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Following Senator Trent Lott’s expression of the belief that a segregationist presidential administration could have prevented “the problems we’ve had all these years,” our current President and his party announced a new Republican approach of openness to African Americans.
This was quickly followed by an attack on affirmative action, which took some of the shine off the party’s professed change. Now a Republican Congressman from Ohio has apparently assigned himself the task of finishing the job, of eliminating once and for all any lingering belief that his party has actually changed.
U.S. Rep. Bob Ney (R-OH) has introduced a bill in the House (HR 833) that would preempt (that is, tear up) every state and local law in the country that protects borrowers against predatory lending. At the same time, the Ney bill would weaken existing federal protections.
By predatory lending I mean the making of overpriced and abusive home loans that strip families of equity and often rob them of their houses through an array of nasty practices that often lead to repeated refinancings and foreclosures. Predatory lending is an upside-down world of lenders who fight the creation of laws that would require them to take into consideration a borrower’s ability to repay a loan. These lenders’ overpriced loans include excessive rates and fees, extra bogus products, penalties for paying a loan off early by refinancing with a better company, and clauses in the fine print that deny borrowers the right to sue once they figure out how badly they’ve been taken.
Predatory loans are concentrated in the subprime market. Subprime loans are supposed to cost a little more to compensate for borrowers' poor credit. However, according to Freddie Mac and Fannie Mae, 35 to 50 percent of subprime loans are made to borrowers who could have qualified for prime loans. And many subprime loans are, of course, not just reasonably more expensive; they’re outrageously predatory.
The federal government releases data on loans made by subprime and prime lenders. In 2001, more than one out of four, 27.8 percent, of all refinance loans received by African-American homeowners were from subprime lenders, compared to a tiny fraction, 6.3 percent, of the refinance loans received by white homeowners.
Income disparities compound the racial ones. Subprime lenders accounted for a whopping 41.7 percent of the refinance loans made to low-income African-Americans in 2001.
But the racial disparities remain regardless of income. Upper-income African-American homeowners are more likely than low-income white homeowners to receive a subprime loan when refinancing.
I've talked to scores of the victims of these loans, people whose lives have been turned upside down, people who've grown suicidal, who've been unsure for months how they can possibly carry on, and who have been hit with fresh outrages at every turn. These stories are devastating, but even worse is the spreading effect on African-American neighborhoods of houses left vacant by shark lenders. We cannot build wealth or stability if homeownership is no more secure than the whim of a predator with fine print and a toothy smile.
Congressman Ney’s bill would protect the sharks, not the victims. Ney would take us all the way back to the good old days of a few months ago when Senator Lott defined Republicans’ racial attitude. And Ney would return us to the tasteful secrecy that preceded Lott’s fit of honesty. As Eddie Roth complained in the Dayton Daily News on Feb. 20, and as several reporters have complained to me, Ney’s staff is not returning calls from the media on this topic. Ney’s bill is misleadingly titled “The Responsible Lending Act,” but he doesn’t seem eager to advertise it or to have it examined too closely.
There is a twist in the New Republicanism of Bob Ney: states’ rights have been flung to the ground and trampled by this redesigned elephant. As Roth wrote, regarding states, “the industry's strategy is, If you can't beat 'em, take the matter out of their hands and bring it to Washington, where money talks louder.”
In the old paradigm, conservatives and segregationists spoke of states’ rights as code for white supremacist policies. In the new era that we have entered, Republican radicals and their corporate masters talk of “national standards” in order to strip states of the right to regulate lending, or – for that matter – to control schools, or to cut down on air pollution, or to devise strategies of addressing crime or drugs.
It’s nice to see Republicans recognizing the potential of national policy. It’s too bad they don’t want to use it to benefit the entire nation.
Ms. Hurd has been ACORN's National President since 1990. She lives in Dorchester, Massachusetts and is a trainer at ACORN' s Leadership School. ACORN, the Association of Community Organizations for Reform Now, has over 150,000 member families organized into 700 neighborhood chapters in 51 cities across the country.
ACORN has targeted Wells Fargo as an especially egregious predatory lender. "Wells Fargo has been doing outrageous things in our neighborhoods,” said Hurd, announcing actions against the financial giant in 15 cities. “They thought they could get away with it - we are putting them on notice that they can't. We see what they are doing, and we are serious about defending our communities. Wells can expect no peace until our members are satisfied that they are ending abusive lending practices and taking steps to repair the damage already done."
For ACORN's report on Wells Fargo, go to http://www.acorn.org/campaigns/wellsfargo.
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