CNN has reported that 1 out of 10 African-Americans have either lost their homes or will lose their homes to foreclosure. Should we wonder why? If you consider how African-Americans even purchase automobiles, it’s all suspect.
Due to a poor credit rating, it should be difficult for anyone to get a proper or competitive interest rate today. However, it is twice as bad for an African American to try to get a good credit rate for anything. When purchasing a vehicle, African-American patrons are more likely to be profiled as having poor credit even before starting the process with a credit application. Then, once the application has been supposedly “processed,” they are told that they would have to put down an exorbitant amount of money to get payments where they want them to be. Still, the interest rate they walked into the dealership for is not available to them. Even with those African-Americans who have stellar credit ratings, the credit lender more than likely will use terms to describe the applicant as: “Overextended or Unable to Verify/Confirm income. Why would anyone think differently about purchasing a home?
When seeking a home, African-Americans hear that the interest rate is “fabulous” and that it’s a great time to buy. It would be a great time to buy if, in fact, you know what you are getting yourself into. No money down is usually the wonderful eye-catcher for anyone. But for many African-Americans, they do not know about the appraisal process of a home, title search or the formula that determines whether they actually qualify to own the home that the bank is about to put them in. One of the main problems with African-Americans accepting the terms of a loan is that they don’t have anyone qualified to help them look over the forms. The only thing they think about is getting into the house and that they can afford the payments. Even if somebody has to work three jobs, they are determined to get that house. But, if someone really explained the difference of an ARM and a Fixed Mortgage was, chances are, African-Americans would still choose the ARM. For those of us not familiar with the ARM, it is Adjustable Rate Mortgage. An Adjustable Rate Mortgage (ARM) offers home buyers lower initial interest rates, but the lower rates are not guaranteed for the length of the loan. Many people choose the ARM when they want to qualify for a larger loan. The problem with the ARM is that if the borrower does not convert that ARM, by the due date, to a fixed rate loan (no changes in the interest rate – as the interest rate remains the same throughout the length of the loan), the interest rate can balloon to whatever rate the lender sets it to be. This ballooned interest rate would include any fees assessed by the bank. The bottom line is: What type of loans were African-Americans signing for? If they knew they were signing for an ARM loan, were they informed of the ramifications of the loan? Were African-Americans tricked into signing for the loan when they thought they were signing for a FIXED loan?
African-Americans need to stop saying that they are leaving their possible foreclosure eviction in the lord’s hands. Maybe it wasn’t the lord who got them into a house that they couldn’t eventually afford. It could have been sheer stupidity that put them into the house. However, the banks may have been laughing all the way back to the bank knowing that African Americans and their failed home ownership would be their bread and butter. Would there be any way to decide the amount of ARM loans as opposed to the FIXED loans? It would be an interesting finding. I guess it was a good thing for President Obama to bail out the banks. According to this, the problem could have been worse. When at first, we saw Bank of America put a halt to foreclosures, they quickly canceled it. Was Bank of America the main lender that preyed on not only African-Americans – but any uneducated borrowers who wanted to buy a home? I think they should be forced to put all their papers on the table.