the communities were hugely out of prime lenders due to redlining, little competition existed and the vacuum of credit produced conditions for predatory sales of loans of high-cost to colored communities.

Simply put, the crisis of the economy has been built on this country’s massive history regarding racial discrimination.