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The group studied the effect of subprime loans on minority communities and says they are already seeing real physical signs of this financial distress: a dramatic increase in abandoned homes, the devaluation of neighboring houses, increased crime, struggling commercial centers and tax base erosion.
"It's important to realize just how much ground middle- and working-class Black Americans have lost in the subprime crisis," said Amaad Rivera, a United for a Fair Economy spokesman and co-author of the report.
Blacks are estimated to have lost between $71 billion and $92 billion in wealth as a direct result of the subprime crisis in the past eight years. Latinos are estimated to have lost between $75 and $98 billion of wealth during the same time period.
Why is this a minority problem?
The short answer is that predatory lenders disproportionately targeted them. As a result, the subprime mortgage crisis will cost minority homeowners 40 percent more wealth than white homeowners in similar circumstances.
"There's no doubt in looking at the data ... these predatory loans were targeted at racial minorities," said Austin King, a spokesman for Association of Community Organizations for Reform Now. "Even when you zero out all the other factors like income and credit scores, even then a high-income African American was still as likely to be sold a subprime loan as a low-income white person."
Data from the Home Mortgage Disclosure Act shows that about 40 percent of black subprime borrowers could have qualified for cheaper mainstream loans. But they were steered into exotic, more expensive mortgages.
"Nobody really expected (borrowers) to be able to pay at that higher level. It was a mechanism to generate refinance opportunities, and the borrowers were destined to inevitably end up in foreclosure in a downturn market," said Paul Leonard, California director for the Center for Responsible Lending.
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It's true, these are very tough times. Take the example of Beaulah Barton. She was enjoying her retirement in the quintessential adult community better known as Florida when her daughter lost her job.
Expressing the epitome of love and family support, Barton went back into the workforce full-time to pay her daughter's mortgage until she finds a job.
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Will we see more of this in the near future?
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