Foreclosure Moratorium Needed Now, Say Civil Rights Groups
Feature Story by Tyler Lewis - 4/11/2007
A moratorium on the subprime loan foreclosures sweeping the nation is "urgent", according to a number of civil rights groups.
National civil rights groups, including the Leadership Conference on Civil Rights (LCCR), the NAACP, the National Fair Housing Alliance (NFHA), the National Council of La Raza, and the Center for Responsible Lending (CRL), called for the moratorium on April 4 citing the impact foreclosures will have on Black and Latinos, who make up a disproportionate number of subprime borrowers.
"We must squarely address the disproportionate impact on African-American and Latino communities of this predatory lending practice," said LCCR President and CEO Wade Henderson. "For years, subprime lenders have targeted communities of color and aggressively marketed these dangerous and abusive loans. As a result, people in communities of color have lost billions of dollars in home equity, and today they are losing their homes on a massive scale."
Civil rights groups say that the lending industry should institute a six-month moratorium on subprime foreclosures and work with borrowers to put them into affordable loans that will allow them to keep their houses.
"Homeowners saddled with defective loans need relief," said CRL President Mike Calhoun. "Those responsible for these mortgages have a duty to fix the broken product they sold just like anyone else. The industry must work quickly."
Hilary O. Shelton, director of the NAACP Washington Bureau, said that "without intervention, subprime foreclosures will impose the greatest drain on African-American and Latino wealth ever experienced in this country."
Subprime loans were originally created to help people who would otherwise not be able to buy a home. African-American (52 percent) and Latino (40 percent) borrowers are disproportionately represented in the subprime market.
Groups like CRL and NFHA have said that predatory lending practices often encourage these groups to take out unaffordable loans – so-called hybrid adjustable-rate mortgages – that have a fixed rate for the first two or three years but then dramatically increase every six months.
A December 2006 CRL report found that the foreclosure crisis would hit minorities particularly hard, affecting 8 percent of Latino families and 10 percent of African American borrowers compared to just 4 percent of white borrowers.
"Wall Street must also take responsibility for securitizing these dangerous loans especially after scholarly reports, consumer advocates and civil rights groups warned about the lack of suitability and the harm of these exotic loans," said NFHA President and CEO Shanna L. Smith.
