Deceptive Lending Practices Hurting Families
I read this story which unfortunately is becoming more and more common everyday. Lenders are approving unqualified buyers for mortgages that they cannot afford and people who were thrilled that they could own a home are now losing it. While irresponsible lending practices can effect any group, low-income and minority populations seem to be experiencing the hardest hit during the market's downturn.
Hispanics are twice as likely as whites to end up with a subprime loan, and blacks three times as likely, according to data from the Home Mortgage Disclosure Act. Forty percent of first home loans Latinos received in 2005 were subprime, compared with 52 percent for blacks and 19 percent for whites, the data show.
While I believe that there is a special place in hell for lenders and their officers who knowingly approve loans for people they know cannot afford them, the borrower also bears responsibility for their situation. Many borrowers do not know or understand the terms of the loans they are agreeing to repay. Most people who are buying a home inspect the property and ask questions of the current owner, not many ask any questions about the loan they will be responsible for paying for the next 30+ years. From the above referenced article: "Zapata admits he had been in a hurry to sign and glossed over key details in his contract."
