Yesterday HUD Secretary Alphonso Jackson claimed that minorities fear of banks is what led to the subprime crisis. From yesterday’sChicago Sun Times titled“HUD Sec’y: Fear of banks led to mortgage crisis”
One-third of the nation’s mortgage foreclosures probably could have
been avoided if black and Hispanic home buyers hadn’t been so afraid to
borrow from banks, U.S. Housing and Urban Development Secretary
Alphonso Jackson said today.With painful memories of the redlining that went on during the 1950’s
and `60’s, minorities fearful that they would be denied home loans
steered clear of banks, Jackson said.SNIP
Instead, they took their business to mortgage insurance companies that
are totally unregulated and mortgage brokers with some regulation, but
nowhere near as much as banks.“When we walk down to Northern Trust, Bank of America or Chase and they
say, ‘We have a five-year mortgage,’ we know that because they’re
supervised by federal regulations. But, the mortgage insurers and the
mortgage brokers would tell you anything—anything. And all of the
sudden, they’re out of the picture once they sign the loan,” Jackson
said.“We’ve got to get to the point—and a lot of times people don’t want to
talk about this — where blacks and Hispanics go to banks and stop being
afraid. … There’s always been a taint of suspicion that banks would not
make the loans. Maybe back in the ‘50’s and ‘60’s, that was true. We
know we had great redlining at that point in time. That’s not the case
today. The Truth in Lending Act, the Community Re-Investment Act — make
it clear banks have an obligation to work with low- and moderate income
people.”SNIP
Jackson offered his candid assessment of the mortgage foreclosure
epidemic after joining Mayor Daley at Tuley Park Fieldhouse, 501 E.
90th Place, site of the fourth of nine “Borrower Outreach Days”
designed to assist homeowners in danger of losing their homes.