Bamboozled by financial systems, Blacks struggle to recover

Filed under OPINION

Suddenly, it dawns on you that you lost your home, your life savings and your credit rating tanked not by accident, but by design of predatory lenders, vultures that circled Black communities looking for prey and you – a highly-educated, middle-class Black woman – fit the profile.

I am among those in that profile of Black women who played by the rules that were passed down for generations through our families. We graduated from college with advanced degrees; we sidestepped instant spending gratification for prudent savings and invested in real estate. We paid our bills early to keep our credit scores above 700.  But now at advanced ages, because of the subprime housing implosion instead of enjoying the fruit of our labor, our finances are in shambles and we are forced to find ways to start all over again.

Stalked, singled out
Data show that people of color and their communities were stalked, singled out by those who are now profiting over their loss by buying up properties cheap and renting them out at inflated prices. Hit hard by high unemployment, foreclosures, lack of cash and credit, African-Americans are suffering from more than an economic crisis. It is also a betrayal – a psychological meltdown and a cultural implosion resulting from being bamboozled by financial systems they thought were trustworthy.

Some like Carolyn Holbrook, 67, of Minneapolis admits she is in therapy to cope with her grieving over the townhouse she lost two years ago.  “It is more than just losing a house; it is like losing a part of yourself, like a part of you died. My home was where my children and grandchildren came.”

Dr. Avis Jones-DeWeever, executive director of the National Council of Negro Women, says, “We are looking at intentional draining of Black wealth that has set us back generations. Driven by the housing crisis, Black wealth has dropped 52 percent in four years during the recession. That is the largest loss of Black wealth since Reconstruction following the Civil War – a huge tragedy.”

Looking at the status of Black women, Dr. DeWeever analyzed federal data in the Home Mortgage Disclosure Act. “It showed that middle-to upper-income African-American women in 80 percent of the 100 cities surveyed were most likely to receive a high cost subprime loan than other groups.  Our own survey found that often Black women were given subprime loans when they could have qualified for regular, fixed rate loans,” she said.

No more ownership
Statistics, however, can’t begin to show the emotional burdens of those, such as Sylvia McDonald-Kaufman, an attorney with a master’s degree in divinity, who saw her dream of home ownership crudely snatched away. In 2004, Kaufman moved from Fairfax, Va. to Prince George’s County, Md.  She put down 50 percent on a $405,000 home in Fort Washington in order to pay off the mortgage quickly and put some money away from retirement.

Shortly after the move, she received a reduction in pay after a transfer between departments at her job at Howard University. She asked her lending institution to tack on a couple of months’ payment to the back of the loan. They did so – but then raised the mortgage $300. “That was when I learned I had a sub-prime mortgage.”

Kaufman said when she lived in Fairfax, she asked her bank if she could be 15 days late. “They cordially gave me three months of payments to tack on the end without my asking for it. So in a White, highly educated county, where I only put 10 percent down on a house, I received in excess of what I needed. But in a predominately Black county where I put 50 percent down, my mortgage payment was not only raised, but I was reported late each month to the credit bureau, which damaged my credit. Then the bank suspended the ‘tack-on,’ refused to work with me and I was pushed out of the home.”

‘Personal failure’
With savings drained from trying to meet unreasonable housing payments, credit shot, the family’s income cut, the Kaufmans now live with friends. For the first time in decades, she is now a tenant, instead of a homeowner.

“I have to admit I went through a period of grief, feelings of personal failure, because my family has always been landowners.  But I came to myself and said, ‘Enough of that.’  I have a value system based on faith in God. My outlook for the future will always be positive.”

Dr. Barbara Reynolds is a lecturer at universities and seminaries, an author of six books, and a book coach.

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