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US Blacks See ‘Financial Apartheid’ in Subprime Crisis

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Breitbart, January 27, 2008

They had small means and big hopes of owning a house. But African-Americans snared in the US mortgage crisis have seen the American dream turn into a nightmare many call “financial apartheid.”

The storm triggered by risky “subprime” loans has left many in ruins, forced out of their modest homes and furious at falling victim to financial dealings that have taken a particular toll on minority families.

“People of color are more than three times more likely to have subprime loans,” concluded the organization United for a Fair Economy in a recent report which estimated that minorities have seen between 163 billion and 278 billion dollars of their equity go up in smoke since 2000.

With its weakened economy and a large black population more used to renting, Cleveland has become a poster child of the subprime crisis in a country where some 2.1 million borrowers are behind on their mortgage payments.

City officials estimate that foreclosures have swallowed some 70,000 homes and turned entire neighborhoods into ghost towns.

The city has responded by suing lenders, accusing them of targeting black borrowers and steering them to the loans granted with few formalities and at hefty interest rates to people with poor credit histories.


“When the wave of foreclosures blighted our neighborhood, members of our community rang the alarm. Nobody did anything. Now that white suburbs are hit, the city hall discovered foreclosures,” [a Mount Pleasant resident] said.


Nikita Bailey, an activist with the non-profit Center for Responsible Lending, warned that the mortgage crisis could empty the pockets of African-Americans.

“Today the subprime market is poised to bring about the greatest drain of wealth the African-American community has ever experienced,” Bailey told AFP. “It is a financial apartheid no doubt about it.”


In the hardest-hit suburb of Cleveland, “nearly 24,000 people have lost their homes to Cleveland’s Katrina,” [Cleveland Plain Dealer columnist Phillip Morris] told AFP.


“They wrecked our American dreams, the willingness to own a home,” he said. “Even during the Great Depression we did not see the number of homes and properties abandoned like we are seeing now.”

Original article

(Posted on January 28, 2008)

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Certainly, the lenders should be blamed. Just like the nasty automobile dealers are at fault when a Black buys a Cadillac or Lincoln SUV — then can’t keep up with the payments. If the auto makers wouldn’t waste so much on advertising their vehicles, the poor Blacks wouldn’t be as likely to be duped into buying a car they damn well know they can’t afford. By the way, whatever happened to personal responsibility for one’s mistakes? Oh, sorry, I forgot! That’s strictly for us Whites.

Posted by Fed Up at 5:07 PM on January 28

The blacks throw a tantrum to get the banks to loan to the blacks.
The blacks throw a tantrum when the banks foreclose on the blacks, because they can’t pay back the loans.

In all seriousness, the only “real” victims here are the banks, losing money - yet black “victimhood” makes sure that blacks are ALWAYS the victims.

Posted by Obscuratus at 5:11 PM on January 28

So now as well as supporting blacks in the projects and with section 8 vouchers, White taxpayers are expected to provide them with $400,000 houses.

Posted by margaret at 5:12 PM on January 28

It’s all too typical of many issues today in our “culture of victimhood”. For years activists complained about the difficulty minorities had in getting financing. “Racism” was asserted as opposed to economic reality.
If sub-prime mortgages are the problem and, as the activists claim, borrowers were not fully aware of the specifics (didn’t read the fine print), where were the activists and why didn’t they take steps to educate their communities regarding this type of financing while there was time to make a difference.
Sadly, the answer is that these advocacy groups are only able to react to conditions they deem discriminatory. That’s because it’s easier than actually being proactive for the members of their “community”. They care only for their own ability to complain. This gives them the aura of righteousness.

Posted by George at 5:12 PM on January 28

You can’t win Whiteman.

If you don’t give loans to minorities that can’t afford it, you are a racist.

If you do give loans to minorities that can’t afford it, you are a racist.

Posted by Kyle at 5:18 PM on January 28

The usual story.

Blacks totally screw up one neighborhood and then move on to the next white neighborhood.

Whites are running out of places to hide.

Posted by Dennis at 5:30 PM on January 28

I am curious:

Doesn’t anyone know the percentage of blacks with bad credit ratings? I would imagine it is quite high but I have never seen the exact figure.

Posted by Dennis at 5:32 PM on January 28

“Even during the Great Depression we did not see the number of homes and properties abandoned like we are seeing now.”

No kidding. Aside from the fact that there are more homes PERIOD than there were in the 30’s.

“In the hardest-hit suburb of Cleveland, “nearly 24,000 people have lost their homes to Cleveland’s Katrina,”

And the death toll? None? Wah.

Posted by Guillaume at 5:34 PM on January 28

People who are hit by the subprime “crisis” have only themselves to blame. Unless they are a victim of actual fraud (unlikely), everything they needed to know about the terms of the mortgage was on paper in black and white. They just needed to READ the terms of the agreement before signing it.

But I guess that’s a lot to ask of black consumers.

Posted by Kevin at 5:39 PM on January 28

This is the latest trend in the U.S. - using the word ‘apartheid’ instead of segregation. Of course, they are too dumb to realize that apartheid is merely the Afrikaans word for segregation. I guess to the ignorant in sounds so much more evil.

I have also noticed anti-racists referring to interment camps as concentration camps (especially referring to those used for Japanese-American in WWII and American Indians in the 1800s). No doubt to make a parallel between the U.S. Third Reich. They were internment camps and were called such by the U.S. government so there is no need to refer to them as concentration camps. The left and their languages games only fool the gullible. They are probably the same fools who think Hogan’s Heroes is set in a concentration camp.

Posted by Civilized Neighbor at 5:55 PM on January 28

If you get a variable loan the interest rate can change.If it goes up your payment will go up.I don’t believe that the loaning institutions have failed to tell these blacks about this.They can’t deny blacks a loan because of the law and when blacks can’t make their morgage they bcome victims.

Posted by THE MAN at 6:09 PM on January 28

When blacks are not complaining about Whitey not lending to then to buy a house because of racism, they complain that Whitey is lending to them so they will default on their loans.What ever happens, it is always the fault of Whitey.

Posted by Peejay in Frisco at 6:16 PM on January 28

When banks don’t loan money to blacks because of their notoriously bad credit- - its racissss! When banks are then FORCED to loan money to them despite their bad credit and they foreclose- - its racissss! Like i’ve said before, blacks have got the “catch-22” game down to an art. Any way you go, Its ALWAYS Whiteys fault- - never theirs!!

Posted by Tom S at 6:19 PM on January 28

As I’ve said before:

If you don’t give low-income, high-risk African-Americans a loan, you are a racist.

If you give low-income, high-risk African-Americans a loan, you are a racist.

Now do you understand?

Posted by at 6:24 PM on January 28

A large number of these sub-prime loans were negotiated by African-American employees of the lending organizations. In addition, a good number of the organizations distributing sub-prime loans were Minority managed, and often set up using government affirmative action grants.

Posted by at 6:29 PM on January 28

So because of the “American Dream”, owning a home is a fundamental “right”, detached from income, credit history or ability to actually make mortgage payments and taking into consideration an applicant’s credit score while reviewing a loan application constitutes “apartheid”?

So basically this is one of those “tired huddled masses”/”nation of immigrants” situations, where some outrageous “right” (eg the right of any person in the world to come to the USA and demand citizenship) is made up out of thin air simply by repeating it over and over and over and over…..

Posted by at 6:47 PM on January 28

I wouldn’t know about “poor” credit history: I get up at 4 am and work 3 jobs (2 are part-time). I have good credit and pay 4.8% interest on my loan. I, too, have modest means, and I live in an older modest house, in an incredibly modest neighborhood. In fact, everything about me is modest, but I am solvent.

Posted by at 6:50 PM on January 28

The people who arm twisted the lending institutions to make loans to people who could not afford a house because not making the loans was “racist” and “discrimination” are silent.

Having provoked the crisis by using legal threats and prosecution threats against bank who “discriminated” they seem to have developed amnesia as to were the problem started.

I wonder if they think that “discriminating” against people who could not afford house loans is as damaging as they claimed.

Posted by Bruce at 7:27 PM on January 28

I see “financial affirmative action” here.

Most of this article has a whiney tone, and it complains about how all these poor blacks were “tricked” into these s/p mortgages. They would have never been available if not for our affirmative action junkie Federal government making them, most notably using the Community Reinvestment Act of 1977.

Posted by St. Louis CofCC Blogmeister at 8:14 PM on January 28

Just say no. I received letters with these come ons in the mail. I threw them out. I knew that if I had finacial problems, I could not repay. With a Bush in the white house, you know the average guy will be screwed.
Here is the lesson for everyone. If you want to make a fortune in investments, learn to say the word, “No.” If the offer is too good, you know something is wrong.

Posted by flyingtiger at 8:27 PM on January 28

These people put nothing down on these loans. They’ve lost nothing. The banks are racist if they don’t make the loans and racist if they do.

Posted by at 8:38 PM on January 28

“ Nikita Bailey, an activist with the non-profit Center for Responsible Lending, warned that the mortgage crisis could empty the pockets of African-Americans.

‘Today the subprime market is poised to bring about the greatest drain of wealth the African-American community has ever experienced,’ Bailey told AFP. ‘It is a financial apartheid no doubt about it.’”

Well, in that case Comrade Bailey, let the drain go unplugged!

Any form of Apartheid is inherently good, by my way of thinking. Any “unfortunate” social or financial manifestation that keeps blacks ever more distant to whites is a positive, that only imbeciles would decry. They are not our people or our countrymen, they as a group openly make great spectacles of declaring this, in their ever more openly expressed thirsts for our country’s and kinds’ destruction; when something that their greed and abject stupidity brings them into strife and disorder of the socially distancing sort, so be it and jolly good!

60 years of integrationist Marxist nonsense have brought them to this, along with the equality to prove that fools are more often than not, parted with their money. Affirmative action and Saint Martin’s dream, don’t inculcate economic sensibilities, only the façade of them.

Thus, let the Apartheid (subprime or otherwise) spread unencumbered, from sea to shining sea!

Posted by John PM at 9:11 PM on January 28

The lenders ARE, in fact to blame. But not in the way blacks claim. The lenders are guilty of engaging in “social justice” rather than making sound business decisions. They should be forced to accept the consequences. No bailout by the government.

Posted by at 9:17 PM on January 28

This whole mess was started by Jimmy Carter and then buttressed by Bill Clinton.

In 1977 Carter thought he had a chance to cement his ties to lower class voters. He and his lap-dog Congress passed the Community Reinvestment Act. During Clinton’s years, he added more teeth to the act than it previously had.

In essence, the bill “urges” banks and S & L’s to make risky loans to those who really aren’t able to qualify for any conventional mortgages.

Why would lending institutions so gernerously reach out and deal with those for whom the discipline of repaying a loan is almost unheard of? Because Carter and Clinton put the FDIC and Federal Reserve on their tails if the banks attained an unaceeptable report card for giving out high-risk loans.

My cousin is a career banker and when he told me in the early 90’s that his rock-solid institution was forced to make 100% mortgages available, I knew something was up. His hands were tied. It was either make sub-prime loans or be sucker-punched by Big Government’s sucker punches. The rest is sad, sad history.

“They wrecked our American dreams, the willingness to own a home,” one Cleveland resident said.

No, it is the individual’s industry, discipline, and resolve that make or break the opportunity to own a home.

Posted by Annoyed In Illinois at 9:18 PM on January 28

Yet another example of “whites can’t do anything right”. When blacks are denied loans they can’t repay, the banks are of course, racist. When they do get loans they can’t repay, it’s “financial apartied” or “Cleveland’s Katrina”.

Posted by at 9:42 PM on January 28

They should have read the fine print and the bottom line. Maybe blame the school system for making them functional illiterates that can’t understand a contract?

Hey, if they couldn’t have gotten the loans under stricter lending guidlines, then they would not have gotten a house anyway, so losing it now puts them where they would have been all along: renting.

Always blaming somebody else for their problems. Tsk, Tsk.

Posted by at 9:44 PM on January 28

Am I missing something here? Surely you do not take out a loan unless you are very sure that you can repay it? To not take this simple precaution says something about the borrower and it makes my opinion of the borrower’s common sense even worse when they blame the institution that gave them the loan. And to us the word Apartheid in this way is wrong, for NOT to allow the loans to black people would justify using this word. All a matter of semantics being used by propagandists I guess.

Posted by Brian Deller at 9:59 PM on January 28

Were the sub-prime lenders unscrupulous? Yes, of course.

But that’s not the only factor in considering responsibility for what could well be our economic Armageddon.

As part of their constant whining, the white liberals and black demagogues have for years decried the lack of black home ownership, complaining that the individual loan qualifications were racist against blacks. Well, eventually, the standards were lowered, and we have what we have today.

Affirmative Actiion in jobs and school qualifications, grades, tests, and a push to get more blacks into leadership roles in the military have all caused an inundation throughout the country’s institutions with the largest crop of incompetents the country has ever known. These too could go the same way as the sub-prime crisis, but, instead of falling because of a lack of money, we could well see a catastrophe because of incompetence.

I can’t think of anything about continuing the lie of equality or the push to give blacks something they can’t earn on their own that won’t get us into trouble somehow.

Posted by Robert Kelly at 10:20 PM on January 28

What part of “Adjustable Rate Mortgage” did these people fail to understand? Their rates adjusted, just as predicted prior to the signing of their contracts. And just as predictable, we will again be forced to pay for their poor choices.

Posted by Cop at 10:20 PM on January 28

Bring back “redlining.” It worked.

Posted by Glenn at 10:32 PM on January 28

Here’s a related article:

Study Finds Disparities in Mortgages by Race

“The 10 neighborhoods with the highest rates of mortgages from subprime lenders had black and Hispanic majorities, and the 10 areas with the lowest rates were mainly non-Hispanic white.”;=slogin

Posted by (•)▼(•) Nite Owl at 10:55 PM on January 28

This is just another ploy to steal more money and they are massive liars. I’ve seen them lie too many times to ever trust them again. They want to borrow and then go bankrupt and not pay back - that’s what they want. Give me the money, I’ll drive my expensive car and then go bankrupt. Same story over and over. The africans in America are stealing the land blind. Is it only a few of us who see this? Look at how many african city governments have big deficits just like our federal government. The difference between the two is this: the federal government is stealing money from the next generataion and giving a disproportionate amount to black african people to buy their votes. The big black city governments are stealing money by running deficits and giving it to themselves. Always for themselves. They are thieves and violent degenerates will enslave us unless we oppose them by any means necessary.

Posted by Elrey Jones at 11:30 PM on January 28

Gee I wonder how many lenders were forced to grant loans based on the color of the applicants skin rather than the character of the person?

Posted by pat at 11:42 PM on January 28

I’ve got a question. I’m curious as to whether the exact (or even approximate) post-reset sub-prime loan interest rates were actually specified in the original loan documents or whether the steep increases we’re now seeing were open-ended rate hikes and therefore caught many people — regardless of race — completely off-guard. Anyone?

Posted by Jack Burns at 12:31 AM on January 29

Hmmm…so let me get this right it was racist for the banks to give out loans? And if the banks would not have given out the loans we would have heard a couple years ago about how it was racist for the banks to not give out loans.

When we first started looking for a home the first thing we did was figure out what the monthly mortgage would be. A few of the houses we checked out there was no way we could have made the monthly mortgage payment, so guess what we bought a house we could make the payments on. When will people learn spend only what you can afford, I know what a novel idea, right.

Posted by Joseph at 12:47 AM on January 29

“Nikita Bailey, activist for the nonprofit Center for Responsible Lending”- What a telling name! With Nikita Kruschev as her namesake, its obvious her parents were Anti-American Marxists or totally addle-headed. They obviously raised a good Marxist!

Posted by Boethius at 1:30 AM on January 29

Cripes! Subprime loans go to the “sub” classes who can’t or won’t subscribe to the Protestant work ethic that says you work hard and save a little (enough for a down payment) and then you are considered middle class … and qualify for middle class treatment by society and lenders. Yeah, and now they want to play the role of victim!

Posted by nestor at 1:36 AM on January 29

I hate article like this.

” 2.1 million borrowers are behind on their mortgage”
“foreclosures have swallowed some 70,000 homes”
“nearly 24,000 people have lost their homes to Cleveland’s Katrina,”

This is suppose to be about Blacks loosing their homes, however in the article it seems they have added both Blacks and Whites together to inflate the numbers and make things look worse than they are. Things are bad, but they seem to be trying to skew it to make it look worse for one group.

Posted by Drifter at 6:24 AM on January 29

Correct me if I’m wrong but are these the same people that passed a law during the Clinton Administration that forced banks to give loans to otherwise unqualified individuals in the first place?

Posted by at 6:27 AM on January 29

“…hefty interest rates to people with poor credit histories.” Well, DUH!!! People who don’t fulfill their obligations to pay their bills are going to pay a higher rate because of the higher risk they have proven themselves to be. This is true whether they are black or White. That there are more blacks than Whites in this group is an indictment against blacks not the lending institutions.

”’…nearly 24,000 people have lost their homes to Cleveland’s Katrina,’ [Cleveland Plain Dealer columnist Phillip Morris] told AFP.” Hey Morris, there is a difference between a natural disaster and a self inflicted wound. It’s called thinking. Try it sometime.

“’It is a financial apartheid no doubt about it.’” Apartheid is government enforced separation between two or more different peoples. Separating yourself from others because of your own actions is not apartheid you twit.

”’…the willingness to own a home,…’” The key word here is “willingness”. Everybody has a willingness to own a home but not everyone is responsible in their own affairs to own one. But in the child-like mind of too many blacks if they want it then they should have it and someone else should give it to them and if they don’t get it then it’s racism, blah, blah, blah…

Posted by at 8:04 AM on January 29

Mortgage brokers are in the business to make money. Their only concern is closing a loan and collecting a commission. They could care less what race the people are or if the loan is an ARM that will explode in the face of the borrower in two years. A mortgage broker would write my cat a loan if they could collect a commission.

Posted by Major Tom at 9:25 AM on January 29

I see “financial affirmative action” here.

Most of this article has a whiney tone, and it complains about how all these poor blacks were “tricked” into these s/p mortgages. They would have never been available if not for our affirmative action junkie Federal government making them, most notably using the Community Reinvestment Act of 1977.

Posted by St. Louis CofCC Blogmeister

It’s worse than that. I recall reading in National Review, back in the 1990s, that blacks were suing banks in greater and greater numbers because the banks were turning them down for loans due to “racism” (as opposed to “lousy credit”).

The problem was obvious: social activists, upset with not having enough wealth, targeted the private sector instead of the (bankrupt) Federal government. Give us loans to buy our own houses, they said. We want what whites have.

So the banks were damned if they refused loans to lousy credit risks and damned now that they’ve given such loans out. What next?

Posted by kgb at 10:29 AM on January 29

I did a bit of sales work in my younger days and there was understanding that a white person would ask what something cost and a black person would only ask what are the payments.

Some Blacks are actually good with money but the percentage is small. It’s known in the sales field that if you can make the payments look good you can sell anything to a black person.

I know it’s racist to say this but many blacks are just not very good when it comes to money management. So in a way they are right and sales people do tend to take advantage of this fact.

Posted by Daniel at 10:50 AM on January 29

As the baby boomers retire in large numbers in the next 10 years, we are going to see a radical shift in the racial makeup of our state and federal government ‘leadership’.

Affirmative action started in the 70s. But the current leadership in government agencies is still mostly white.

As this changes, we should expect a radical deterioration in the quality of the decision making in government.

And its not like it isn’t bad enough already.

Posted by at 12:30 PM on January 29

We had an adjustable rate mortgage due to some business failures and knew what would happen so we worked hard to improve credit, took in renters and ate out of charity boxes (once or twice) so that we could pay our mortgage. We knew our rate was fixed for 2 years so we refinanced so that we could get a fixed rate. If these people had worked to get their credit together they could have gotten a fixed rate and kept their home!

Posted by Spartan24 at 12:32 PM on January 29

Nonprofit radical groups such as ACORN, the National Reinvestment Task Force, and the National Association of Neighborhoods pushed for lowering standards on mortgage lending under the guise of combating “redlining” or “disinvestment.” HUD, the banks, the builders, Fannie Mae, Freddie Mac, insurance companies, appraisers, Congress and a succession of presidential administrations all listened and succumbed to this egalitarian pressure. We’re reaping what we’ve been sowing for some 40 years, ever since the Housing Act of 1968, hastily passed bby Congress in the wake of rioting after the the Martin Luther King, Jr. assassination.

Black activists have the gall to accuse the major mortgage and capital players of “racism,” as if they weren’t howling the same thing before their constituencies had received loans for which ordinarily would not qualify. It’s the same logic with these Jesse Jackson types: “Heads I win, tails you lose.” And it’s costing us, as consumers and as taxpayers, a bundle.

Posted by Carl at 4:28 PM on January 29

The blacks throw a tantrum to get the banks to loan to the blacks.
The blacks throw a tantrum when the banks foreclose on the blacks, because they can’t pay back the loans.
Posted by Obscuratus at 5:11 PM on January 28

Yep. Just another example of blacks wanting — - no, DEMANDING — - special treatment due to their own incompetence! How refreshing it would be if, for once, somebody would tell these people, “NO”!

Posted by Cop at 4:30 PM on January 29

so many hit this right on the head -
the sub prime market exists to give people loans that they do not qualify for in a regular lending qualification.
So many of these loans are made via the internet or thru brokers that the underwriters have no knowledge of race of mortgage holder, so they cant be blamed with steering or profiling. IF the goverenment had not gotten involved (during the CLinton years) most of these packages would not have existed. If that were the case many of these folks would not have homes but they would have apartments and not have totally ruined credit for a default that simple math should have been able to show them was going to happen. Stated income notes allowed people of all races to fudge the amount they can really afford, by their complaining blacks are saying that they lied in greater numbers than other races did to their lenders. It never should have happened, but it isnt racial, it is simply buying within your means and not lying about stated income. I sold a home a few years ago to a couple, they were told by me, their agent, their lender and a title company assistant to not buy anything between that day and the day of escrow closing because a credit check would be run again right before closing to ensure they were at the same credit score. They went in that week and bought a $3000 flat screen TV on a credit card. Guess what? They didnt get to close and lost a great deal on a starter home… because they were idiots, not because of their race.

Posted by cartman at 5:16 PM on January 29

They literally want everything handed to them, including the keys to nice 4 bedroom house in the suburbs, whether they can afford it or not. When they aren’t given loans for them, they cry racism. When they are, but aren’t able to make the payments, they still cry racism.

Posted by at 7:21 PM on January 29

You don’t give blacks loans because of their notoriously poor credit history and financial irresponsibility and your a “racist” engaging in “credit discrimination”. You DO give them a loan, they don’t pay it back and your still a “racist”. When your dealing with blacks YOU JUST CAN’T WIN.

Posted by at 7:55 PM on January 29

KGB…What is Next?

Try Bank insolvancy. Just more Socialism by the State. Banks were forced to loan their money out knowing it would never be repaid. Now that the House of Cards has collapsed…it is time to send in the Clowns. If the Queen of Hearts is elected in November, expect more outpouring from the Federal Government. She will be a River to Her People. Please note that we are not included in that particular class.

So the Federal government will take tax money from white people to give to the banks, which are empty of money because they were forced to give all their money to the Sub-Primes.

So we have now returned to the days of slavery. White people who owned slaves had to house them at their expense. And today white people have to house them at white peoples expense. But whites don’t own blacks in this day and age. So the question is who owns blacks today? What is the name of the Plantation?

The scam on whites is a long and circular route from the white mans wallet to the black mans wallet. The scam on blacks is that they are thinking that they are ‘FREE’, yet they have been reinstitutionalized into that system of servitude. Volutarily (sp.). So who is the Free Man and who is the Slave. It looks to me that both men are slaves. They are slaves to each other and slaves to the State. Yet both think they are ‘FREE’.

The white man and the black man do not sit at the top of the pyramid. So who does? The ‘Elites’? The ‘Federales’? Slavery ‘ended’, but it never went away. Never.

Slightly OT, but I still like the idea of a windfall profits tax on credit card companies.

Posted by at 9:22 PM on January 29

Civilized Neighbor,

Before the actual concentration camps were liberated, the US government called their Japanese detention centers “concentration camps”.

Posted by at 10:54 PM on January 29

Since when is owning a home a “right?” I am getting sick and tired of all these sob story pieces from the liberal/neocon media whining about “financial apartheid,” as if blacks are the passive victims. who should NEVER be held accountable for their actions.

Whatever happened to the notion of personal responsibility?

Living within your means?

Delaying gratification?

OK, I know those questions are rhetorical, but it would be nice if blacks would stop living up to the worst stereotypes we have of them.

As long as we treat blacks like little children, they will continue to behave like them. After all, there’s little incentive for blacks to behave otherwise.

Posted by Old Victorian at 11:45 PM on January 29

This article makes me so mad. I would like nothing more than to own a modest house in a leafy suburban area, but my husband and I are busy paying off our student loans and saving a downpayment. Blacks get all sorts of diversity scholarships and if they do take out student loans they default on them at 40% rates!! Now they are out there buying houses with no money down, and whining about “losing” them when they don’t make the payments. I guarantee black-run cities will give them all sorts of handouts and incentives to buy more houses in the future - from White tax money! Meanwhile, I drive my 10 yr old compact car back to my one bedroom condo…

I’ve got a question. I’m curious as to whether the exact (or even approximate) post-reset sub-prime loan interest rates were actually specified in the original loan documents or whether the steep increases we’re now seeing were open-ended rate hikes and therefore caught many people — regardless of race — completely off-guard. Anyone?

Posted by Jack Burns at 12:31 AM on January 29

Each loan was a little different, but typically there were 3 rate change caps that were CLEARLY spelled out in the Promissory Note section of the loan documents:

1) the initial (first) adjustment cap, which says the loan rate will adjust up to a certain percentage on a certain date

2) the subsequent rate change cap; each adjustment after the first change can only be up or down by a certain amount

3) the Lifetime adjustment cap (meaning the loan cannot go up more than x% from the loan initial rate no matter how high market rates go)

There are different types of loans, but most of the people getting foreclosed upon right now had loans that had 3% maximum initial adjustment after a 2 or 3 yr period of fixed rates, then a maximum adjustment (up or down) of 2% per year on the anniversary of the loan, and a 5% rate adjustment lifetime cap no matter what happened to rates in general.

Typical example: In 2004 a loan would start at about a 5.50% rate fixed for 2 yrs. In 2006, on the anniversary of that loan, it would adjust up to 3% higher for a maximum rate 8.50%. How much the rate actually changed depends on how much the index rate changed over that two years (the index being either Prime rate or the LIBOR rate). Then, every year after that, the rate would change up or down to a maximum of 10.50% (the initial rate plus the lifetime cap of 5%). The rate could go down if the index rate was lower than the previous year. This yearly cycle would go on for the remainder of the loan. 10.50% sounds like a lot today, but historic mortgage rate averages were around 8.50%. In the Carter years, mortgages reached a peak of 18.00% - 24.00% depending on credit rating and downpayment.

Some subprime people had higher rates if their credit was particularly horrible. But, no higher than their statistical risk of default said they deserved. I never saw a 2004 initial rate higher than 8.50%, and the woman who was offered that was financing a 350k house with 37k income and terrible credit (hispanic!). I never saw a lifetime rate change cap higher than 6%.

Yes, loan documents were VERY clear how much the rate could change on the initial change date, each anniversary after that, and the lifetime rate cap. That was required by law - anyone who says it wasn’t in their papers is lying or illiterate.

And yes, the loan docs gave examples of what the payments would go up to if they hit the maximum. They also had several sections of the disclosures and loan docs that said “ADJUSTABLE RATE NOTE: PAYMENTS MAY INCREASE” in huge bold-face 36 point type. If you saw the papers these “victims” signed you would laugh out loud!!

Posted by Jill at 12:10 AM on January 30

Hi Jill

Many thanks for answering my query; that’s exactly what I was looking for… and whole lot more. I much appreciate you taking the time to lay it all out so concisely.

Kind regards,


Posted by Jack Burns at 5:07 AM on January 30

Anything over 10% is generally accepted to be usuary. (Take the time to look the word up on the net.) A lot of the lending amounts to nothing more than loan sharking and the government allows it. They even made it harder to declare bankruptcy. Capitalism only works for people like Elvis or Brittany who are born with some talent. It doesn,t work for the average worker. No matter what color. Read rich dad poor dad books and he tells you if you work more they just tax you more. Capitalism doesn,t work for the common people and never will.

Posted by at 9:44 AM on January 30

Wasn’t Allen Greenspan going on about a ‘housing bubble’ a couple of years ago? I do believe they’ve managed to burst it.

Posted by at 12:11 PM on January 30

Blacks seem to use — -without irony — -emotionally-loaded buzzwords to describe ordinary, everyday events. A public investigation of Clarence Thomas’ past was an “electronic lynching.” Financial downturns in risky, fringe-area loans is “apartheid.” These people are beyond shame.

Posted by at 12:47 PM on January 30

My wife and I scrimp and save just so these dopes can ask for a taxpayer-funded bailout of the mess they got themselves into. Capitalism works for me; I have more invested than I own in chattels or real-estate.

As for more than 10% being considered usury, this varies by state law, so in fact the term “usury” is clearly defined. When you borrow money, the interest is the price you pay so the lender will absorb the risk you will be unable to pay off the loan.

If you don’t like it, rent an apartment, or spend less on malt liquor and fancy wheel rims.

Posted by Michael C. Scott at 3:53 PM on January 30

“Cleveland’s Katrina”????? That was too funny — I split my gut laughing. But Bruce has it right, many of these same people who are screaming how foreclosures were racist were the same ones screaming that requiring a decent credit history to get a mortgage was racist. Oh,I get it — we simply give a chosen group whatever it’s members want and the rest of us pick up the bill when they can’t.

Posted by at 1:28 AM on January 31

Credit cards if you read the fine print can charge up to 36.6%. I,d say thats more than usuary. If it works for you thats all you care about. Can,t we get a cooperative system that works for everybody? France got close and some of the other european countries. I read that in europe if you go to school for something theres a job waitig for you and thats your career. In america you can go to school for something then get out and have to deal with affirmative action and all kinds of political stuff. You can go to school for something but if the interviewer doesnt like you or you don,t fit in with the diverse quota system you,re toast. Let the computers hire you, if you have the grades you are in otherwise going to school and passing is just a waste of time. I know.

Posted by at 11:19 PM on February 3

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