by
dominique DiPrima
I’m still celebrating our 2012 victory every day in ways big and small. Mostly I celebrate by giving thanks, often silently, for so many things that we’ve created and averted by re-electing the 44th President. Sometimes there are shared conversations with friends and acquaintances where we speak with gratitude of the increased possibilities for our children, and our communities. I am thankful that there will be help for the unemployed, vigilance over our food supply, policies to address global warming…And we may actually be able to avoid World War III in the Middle East to name a few. But like I always say, we also need to focus on what we want, not just what we don’t want. Thus I am putting forth my thoughts on a Black Agenda in hopes of being part of a process of seeking specific outcomes for our community.
THE BLACK AGENDA #3: HOUSING/FINANCIAL REFORM
The so-called “housing bubble,” the great recession and the credit tightening that followed The Bush Crash of ’08 hit the Black community harder than any other. The Pew Research analysis finds that from 2005 to 2009 inflation-adjusted median wealth fell 53% among Black households compared with just 16% among white households. The research also found that the erosion of wealth was largely due to plummeting house values. Wealth gaps are at record highs with the median wealth of white households now 20 times greater than that of Black households.
Since the Black community has been targeted with sub-prime loans and high cost credit, hit hard by the foreclosure crisis and battered by the recession with a level of wealth erosion that has literally set us back generations, real help for homeowners and financial reform must be part of a Black Agenda.
• Principal Reduction – Widespread principal reduction for communities that are proven to have been targeted with high percentages of sub prime loans.
• Compulsory Home Loan Modifications – Whether it’s government bailing out homeowners by purchasing massive housing inventory from banks or creating programs with real teeth to force banks to modify more home loans, something has to be done here. Again an emphasis on areas targeted by subprime loans would ensure that the African American community gets the help it needs.
• Support Expansion of Consumer Protection Agency & Financial Regulation – In his first term President Obama set the stage with the creation of a Consumer Protection Agency. Republicans have been steadily trying to dismantle and/or weaken it ever since. We must lobby and vote for just the opposite and make sure racial disparities are high on this agencies agenda. The same goes with the rest of the finance reform law that the president signed in 2010. We need to be vigilant to make sure it is made stronger and given more teeth and not watered down.
• Modification Oversight/Brokers – Prosecution of shady modification brokers is one aspect of this idea, in order to protect vulnerable homeowners particularly in areas typically targeted by high cost credit.
• Modification Oversight/Banks/Servicers – Penalties for banks that offer multiple or conflicting modification and/or temporary modification orders. Penalties for banks that do not respond in a timely manner. Requirement that small services are held to same standards as big banks in handling of individual homeowners.
• Homeowners Bill of Rights – The provisions of California’s Homeowners Bill of Rights should be strengthened and extended nationally.
• Foreclosure Credit Adjustment Act – Homeowners who came from communities targeted with sub-prime loans and homeowners who can show that they were misled or unnecessarily lured into a sub prime loan (IE they would likely have qualified for a general market loan,) should have access to a federally mandated foreclosure forgiveness program with the three credit reporting agencies. This will enable home owners to get back on their feet more quickly, as credit scores are currently used to calculate rates paid for most purchases, to qualify to rent a home and even on job applications.
• Outlaw or Severely Limit Payday Loans – If this is allowed at all it should be through a federally or state-subsidized consumer service.
• Cap Interest Rates for Payday Loans/Check Cashing Services/Car Title Loans – Make it illegal to charge more than say, 30% for any type of loan, financial service or line of credit. Stop the loan-sharking in Black & Brown communities – by law!
• Serious Penalties for Discriminatory Lending/Credit – The Justice Department needs to go after banks, car dealers and lenders who target African Americans with higher costs for loans and credit lines. It should be more expensive to perpetrate racial disparities in financial services than to simply adhere to fair practices.
I don’t claim to be a financial expert, nor is this even the tip of the iceberg in terms of what needs to be done to protect and rebuild African American wealth in this country. But it is a start. If even half of the things on this list were implemented, it would have a huge, long-lasting impact on our community immediately and for generations to come. Let’s talk about it, be about it, and make it manifest. We did it for the president…Now let’s do it for ourselves!
December 3, 2012 at 2:36 pm
Thank you for the piece Dominique, I like the fact that you focus on solutions rather than just harping on the problems. Let me give you my opinion on some of the things you’ve written.
First, I got to say, I think you took an unfair crack at Bush. Maybe it’s just because I’m a Republican, but the truth is that Bill Clinton was much more at fault for the Housing meltdown and the ensuing crash than was George W. The Community Reinvestment act that President Clinton implemented mandating the issuance of sub-prime loans to minority communities did more than anything else to create the bubble that ultimately burst under Bush. Bush did a lot of things wrong, but that was one is on Bill.
Secondly, I think that, while I don’t favor just letting the market hit bottom (that would have a hard impact on the minority and already impoverished communities) I don’t favor the type of targeted refinancing you’ve mentioned in some of your points. (Although I don’t mind the idea in cases where it can be proven that people were maneuvered into sub-prime loans who could have qualified for market levels.) They’re trying that in different ways already with HAMP and HARP and all these other things, and while they’re definitely helping some individuals,one it’s too slow for one, two it only manages to prop up a lame market, and three how can the government punish banks for doing what it told them to do in the first place with respect to targeting minorities for sub-prime loans (remember, we all like these loans when times were good and the rates were low). What we should think about doing is lowering the lending rates for everybody, which the government can do by selling treasuries to fund lower rates. That would help the whole housing market, not just helping people underwater to hold on to their homes but also helping new borrowers come into the market.
Having said that though, the most important thing in promoting home ownership is invigorating the economy. President Obama I’m afraid has not done a very good job on that score, but that is another conversation.
There some things I like about the Home Owners Bill of Rights. That banks not be allowed to foreclose on people during refinancing negotiations, for example, might be a good policy to adopt nationally.
I also share your dislike of Payday loan operations, but I don’t think it’s right or constitutional to simply ban them. You can’t ban someone’s business just because you don’t like it. People, our people certainly, need to be educated and regulations need to be smart. And one of the problems with the Dodd-Frank bill Obama has put through is that it will make more difficult the expansion of the smaller community banks that we would like to see come into the community and replace these Payday loan operations that drain the wealth of poor and working people (disproportionately minorities) and contribute nothing productive in return.
Ultimately, we need to focus on financial education. Understanding of home loans and the instruments of finance is at a low bar among Americans in general, and for us it makes us easier to take advantage of. I applaud for doing your share to pay attention to that issue, and I hope we think more and more in terms of increasing financial literacy in the community.
-JRWJ, Black Is.