Conference examines subprime loan crisis effects on African Americans

March 20, 2008 4:53:08 PM PDT
The credit crisis and the alarming number of foreclosures are a great concern nationally and in our area.A Chicago conference is focusing on the impact on African Americans and what is being done to help those who need it.

It's spring break at Harold Washington College, but the building is use by the city's business and civic leaders. This is the tenth annual LaSalle Street Project, a conference sponsored by Rainbow PUSH Coalition to address and remedy economic racial disparity. The state of the economy and the nation's mortgage crisis topped the concerns this year.

"We need federal intervention right now. The free market was not free and in fact was corrupted by greed. And that must change," said Rev. Jesse Jackson, Rainbow PUSH Coalition.

"My grave concern is over the next three, six, nine, 12 months, the people whose rates are going to jump significantly," said Alexi Giannoulias, Illinois State Treasurer.

Vice chairman of the Federal Deposit Insurance Corporation says the mortgage crisis is unfairly impacting homeowners of color because he says lenders gave more high cost mortgages to African Americans and Hispanic Americans when the homeowners could have qualified for lower cost mortgages.

"The Chicago metropolitan area has led the nation in subprime mortgage lending. And the efforts of the FDIC have been to press for large scale systemic modifications of the subprime mortgages," said Martin Gruenberg, Vice Chairman, FDIC.

At the press conference, a representative for the Illinois attorney general's office announced they'd issued subpoenas to Countrywide home loans and Wells Fargo questioning whether clients of color were targeted for subprime mortgages.

"Our investigation was prompted by a study conducted by the Chicago Reporter, showing that African American and Latino borrowers were more likely than white borrowers to be placed in high-cost home loans. We aim to find out the reason behind this disparity," said Veronica Spicer, Illinois Assistant Attorney General.

Business and community leaders there support a proposal by the FDIC's chairman forcing subprime lenders to renegotiate mortgages with homeowners with terms they can afford. But it's unclear whether subprime lenders are willing to make that deal.


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