Racial Bias of Subprime Mortgage Lenders Accounts for 40% Difference in Losses Between Whites and People of Color
Boston—A new report says the subprime mortgage crisis will cause African-Americans to experience wealth losses of between $71 billion and $122 billion over its duration. The racial bias of subprime mortgage lenders accounts for a 40% difference in losses between whites and people of color.
Foreclosed: The State of the Dream 2008 is available online at http://www.faireconomy.org/dream. This will mark the fifth year that United for a Fair Economy (UFE) has published its State of the Dream report.
“As we approach the 79th anniversary of the birth of Martin Luther King, Jr., it’s important to realize how much ground middle- and working-class Americans have lost in the subprime crisis,” said Amaad Rivera, Program Leader for the Racial Wealth Divide team at UFE and a report co-author. “Our estimates indicate that it will cause the greatest loss of wealth for African-Americans in modern US history.”
“The dream of economic stability and opportunity for everyone living in the US, so eloquently described by Martin Luther King, Jr., is bound up with homeownership, the most significant source of wealth for most people,” said Dedrick Muhammad, Senior Organizer and Research Associate at the Institute for Policy Studies, a co-author of the report.
“As a result of cold-blooded targeting of people of color, and low-income people in general, by the subprime mortgage industry,” said Brenda Cotto-Escalera, Co-Executive Director of United for a Fair Economy (UFE) and a co-author of the report, “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.”
The report details the types of subprime loans developed and offered by the industry since 1995, presents evidence of their effect on minority and low-income communities, and outlines potential solutions.
United for a Fair Economy is a non-profit, non-partisan organization that spotlights the growing economic divide and works across races, ethnicities and classes to help shrink it.