Factors Affecting The Foreclosure Crisis

2354 WordsMay 3, 201610 Pages
While it is apparently that there are tremendous wealth inequalities between the richest 1% and the rest of America, we fail to realize that the wealth disparities held within the middle and lower classes are retained and even broadened by the racial laws and regulations that surround the owning of property .Prince George’s County is majority black suburb in Maryland where many prominent , highly educated individuals live . Most of the residence are entrepreneurs, lawyers, educators, and federal employees, and “the average household income is $73,563” (Baptiste 1) , therefore it would be assumed that these individuals are economically stable . However when the 2008 recession hit and caused the foreclosure crisis , this county faced “twice…show more content…
Wealth determines many other factors of life such as health and education , therefore a decrease in wealth is harmful because it reduces a person’s lifespan and their ability to get out of their rough economic situation. Although subprime lending is the most current form of housing discrimination inheritance inequality, redlining and property taxes have historically caused separate and unequal communities between Black and Whites. While my paper will focus mainly on the disparities nationally between Whites and Blacks , this problem overwhelmingly affects the Hispanic community as well. One fundamental cause of the homeownership crisis among African American communities are inflated subprime loans, which are implemented to expand the profit margins of the housing market and to uphold segregated communities, despite the passage of the Fair Housing Act of 1968. A subprime loan is a predatory loan with high interest rates that is intended for individuals that are high risk borrowers. However “some lenders provide financial incentives to mortgage brokers who push families into loans with higher interest rates” (Mendenhall, 32) ,despite their credit score or their ability to pay back the Figure 1 depicts the extent of racial problem that each racial group believes America currently possesses loan. These yield spread premiums were predominately utilized against “African American and Latino borrowers” (Mendenhall,
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