The Struggle for ‘Home’

Predatory Lending. An estimated six-and-a-half million foreclosures are expected as a result of this economic disaster.

Already 10,000 people a week are losing their homes. Couple this with three-quarters of a million jobs lost in the past nine months, including 2.5 million from September through December 2008; and the picture ahead is bleak.

The current economic crisis has been fueled by the massive number of mortgage defaults instigated by banks and brokers to purposefully fail. There was so much money to be made in the fees and services of these loans, and the subsequent reselling and packaging of the inflated mortgages, that it was too easy for investors to overlook the inevitable collapse of the economics behind them. The immediate profit was so great that soon even people with inadequate means were urged to take on mortgages.

The African American and Latino communities were targeted explicitly
for this scam in what has become known as predatory lending practices,
or subprime mortgage fraud. In this scenario, a mortgage broker offers
a new home or refinancing of an existing loan without a down payment.
After a year or two of manageable monthly payments, the buyer gets hit
with an unaffordable, skyrocketing increase in the interest rate.

Since then, the number of foreclosures has been on a steady
rise, leading to today’s market implosion. Most of the values of these
houses were intentionally inflated beyond their actual worth and many
people refinanced homes based on the inflated figures. As the market
tumbled and houses returned to their original value, homeowners still
had to pay the interest on the over-inflated loan. Foreclosures
followed from there.

This was a program intentionally made to fail, and a lot of money was made in the process.