The NAACP has filed class-action lawsuits against HSBC and Wells Fargo for targeting blacks with sub-prime mortgage loans. The records of the banks are private, and they haven't been released yet, so I'm not clear on how strong the case is against those two banks in particular. But what's clear is that black folks were three times as likely as whites to end up with sub-prime mortage loans ( overall, more sub-prime loans were given to whites). As Melvin L. Oliver and Thomas M. Shapiro wrote for TAP, even black folks with good credit scores and who qualified for conventional mortgages were steered toward sub-prime loans because of the greater potential for profit on the part of the lenders. The loss of wealth in the black and Latino communities because of the sub-prime crisis is catastrophic, Oliver and Shapiro cite one estimate of the loss at between $72 billion and $93 billion. This would be devastating for anyone, but it particularly hurts blacks and Latinos because they're more likely to be dependent on their home equity as a financial resource.
What that means is that families that would have been able to say, pay for college four years ago won't be able to now. Because one in ten black homeowners has been affected by foreclosure, the potential for upward mobility among many black families will have been stopped in its tracks. We're already beginning to see the gap between the rate at black and white college students who graduate within six years expand. For example, in Maryland public universities, the gap has already expanded to 25 percent from 15 percent three years ago.
If these banks deliberately steered black homeowners toward sub-prime mortgages, then they should have to answer for it. Because everyone else already is.
-- A. Serwer
