The Funeral Pyre Has Been Built: Effects of Minority Mortgage Meltdown Become Clear

In his review of Escape from Detroit:The Collapse of America’s Black Metropolis at AmRen, Gregory Hood notes this:

Fear not the future; it’s only what you make of it.

Dreary as this all is, I believe it is cause for optimism. As Mr. Kersey says, “History is about to begin again.” In some of the largest cities in the country, the system is beyond salvation. This offers new opportunities for changing the debate and starting a new movement that might just save the white race—and keep the streetlights on. Detroit is hopeless—and that should give us hope.

Hope. In 90 percent Black Detroit, there is no hope. As noted in a PK column at today, acceptable public debate has been incapacitated on the subject of the real reason behind Detroit’s monumental collapse (Robert Putnam, The Detroit Corollary, And The Slamming-Shut Of The American Mind, June 10, 2012): to even broach the racial correlation to Detroit’s demise in the public sphere would allow the genie to escape from the proverbial bottle that has been sealed shut by the most effective example of bipartisanship in the history of American politics.

One of the main inspirations behind the launch of SBPDL was Steve Sailer; I’ve long hoped he would finally get around to writing the book on his concept of the Minority Mortgage Meltdown (MMM) and was upon looking at the Drudge Report today that the reality of the folly of the MMM hit. The Washington Post reports:

The Great Recession wiped out nearly two decades of Americans’ wealth, according to government data released Monday, with middle-class families bearing the brunt of the decline.

The Federal Reserve said the median net worth of families plunged by 39 percent in just three years, from $126,400 in 2007 to $77,300 in 2010. That puts Americans roughly on par with where they were in 1992.

The biggest drops occurred among middle-income Americans, whose wealth was inextricably linked to the housing market boom and bust. Meanwhile, the wealthiest families actually saw their median income rise slightly.

“It’s hard to overstate how serious the collapse in the economy was,” said Mark Zandi, chief economist for Moody’s Analytics. “We were in freefall.”

The survey, conducted every three years, painted a portrait of consumers still under significant duress: Though Americans made progress in paying off their credit cards, the median value of family debt did not change between 2007 and 2010. The percentage of families saddled with debt greater than 40 percent of their income also stayed the same. More families reported being behind on their bills.

The implosion of the housing market inflicted much of the pain. The value of Americans’ stake in their homes fell by 42 percent in those three years to just $55,000. The poorest families suffered the biggest loss of wealth from the drop in real estate prices. But middle-class Americans rely on housing for a larger part of their net worth. For some, it accounts for just over half of their assets. That means every step downward is felt more acutely.

 40 percent of their wealth is gone. Middle Americans. White people. Hard working, honest, law-abiding people who do most of the living and dying in this country; who pay the brunt of the costs (and lost opportunity costs) of real Climate Change; who commute long distances just to give their children the chance to attend school’s that are located in safe, orderly Whitopia’s; who have now seen a 40 percent drop in equity in their homes.

It was in 1988 that the Atlanta Journal Constitution would publish Bill Dedman’s first part of The Color of Money, a multi-part series that purported to show evidence of discrimination by banks in lending to the Black community.

In 2000, the U.S. Department of Housing and Urban Development published a study called Unequal Burden in Atlanta: Income and Racial Disparities in Subprime Lending, describing the Dedman’s study this way:  

a series of Pulitzer Prize winning articles about the geographic disparity in mortgage lending between black and white neighborhoods in Atlanta. The Atlanta Journal-Constitution series revealed that in 1986, Atlanta lenders originated six times more home purchase loans per owner-occupied housing unit in predominantly white as in predominantly black neighborhoods. A recent study concluded that although there had been improvements during the 1990s, disparities in lending between black and white neighborhoods continue to persist in Atlanta.

 Wait. So all The Color of Money showed was that white people actively sought home loans in greater numbers than Black people did in Atlanta? Well, yes. Somehow, this equals discrimination, even though Atlanta’s Black community was (and still is) perhaps the poorest in the nation. Banks have a responsibility to lend money (which was deposited by individuals) that will have the greatest potential of being paid back — to make money for the bank and its shareholders.

Black people always were (and always will be) a huge credit risk.

Here’s what Dedman wrote in The Color of Money:

“We’re talking about disinvestment, capital flight from the Southside,” said Sherman Golden, assistant director of the Fulton County Department of Planning and Economic Development. “When the banks disinvest, the governments also find themselves disinvesting. To accommodate the growth on the Northside, all the public funds flow north. Southside residents put money in the bank and pay taxes, but their money is spent on the Northside.”

Lower-income also affected

Although the Journal-Constitution study focused on middle-income neighborhoods, the results concern groups working to solve Atlanta’s shortage of decent housing for the working class and the poor.

“As long as they won’t lend in Cascade Heights, I don’t know how we’ll get them to lend in Cabbagetown or Ormewood

Whites receive five times as many home loans from Atlanta’s banks and savings and loans as blacks of the same income — and that gap has been widening each year, an Atlanta Journal-Constitution study of $6.2 billion in lending shows.

Race — not home value or household income — consistently determines the lending patterns of metro Atlanta’s largest financial institutions, according to the study, which examined six years of lender reports to the federal government.

Among stable neighborhoods of the same income, white neighborhoods always received the most bank loans per 1,000 single-family homes. Integrated neighborhoods always received fewer. Black neighborhoods — including the mayor’s neighborhood — always received the fewest.

 Basically what Dedman wrote here is this: Black people didn’t seek out loans, but they should get them anyway. To make matters worse, banks in Atlanta pooled money together to offer low-income people (Black people) low interest loans.

The AJC would proudly report Home loan pool: Wish come true for some blacks but critics of past bias say banks ‘not off hook’ (Amy Wallace, August 4, 1989):

Last summer, after a series of newspaper articles about racially unequal patterns in home mortgage lending, several black real estate agents and five white bankers met one morning to discuss what could be done.

The bankers, shaken by the bad publicity, were eager to reach out to the black community. But what struck Miller Johnson Jr., a broker with Citywide Realty Associates Inc., was that they had very little idea how to do it.

“They didn’t know where the Atlanta Daily World was. Now, how were they going to reach blacks without advertising in a black newspaper? I told them (it was on) Auburn Avenue, and one asked where that was,” Mr. Johnson said. The street, historically the spine of black commerce in Atlanta, was a block from where they were sitting, in the First American Bank’s Peachtree Street office.

The past year has been an education for Atlanta’s lenders. Since May 1988, when The Atlanta Journal-Constitution reported that whites received five times as many home loans from Atlanta’s banks and savings and loan associations as blacks of the same income, lenders have taken a number of steps toward better serving the black community.

Through four special lending programs, nine banks have lent nearly $45 million to more than 850 homebuyers in targeted low-and moderate-income areas. The $20 million Atlanta Mortgage Consortium (AMC), one of the largest lending pools, has hired a black-owned public relations firm. Several of Atlanta’s majority-owned banks have had their first meetings with the all-black Empire Real Estate Board and have acted on some of its recommendations. One bank sent its employees on a guided tour of the mostly black Southside and adopted a blighted neighborhood, Pittsburgh.

 Later that year, Dedman would pen an article titled Federal study finds bias in lending across nation that purported to document discrimination in lending in not just Atlanta, but all of America. It wouldn’t be until 1993 that this study was released (Dedman’s article appearing in 1988, citing an “unreleased” federal study),  and it would take two enterprising journalists from Forbes to quickly squash the already entrenched notion of “discrimination.” Peter Brimelow noted in a column at Market Watch in 2008:

I really did co-write the first one, for Forbes magazine on Jan. 4, 1993. The Federal Reserve Bank of Boston had just published a study purporting to prove definitively that mortgage lenders were discriminating against minorities, the hot cause of the day. 
But when my brilliant co-author, Leslie Spencer, asked the Boston Fed’s research director, Alicia H. Munnell, what minority default rates were, she said proudly that census tract data showed that they were equal to whites. When Leslie pointed out that this actually proved there was no discrimination, because the lenders had somehow weeded out the credit risks down to the same acceptable level, Munnell was dumbfounded and had to concede (on tape) that she did not, in fact, have definitive proof of discrimination at all. (here’s a link to the actual Forbes article, The Hidden Clue)

Flash forward to 2012: North Fulton has been paying 80% or more of the taxes to support South Fulton County (home to the Southside of Atlanta, perhaps the collection of the poorest Black people in all of America — a reflection of their innate abilities to operate in either a white or blue collar world) for scores of years; now they are on the verge of trying to secede and form their own county.

The federal government vs. real-wealth creation (home ownership)

That same U.S. Department of Housing and Urban Development study (Unequal Burden in Atlanta: Income and Racial Disparities in Subprime Lending) would report that in the 1990s, some pretty drastic measures went into effect to ensure Black people in Atlanta got a piece of the American Dream:

The importance of subprime lending to minorities and low-income Americans, which is documented in what follows, demonstrates how important it is to these communities that subprime lending not include any lenders engaging in predatory practices.

1.    From 1993 to 1998, the number of subprime refinance loans originated in Atlanta increased by over 500 percent. The number of refinance mortgages reported under HMDA by lenders specializing in subprime lending in the Atlanta metropolitan area increased from 1,864 loans in 1993 to 11,408 in 1998.

2.    Subprime loans are three times more likely in low-income neighborhoods in Atlanta than in upper-income neighborhoods. In low-income neighborhoods, subprime loans accounted for 21 percent of all refinance loans originated during 1998 – compared with only 11 percent in moderate-income neighborhoods and just 6 percent in upper-income neighborhoods.6 In the poorest communities, where median family income is 50 percent or less of the area median income, subprime refinances accounted for 43 percent of all refinance loans.

3.    Subprime loans are almost five times more likely in black neighborhoods in Atlanta than in white neighborhoods. In predominantly black neighborhoods in Atlanta, subprime lending accounted for 33 percent of home refinance loans originated during 1998 – compared with only 7 percent in predominantly white neighborhoods.

4.    Homeowners in moderate-income black neighborhoods in Atlanta are almost twice as likely as homeowners in low-income white neighborhoods to have subprime loans.    In 1998, only 9 percent of homeowners in moderate- income white neighborhoods have subprime refinance loans while 27 percent of homeowners in moderate-income black neighborhoods have subprime loans, which is almost double the 14 percent of homeowners in low-income white neighborhoods who have subprime loans.

In addition, a recent study by Abt Associates of foreclosures in Atlanta found that foreclosures of mortgages originated by subprime lenders have substantially increased since 1996 — while the overall volume of foreclosures in Atlanta declined by 7 percent between 1996 and 1999, the volume of foreclosures started by subprime lenders grew by 232 percent.8 As noted earlier, this increase in foreclosures in the subprime market occurred amidst a trend of rapidly increasing subprime lending.

What does all this mean? It means that Bill Dedman’s reporting helped usher in the Minority Mortgage Meltdown, because no one bothered to challenge him. The nobility of the Black person who wasn’t even seeking a home loan was far superior to the bank or S&L which wasn’t even aware it needed to lend to this borrower.

Now, more than 50 percent of the mortgages in metro Atlanta are underwater. The AJC reported today (Home sales up as prices plummet: Market reels from foreclosures, but volume may help housing in the end, Christopher Quinn):

For the fifth year in a row, metro Atlanta home prices are down — way down, according The Atlanta Journal-Constitution’s yearly analysis of home prices and sales. 

The median sale price dropped nearly 15 percent across the region in 2011, to $115,000 from $135,000, the data shows. By a separate measure, Atlanta’s price index has now dropped almost 40 percent from its peak, to the same level it was in 1996.

And in a further sign of the region’s dysfunctional housing market, the price drop came even as overall home sales rose sharply in 2011, the most recent full year of data, and inventory fell.

Prices typically rise with stronger sales. But metro Atlanta’s prices are being pushed lower in part because foreclosures and low-end homes dominate sales, accounting for about half of all transactions in some areas.

And as the percentage of Black people living in metro Atlanta counties rises, the market will see even greater drops in home values, eventually rivaling Detroit. Just look to Clayton and DeKalb County for a glimpse of this future.

The Funeral Pyre has been assembled for what we have dubbed Black-Run America (BRA): fittingly, it rests in a city that General William T. Sherman once burned to the ground.

One can only guess what the net worth of your average metro Atlanta white family has plummeted to over the past three years as Black people flock to live in The Black Mecca, attracted by minority contracting positions mandated by both Fulton County and the City of Atlanta (not to mention Hartsfield International Airport)?

White America owes Black America nothing. Nothing.

Policies enacted by the federal government and mandated for compliance by big mortgage lenders (lowering income restrictions, down payments, and credit-worthiness for a home loan)  to ensure that  Black – and other minority – home buyers got a taste of the American Dream has ended in what Sailer calls the Minority Mortgage Meltdown.

That bipartisan refusal to talk about race is about to end.



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