Guest post by Jim Dickerson, Founder and Chair of Manna, Inc.
On Monday, July 8th, the Washington Post published a story by Ylan Q. Mui entitled, “For Black Americans, Financial Damage from Subprime Implosion is Likely to Last.” What the article did not say explicitly, but implied, was that a crime was committed against Mrs. Ida Mae Whitley and her family and that of many thousands of other minority and lower/modest income borrowers like her by unscrupulous, predatory lenders, brokers and others on Wall Street who, evidently legally, swindled Ms. Whitley out of the equity in her home and good credit—her one ticket out of low income/wealth status. They also are responsible for targeting and wiping out 50% of black home equity and wealth in this country. All these lending and real estate predator/crooks need to do is file for bankruptcy, as Ms. Whitley’s lender did, walk away and start a new company to find new ways to legally beat more vulnerable people and groups like Ms. Whitley and future generations out of their money. These crooks names were not even published in the article! We publish sexual predators’ names, why not financial, real estate and lending predators’ names living in our midst and preying on the vulnerable?
Rather, what we do is blame the victims, which is occurring now by policymakers, pundits, lenders and many in the public. How convenient. And what is the solution? To punish this income group even more, by making it even harder, almost impossible, for them to get loans, repair credit and by severely limiting the equity they can build up on their new homes with very discriminatory, unjust and predatory resale restrictions that trap them in low income/low wealth status such as is the case now in DC and promoted by “enlightened” Government and private policy groups. It’s reminiscent of what Pharaoh did to the Hebrew slaves in Egypt when he forced them to, “Make bricks without straw, because they are lazy.” (Exodus 5: 7-8)
As of last week, another major mortgage lending bank officially ended their programs that support community and mortgage lending business for lower income people and the communities they live in, leaving no major mortgage lending bank operating any programs for third party originations in low and moderate income neighborhoods. The banks themselves have not opened mortgage operations or dedicated staff to these neighborhoods, and shutting down broker originations shuts down lending. Now what we have are lawsuits that force banks to pay paltry sums of money in comparison to their earnings and amounts in reserve, rather than forcing long term, institutional commitment to making good long term, low interest loans to very qualified, counseled and credit worthy buyers over years to come as the Community Reinvestment Act was designed to do, but is being ignored now. The vacuum of lending in lower income areas asks these markets to recover and build back up without any straw for the building.
We and other successful producers of affordable for sale homes know what works. In 30 years Manna has sold over 1,000 homes to lower income, very low down payment 1st time home buyers in the District of Columbia with less than a 2% foreclosure rate among them. In the last 8 years, through the worst recession and foreclosure melt down since the depression, Manna has a 0% foreclosure rate among our buyers! What works is: 1) Quality homebuyer training and counseling, 2) Down payment assistance such as DC’s highly successful HPAP program. 3) Good 30 year fixed rate mortgages and 4) Accessibility to credible ongoing counseling when problems arise. It’s not rocket science. Now is the best time for lower and modest income people to purchase a home. Prices and interest rates are at their lowest in many years. In the District, one can own a home cheaper that renting in many neighborhoods. There are many qualified, excellently counseled and trained, credit worthy lower income people eager to move up the economic ladder, improve their neighborhoods, and reverse falling home prices due to foreclosures. They are our ticket to a better more equitable society. Now is not the time to make it impossible for them to do so.