Pushing For Homeownership Backfired

Tuesday, 6 January 2009, 8:48 | Category : Published Home Financing articles
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One of the central themes that I’ve written about extensively over the course of the past few years here at HousingWire is that the current mess isn’t the result of any one single group — there are, of course, now no less than 25 books out there that you can buy that provide some detail on these sort of claims. But the one group that has clearly been given a free hall pass, at least thus far are consumer advocacy organizations.

In June of last year, HW published commentary that shed light on just how involved many advocacy groups really were in driving the push towards greater homeownership, particularly in lower-income geographies and minority-heavy neighborhoods. I suggested then that the push towards ever-greater homeownership, particularly in minority communities, was aided and abetted in most cases by the very same groups now indignantly suing lenders for so-called “reverse redlining.”

On Monday, the Wall Street Journal caught up with this theme in a story that looks at how homes were marketed to the Hispanic community as part of the Bush administration’s vision for the “ownership society.” The story focuses on California Rep. Joe Baca, chairman of the Congressional Hispanic Caucus, but the message within is a bit broader: that many of the so-called advocacy groups now indignant about lending practices in their communities actually helped push their constituents into the muck to begin with.

Consider:

Between 2000 and 2007, as the Hispanic population increased, Hispanic homeownership grew even faster, increasing by 47%, to 6.1 million from 4.1 million, according to the U.S. Census Bureau. Over that same period, homeownership nationally grew by 8%. In 2005 alone, mortgages to Hispanics jumped by 29%, with expensive subprime mortgage loans soaring 169%, according to the Federal Financial Institutions Examination Council.

An examination of that borrowing spree by the Wall Street Journal reveals that it wasn’t simply the mortgage market at work. It was fueled by a campaign by low-income housing groups, Hispanic lawmakers, a congressional Hispanic housing initiative, mortgage lenders and brokers, who all were pushing to increase homeownership among Latinos.

A spokesperson for the Center for Responsible Lending told the Journal that “lenders were seeking out those borrowers and charging them through the roof.” Perhaps, but it was also often done hand-in-hand with community groups, and those through-the-roof fees were often charged at the hands of brokers that represented the interests of the communities they allegedly served: agents and brokers, for example, that were members of the National Association of Hispanic Real Estate Professionals. Read the Complete Paul Jackson Article >

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