African-Americans disproportionately hurt by housing crisis.

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By WAYNE DAWKINS

Ann Coulter, the right-wing pundit who two years ago recommended that the New York Times be blown up, went ballistic one time too many and found herself liar, liar with her panties on fire.

Coulter wrote that black and brown homebuyers were the culprits in the subprime housing meltdown that is a hefty piece of the American economic crisis.

Coulter’s whopper was written in late September during the closing weeks of the U.S. presidential campaign. By November, the majority of voters rejected her and other right-wing pundits’ fear mongering.

Here’s a bold assertion black folk should heed: They have been disproportionately harmed by this crisis and are facing the largest de-accumulation of black wealth since World War I, then a time of sharp decline in farming.

Howard University economist William E. Spriggs broke this down to two dozen African-American newspaper columnists last month. Spriggs summarized “Subprime as a black catastrophe,” by Melvin L. Oliver and Thomas M. Shapiro that was published as a special report of The American Prospect magazine.

American borrowers of color have collectively lost an estimated $164 billion to $213 billion in housing wealth as a result of subprime loans taken during the past eight years, wrote the co-authors. Furthermore, subprime-related foreclosures harm one in 10 black borrowers. For whites, the pain visits one in 25 borrowers.

Why is the pain so acute for African-Americans and is this the 21^st century version of the aphorism–when America catches a cold, black America catches pneumonia?

Before the subprime scam, most black wealth accumulation was tied up in home equity. Home equity accounts for 63 percent of African-Americans’ average net worth, wrote Oliver and Shapiro. For whites, the authors added, home equity wealth averages 38.5 percent of total net worth because on average they have a diversified spread of assets from generations of white privilege.

Yes, even in the blossoming age of Obama that eschews acknowledgment of black victimization, such economic disparities are in plain view.

 Many blacks were steered to subprime mortgages by shady lenders who took advantage of the deregulation of their industry. Four years ago at the Republican National Convention, black delegates touted the “ownership society.” Four years later, scores of those same advocates were MIA and the appropriate replacement slogan should have been the “looting society.”

 Don’t think so? Before this housing debacle that is part of the greater economic meltdown, 75 percent of whites owned their homes compared to 47 percent of blacks, Jessica Gordon Nembhard, another Howard University economist told the black columnists.

That means African-Americans, who en mass were in the weaker position regarding home ownership, were weakened again when black customers with blemished credit were steered to crappy loans.

Richard Hayes of Acorn Housing said not all subprime loans were bad investments.

There was a lot of greed by the lenders because “some of the products,” Hayes said, “were unbelievably exotic.” That explains the Wall Street executives who told “60 Minutes” recently that they did not understand the rules they rewrote in order to make many loans.

Coulter and her ilk blamed government lenders Fannie Mae and Freddie Mac plus the Community Reinvestment Act for the housing collapse. However at worse, explained Zhu Xiao Di of the Harvard University Joint Center for Housing Studies, these institutions were minor, good-faith players. Fannie and Freddie bought only 5 percent of high-priced subprime loans; Wall Street firms purchased 60 percent of the high-priced subprime mortgages.

Meanwhile, the Community Reinvestment Act contributed 10 percent to subprime crisis said Zhu, far less than other lenders. 

Barack Hussein Obama was elected last month based on a promise that his policies can help Americans who have been suffering economically. He is still at least a month away from arriving at the office. Once there, Obama is going to pick through a lot of rubble.

Right now many lenders can help dazed homeowners – especially exploited black ones – by modifying the terms of many loans, said Hayes, Zhu and other economic experts.

No need now to be irrational, they said. Why lose $80,000 on a foreclosure when instead they can accept a cut on an individual homeowner’s $6,000 balance so the person can keep up with payments?

This story is filed under: Business