Affluent Black County Mired In Mortgage Mess

[BluPhire]

Originally Posted by DrPhil

Discriminatory lending practices that disproportionately impact racial and ethnic minorities, including those of upper socioeconomic status, has been observed, discussed, and studied for over a generation. Therefore, it is no shock that racial and ethnic minorities, including the higher social class, are disproportionately represented in the housing crunch. That doesn't mean that the majority of instances in this context are a result of discriminatory practices.

With that said, I wonder what the larger outcome is going to be with this housing crunch.

I agree and I always shake my head at those of the upper socioeconomic because they should know better (I only say that because of the mentality of many upper socio, other times they are upper by salary and not upper by wealth so do we really consider them upper?). There definitely needs to be more education in lending.

[DrPhil]

Originally Posted by BluPhire

(I only say that because of the mentality of many upper socio, other times they are upper by salary and not upper by wealth so do we really consider them upper?).

Technically, no.

Socioeconomic status and social class rankings are based on qualitative economic distinctions of the source of the income rather than the amount of the income.

If someone has no wealth and their income is only based on salary--meaning, if they went jobless, they'd immediately be shit out of luck--their membership in the upper class club is fleeting.

***************

Also, if someone has a salary of $150K before taxes and debts of $140K, especially with no wealth accumulation, their debt-income ratio is comparable to someone with a salary of $40K. If the $40K salary is matched with a debt of $10K, the debt-income ratio can be better than the $150K person.

On that note, a lot of people with $150K salaries would not qualify for certain 30 year fixed rate mortgages based on their payment-to-income-ratio. They would have to get a different type of mortgage loan (like the dangerous ARMs) and some (more considerate) lenders would either advise them to get a cheaper house or wait until their debt has lessened.

[Boodleboy322]

Originally Posted by DrPhil

Technically, no.

They would have to get a different type of mortgage loan (like the dangerous ARMs) and some (more considerate) lenders would either advise them to get a cheaper house or wait until their debt has lessened.

Credit Score is a huge factor in the origination process and ARMs have stricter underwriting guidelines than a standard 30yr Fixed Rate Mortgage. The days of going into these "Dangerous ARMs" got shut down during the Subprime meltdown. Specifically, Hybrid Option ARMs. Indeed they were dangerous when sold to the wrong client. But they haven't been actively trading in the Market for several years now.

[DrPhil]

Originally Posted by Boodleboy322

The days of going into these "Dangerous ARMs" got shut down during the Subprime meltdown. Specifically, Hybrid Option ARMs...But they haven't been actively trading in the Market for several years now.

What do you mean? I'm not the most familiar with Hybrid Option ARMs, but the issue with ARMs hasn't gone away. In 2011, there are still homebuyers who are opting to do a 1, 2, 5, or 7 year ARM despite being warned by mortgage lenders and anyone else who knows the potential dangers.

[DeltaBetaBaby]

Originally Posted by BluPhire

I agree and I always shake my head at those of the upper socioeconomic because they should know better (I only say that because of the mentality of many upper socio, other times they are upper by salary and not upper by wealth so do we really consider them upper?). There definitely needs to be more education in lending.

I understand that there were a lot of people (not necessarily in this area, but in general) who were told things like "oh, you'll never qualify for this (good) loan, why don't you apply for this (not-so-good) loan?" Certainly, as you point out, people should be educated, but someone who is not a mortgage professional can't be expected to have the knowledge of a mortgage professional. Same with the realtors giving bad advice. Even people who had lawyers later found out that they couldn't trust them either.

I'm not absolving the buyers of blame, but certainly many, many people were complicit.

[BluPhire]

Originally Posted by DeltaBetaBaby

I understand that there were a lot of people (not necessarily in this area, but in general) who were told things like "oh, you'll never qualify for this (good) loan, why don't you apply for this (not-so-good) loan?" Certainly, as you point out, people should be educated, but someone who is not a mortgage professional can't be expected to have the knowledge of a mortgage professional. Same with the realtors giving bad advice. Even people who had lawyers later found out that they couldn't trust them either.

I'm not absolving the buyers of blame, but certainly many, many people were complicit.

Oh I agree as well with exactly what you are saying which I why I don't place blame solely on the buyer. Wasn't trying to. I just know when the housing boom started a red flag came to my mind when I first started seeing people I know for a fact would not afford the home they lived in. I wasn't trying to be arrogant but it was simple math.

[DrPhil]

DeltaBetaBaby, I agree but people need to stop putting the onus on the mortgage lenders and realtors. These people are in big business and, unless you have some networks in the industry, this is straight business and not personal for them. They have only changed practices now because the Federal government is getting more involved.

People need to do some research. There is actually a lot of information out there that potential homebuyers can access. That includes community organizations (including some BGLOs) that do economic or homebuyer seminars. It is extremely confusing but take the time to read, compare, question, challenge, research, talk to different mortgage lenders, talk to anyone you know who has bought a house, see what your options are...cry and pray to the Heavens if need be. Just don't sit around waiting for everyone else to look out for you. These are college-educated people who are considered to be among the higher SES of Blacks in America. Surely people can't boast intelligence and kickassness when it comes to careers but then expect to be spoon fed elsewhere, especially given the nature of capitalism and discriminatory lending practices.

As it pertains to racial and ethnic minorities, this can be even more difficult because the average Black and Hispanic in this country is first generation(insert education, career, salary level). That makes it even more difficult to talk to family, friends, and access networks who have bought a home and/or who know what they are talking about. Even then, still talk to people and read/watch/research. After you get the info, you can more prepared to decide whether you think what you've learned is complete bullshit.

[DeltaBetaBaby]

Originally Posted by DrPhil

Surely people can't boast intelligence and kickassness when it comes to careers but then expect to be spoon fed elsewhere, especially given the nature of capitalism and discriminatory lending practices.

I don't think we are really disagreeing here, but I want to be very clear on the fact that banks did things that were flat-out illegal.

I'm all for personal responsibility, but I'm not okay with it being used as a smokescreen that allows such behavior by corporations to go on unchecked.

[DrPhil]

Originally Posted by DeltaBetaBaby

I don't think we are really disagreeing here, but I want to be very clear on the fact that banks did things that were flat-out illegal.

We aren't. I said I agree with you and then typed about the topic. I already acknowledged what banks have done and continue to do if unsupervised.

Even in that, some of the information was out there and many people were simply choosing to be uninformed about the potential pros and cons. Again, this thread is about those who make a salary that is higher than that of the average America; and therefore people who would claim to have access to resources that the average American does not have access to.

Some people overestimated how flexible their spending should be, some people were just showing off, some people weren't researching--all within the context of bank practices and that other stuff.

***
As usual, today NPR was talking about the economic downturn and the implications for employment and housing.

[AOII Angel]

I used to practice in PG County in Lanham, MD specifically. While PG is the MOST affluent AA community, it is not affluent. As a DC suburb, prices are higher than your average community in the rest of the US. Predatory lending cannot be discounted as a factor in this topic as African Americans were a group hard hit by those perpetrating that fraud. People made bad choices, but for ten long years houses were ATMs that many times dispensed more money than people's full time jobs. If it sounds too good to be true...

[DrPhil]

Originally Posted by AOII Angel

While PG is the MOST affluent AA community, it is not affluent.

Of course the most affluent Black community would not really be affluent. LOL. Yay.

Originally Posted by AOII Angel

As a DC suburb, prices are higher than your average community in the rest of the US. Predatory lending cannot be discounted as a factor in this topic as African Americans were a group hard hit by those perpetrating that fraud. People made bad choices, but for ten long years houses were ATMs that many times dispensed more money than people's full time jobs. If it sounds too good to be true...

Exactly.

[knight_shadow]

Originally Posted by Elephant Walk

It's typical to blame any other race for "failures", instead of taking responsibility.

Umm...what?

Originally Posted by DrPhil

DeltaBetaBaby, I agree but people need to stop putting the onus on the mortgage lenders and realtors.

...

People need to do some research. There is actually a lot of information out there that potential homebuyers can access.