Bank to pay minority borrowers $2.85 million
Freddie Allen | 10/14/2013, 10:47 a.m.
The Pew Research Center found that from 2005 to 2009 Black households lost 53 percent of their wealth compared to White households that lost 16 percent of their wealth.
“The single most important aspect in determining Black wealth was equity in their homes,” Anderson said. “Most of the equity that African Americans had was bound up in their homes. The major factor determining equity was home price.”
According to the Pew Research Center, more than half of that wealth was wiped out during the housing crisis that rocked the American economy and led to the Great Recession.
The Pew report stated: “As a result of these declines, the typical black household had just $5,677 in wealth (assets minus debts) in 2009; and the typical white household had $113,149.”
Jim Carr, a housing finance and urban policy consultant and distinguished scholar at Opportunity Agenda, a nonprofit, public policy and civil rights group, said that even as the housing industry recovers, many Black families that lost their homes will not reap the benefits.
“If a person lost their home, they’re not getting their home back. That’s what compensation means,” he said. “If you lost $50,000 in equity in your home, does the settlement give you your $50,000 back? If you’re getting $2000 or $3000 back, that’s not compensation.” William Spriggs, chief economist of the AFL-CIO, said it will take Blacks more than two decades to recover from the wealth lost during the housing crisis.
“We’ve lost ground we made in 90s,” Spriggs said. Unemployment plummeted and incomes rose placing homeownership within the reach of many middle-class Black families. The housing crisis changed all of that, Spriggs stated.
“It’s a very severe setback,” he explained. “Wealth will be harder to come by, because of some policy changes that are being discussed. The path back looks a lot steeper.”
Spriggs said that despite what many people believe, this crisis was not caused by people getting loans that they were not supposed to get.
“That wasn’t true. The big problem was discrimination. [Blacks] weren’t getting the favorable terms that were supposed to get and it’s being documented now,” Spriggs explained. “Had they given [Blacks] favorable terms, we wouldn’t be having this crisis. This crisis exists because of the discrimination.”
Spriggs continued: “These loans had bombs in them. If [Blacks and Latinos] had normal loans, none of this would have happened.”