Black Homeowners Hit Hardest By Foreclosure Crisis: Black In America

Housing Crisis Hits Blacks Hardest

The Foreclosure crisis has hit Blacks harder than any other group in America and it will be tough for them to regain their footing in the housing market.

Blacks' homeownership rate has plummeted nearly 6 percent to 46.2 percent since its peak in 2004. That's more than twice that of any other racial or ethnic group, as well as the nation's rate as a whole, which fell only 2.3 percent, according to U.S. Census data.

Also, among recent borrowers, nearly 8 percent of blacks have lost their homes to foreclosure, compared to 4.5 percent of whites, according to the Center for Responsible Lending. Latinos, who have also been pummeled by the mortgage meltdown, came in a close second behind blacks in foreclosure losses.

The consequences are devastating. Fewer blacks own their home now than any other racial or ethnic group and that makes it even more difficult for them to achieve financial security and attain wealth.

"We built the middle class on homeownership," said Marc Morial, head of the National Urban League, which works to empower the black community. "How many people have built their business with the equity in their home? How many people have sent their kids to college with the equity in their home?"

The loss of homeownership is more than the difference between a mortgage payment and a rent check, experts say. Purchasing property is the key to building wealth, which not only allows people to improve their quality of life and provide more for their children, but also gives them a cushion during tough economic times.

Billions and billions of dollars were stripped away from a community that already had lower levels of wealth than white communities," said Debbie Bocian, senior researcher at the Center for Responsible Lending, which estimates blacks will lose $194 billion in wealth through 2012 due to the mortgage meltdown. "It exacerbates all the socio-economic divides. The consequences are intergenerational."

Subprime lending and unemployment

During the housing boom, nearly seven in 10 Americans owned their home, a gain of 7.8 percent from a decade earlier. Black Americans saw their home ownership rates rise twice as fast to 49.1 percent, thanks in large part to easy credit.

But many of those new mortgages -- which often came with low teaser rates that would adjust upward after two or three years -- would prove unaffordable.

Overall, blacks were 150 percent more likely to get high-cost loans, according to the Center for Responsible Lending. Even when they had similar income and credit scores as white borrowers, blacks were about 30 percent more likely to be steered to expensive mortgages.

When home prices started to fall, borrowers found themselves trapped in subprime loans. And since so many people in the black community had these mortgages, they suffered disproportionately in the early stages of the mortgage meltdown.

Now, the foreclosure crisis has now expanded beyond the subprime market. More and more people with stronger credit backgrounds and more stable mortgages are defaulting on their loans because they've lost their jobs.

But here too, blacks are at a disadvantage. Black unemployment stood at 16.1 percent in September, the highest of any group and 6.5 percentage points above the national average.

"The unemployment rate in the African-American community is sky high," said Chris Herbert, research director at the Joint Center for Housing Studies at Harvard University. "That's certainly behind their high foreclosure rate."

Tight credit going forward

It's tough for anyone to get a mortgage these days. But it's even more difficult if you are black.

Nearly one-third of blacks were denied loans in 2009, compared to 13.1 percent of whites and 25.6 percent of Latinos, according to federal data released last month. The disparity can't be explained solely by differences in applicants' incomes and loan amount requested. Even when these factors are the same, blacks are still twice as likely to be turned down, a Home Mortgage Disclosure Act report found.

Nearly 49.8 percent of blacks had their refinance applications rejected, compared to 21 percent of whites and 41 percent of Latinos.

These stats mean that many blacks can't shift into lower-cost mortgages in order to save their homes, nor can they purchase their first property and boost homeownership rates.

"Credit constraints are a real concern," Herbert said. "While there is a need for tighter underwriting standards, we have to be careful not to go too far and unnecessarily limit access to credit that helps families manage their finances and build wealth."

One solution that the National Urban League is pushing is more homebuyer education programs. First-time purchasers who go through a course that teaches them about budgets, debt, home maintenance costs and risky, expensive loans are less likely to default, experts say.

"We need a fundamental commitment to housing counseling to prepare people to become homeowners," Morial said.


Sources: CNN

A Call For Rahm Emanuel's Resignation From Liberals & Conservatives!

Congresswoman Maxine Waters slams White House Chief of Staff and Blue Dogs Congressional group founder, Rahm Emanuel.






Unlikely Allies Want Rahm Out!


There are few stranger political bedfellows than Conservative anti-tax crusader Grover Norquist and Liberal blogger Jane Hamsher. But the two joined forces on Wednesday to call for the resignation of White House chief of staff Rahm Emanuel, in a letter they penned to Attorney General Eric Holder.

The duo contends that Emanuel’s service on the board of the government-sponsored mortgage company Freddie Mac from 2000 to 2001 may have given him some knowledge of alleged financial irregularities at the time.

Norquist and Hamsher say in a letter to Holder that “stonewalling by Mr. Emanuel and the White House” leave them “no redress” other than to call for his resignation. Norquist is the head of the Conservative group Americans for Tax Reform, and Hamsher is the publisher of the liberal blog Firedoglake.

In a press release, Norquist said, "Fannie Mae and Freddie Mac should be transparent. There is only one reason that Rahm Emanuel and others have fought to keep how they handled billions of dollars of other people's money hidden from public scrutiny; they are hiding corruption.

What would they have us believe they are hiding? Their unexpected business acumen?"

Said Hamsher in the same release, “This administration is pushing for an $800 billion bailout while the organization has no Inspector General or basic oversight, a bullish tactic Emanuel seems to favor while his activities with Freddie Mac are questioned by investigative reporters.”

In the letter to Holder, the two activists noted:

“A 2003 report by Freddie Mac's regulator indicated that Freddie Mac executives had informed the board of their intention to misstate the earnings to insure their own bonuses during the time Mr. Emanuel was a director. But the White House refused to comply with a Freedom of Information Act request from the Chicago Tribune for those board minutes on the grounds that Freddie Mac was a 'commercial' entity, even though it was wholly owned by the government at the time the request was made.”

The White House did not immediately respond to a request for comment.






Rahm Emanuel's Profitable Stint At Mortgage Giant


Before its portfolio of bad loans helped trigger the current housing crisis, mortgage giant Freddie Mac was the focus of a major accounting scandal that led to a management shake-up, huge fines and scalding condemnation of passive directors by a top federal regulator.

One of those allegedly asleep-at-the-switch board members was Chicago's Rahm Emanuel—now chief of staff to President Barack Obama—who made at least $320,000 for a 14-month stint at Freddie Mac that required little effort.

As gatekeeper to Obama, Emanuel now plays a critical role in addressing the nation's mortgage woes and fulfilling the administration's pledge to impose responsibility on the financial world.

Emanuel's Freddie Mac involvement has been a prominent point on his political résumé, and his healthy payday from the firm has been no secret either. What is less known, however, is how little he apparently did for his money and how he benefited from the kind of cozy ties between Washington and Wall Street that have fueled the nation's current economic mess.

Though just 49, Emanuel is a veteran Democratic strategist and fundraiser who served three terms in the U.S. House after helping elect Mayor Richard Daley and former President Bill Clinton. The Freddie Mac money was a small piece of the $16 million he made in a three-year interlude as an investment banker a decade ago.

In business as in politics, Emanuel has cultivated an aggressive, take-charge reputation that made him rich and propelled his rise to the front of the national stage. But buried deep in corporate and government documents on the Freddie Mac scandal is a little-known and very different story involving Emanuel.

He was named to the Freddie Mac board in February 2000 by Clinton, whom Emanuel had served as White House political director and vocal defender during the Whitewater and Monica Lewinsky scandals.

The board met no more than six times a year. Unlike most fellow directors, Emanuel was not assigned to any of the board's working committees, according to company proxy statements. Immediately upon joining the board, Emanuel and other new directors qualified for $380,000 in stock and options plus a $20,000 annual fee, records indicate.

On Emanuel's watch, the board was told by executives of a plan to use accounting tricks to mislead shareholders about outsize profits the government-chartered firm was then reaping from risky investments. The goal was to push earnings onto the books in future years, ensuring that Freddie Mac would appear profitable on paper for years to come and helping maximize annual bonuses for company brass.

The accounting scandal wasn't the only one that brewed during Emanuel's tenure.

During his brief time on the board, the company hatched a plan to enhance its political muscle. That scheme, also reviewed by the board, led to a record $3.8 million fine from the Federal Election Commission for illegally using corporate resources to host fundraisers for politicians. Emanuel was the beneficiary of one of those parties after he left the board and ran in 2002 for a seat in Congress from the North Side of Chicago.

The board was throttled for its acquiescence to the accounting manipulation in a 2003 report by Armando Falcon Jr., head of a federal oversight agency for Freddie Mac. The scandal forced Freddie Mac to restate $5 billion in earnings and pay $585 million in fines and legal settlements. It also foreshadowed even harder times at the firm.

Many of those same risky investment practices tied to the accounting scandal eventually brought the firm to the brink of insolvency and led to its seizure last year by the Bush administration, which pledged to inject up to $100 billion in new capital to keep the firm afloat. The Obama administration has doubled that commitment.

Freddie Mac reported recently that it lost $50 billion in 2008. It so far has tapped $14 billion of the government's guarantee and said it soon will need an additional $30 billion to keep operating.

Like its larger government-chartered cousin Fannie Mae, Freddie Mac was created by Congress to promote home ownership, though both are private corporations with shares traded on the New York Stock Exchange. The two firms hold stakes in half the nation's residential mortgages.

Because of Freddie Mac's federal charter, the board in Emanuel's day was a hybrid of directors elected by shareholders and those appointed by the president.

In his final year in office, Clinton tapped three close pals: Emanuel, Washington lobbyist and golfing partner James Free, and Harold Ickes, a former White House aide instrumental in securing the election of Hillary Clinton to the U.S. Senate. Free's appointment was good for four months, and Ickes' only three months.

Falcon, director of the Office of Federal Housing Enterprise Oversight, found that presidential appointees played no "meaningful role" in overseeing the company and recommended that their positions be eliminated.

John Coffee, a law professor and expert on corporate governance at Columbia University, said the financial crisis at Freddie Mac was years in the making and fueled by chronically weak oversight by the firm's directors. The presence of presidential appointees on the board didn't help, he added.

"You know there was a patronage system and these people were only going to serve a short time," Coffee said. "That's why [they] get the stock upfront."

Financial disclosure statements that are required of U.S. House members show Emanuel made at least $320,000 from his time at Freddie Mac. Two years after leaving the firm, Emanuel reported an additional sale of Freddie Mac stock worth between $100,001 and $250,000. The document did not detail whether he profited from the sale.

Sarah Feinberg, a spokeswoman for Emanuel, said there was no conflict between his stint at Freddie Mac and Obama's vow to restore confidence in financial institutions and the executives who run them. At the same time, Feinberg said Emanuel now agrees that presidential appointees to the Freddie Mac board "are unnecessary and don't have long enough terms to make a difference."

Former President George W. Bush voluntarily stopped making such appointments following Falcon's assessment of their uselessness.

In an interview, Falcon said the Freddie Mac board did most of its work in committees. Yet proxy statements that detailed committee assignments showed none for Emanuel, Free or Ickes during the time they served in 2000 or 2001. Most other directors carried two committee assignments each.

Contrary to the proxy statements, Feinberg said she believed that Emanuel served on board committees that oversaw Freddie Mac's investment strategies and mortgage purchase activities. But Feinberg acknowledged she had no official documents to back up that assertion.

The Obama administration rejected a Tribune request under the Freedom of Information Act to review Freddie Mac board minutes and correspondence during Emanuel's time as a director. The documents, obtained by Falcon for his investigation, were "commercial information" exempt from disclosure, according to a lawyer for the Federal Housing Finance Agency.

Emanuel's board term expired in May 2001, and soon after he launched his Democratic congressional bid.

One of Emanuel's fellow directors at Freddie Mac was Neil Hartigan, the former Illinois attorney general. Hartigan said Emanuel's primary contribution was explaining to others on the board how to play the levers of power.

He was respected on the board for his understanding of "the dynamics of the legislative process and the executive branch at senior levels," Hartigan recalled. "I wouldn't say he was outspoken. What he was, was solid."

By the time Emanuel joined Freddie Mac, the company had begun to loosen lending standards and buy riskier sub-prime loans. It was a practice that later blew up and contributed to the current foreclosure crisis.

In his investigation, Falcon concluded that the board of directors on which Emanuel sat was so pliant that Freddie Mac's managers easily were able to massage company ledgers. They manipulated bookkeeping to smooth out volatility, perpetuating Freddie Mac's industry reputation as "Steady Freddie," a reliable producer of earnings growth. Wall Street liked what it saw, Freddie Mac's stock value soared and top executives collected their bonuses.

Another focus of Freddie during Emanuel's day—and one that played to his skill set—was a stepped-up effort to combat congressional demands for more regulation.

During a September 2000 board meeting—midway through Emanuel's 14-month term—Freddie Mac lobbyist R. Mitchell Delk laid out a strategy titled "Political Risk Management" aimed at influencing lawmakers and blunting pressure in Congress for more regulation. Through Delk's initiative, Freddie Mac sponsored more than 80 fundraisers that raised at least $1.7 million for congressional candidates despite a federal law that bans corporations from direct political activity.

Emanuel spokeswoman Sarah Feinberg said Emanuel "can't remember the meeting or topic" but might have been in attendance when Delk outlined his plans. Feinberg downplayed the significance of the fundraiser thrown for Emanuel, which brought in $7,000, stressing that it was but one of many hosted by Delk. The event stood out in at least one respect, however.

The Freddie Mac-linked events were mostly for Republicans, and only a handful benefited Democrats like Emanuel. "Rahm was a good friend of mine. He was on Freddie Mac's board. He was very much supportive of housing," said Delk, who resigned under pressure in 2004.

Then-Freddie Mac CEO Leland Brendsel also hosted a fundraising lunch for Emanuel's 2002 campaign that netted $9,500 from top company executives. Brendsel was later ousted in the accounting scandal.

Federal campaign records show that Emanuel received $25,000 from donors with ties to Freddie Mac in the 2002 campaign cycle, more than twice the amount collected that election by any other candidate for the U.S. House or Senate.

Emanuel joined the House in January 2003 and was named to the Financial Services Committee, where he also sat on the subcommittee that directly oversaw Freddie Mac. A few months later, Freddie Mac Chief Executive Officer Leland Brendsel was forced out, and the committee and subcommittee launched hearings to sort out the mess, spanning more than a year. Emanuel skipped every hearing, congressional records indicate.

Feinberg said Emanuel recused himself "from deliberations related to Freddie Mac to avoid even the appearance of favoritism, impropriety or a conflict of interest."



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Sources: Politico, Chicago Tribune, Fire Dog Lake, Americans For Tax Reform, MSNBC, Huffington Post, AP, House.gov, Youtube, Google Maps

Democrats Covered Up Fannie Mae, Freddie Mac Crisis?...Shocking!

How Democrats Created the Financial Crisis With Fannie Mac & Freddie Mac



The financial crisis of the past year has provided a number of surprising twists and turns, and from Bear Stearns Cos. to American International Group Inc., ambiguity has been a big part of the story.

Why did Bear Stearns fail, and how does that relate to AIG? It all seems so complex.

But really, it isn't. Enough cards on this table have been turned over that the story is now clear. The economic history books will describe this episode in simple and understandable terms: Fannie Mae and Freddie Mac exploded, and many bystanders were injured in the blast, some fatally.

Fannie and Freddie did this by becoming a key enabler of the mortgage crisis. They fueled Wall Street's efforts to securitize subprime loans by becoming the primary customer of all AAA-rated subprime-mortgage pools. In addition, they held an enormous portfolio of mortgages themselves.

In the times that Fannie and Freddie couldn't make the market, they became the market. Over the years, it added up to an enormous obligation. As of last June, Fannie alone owned or guaranteed more than $388 billion in high-risk mortgage investments. Their large presence created an environment within which even mortgage-backed securities assembled by others could find a ready home.

The problem was that the trillions of dollars in play were only low-risk investments if real estate prices continued to rise. Once they began to fall, the entire house of cards came down with them.

Turning Point

Take away Fannie and Freddie, or regulate them more wisely, and it's hard to imagine how these highly liquid markets would ever have emerged. This whole mess would never have happened.

It is easy to identify the historical turning point that marked the beginning of the end.

Back in 2005, Fannie and Freddie were, after years of dominating Washington, on the ropes. They were enmeshed in accounting scandals that led to turnover at the top. At one telling moment in late 2004, captured in an article by my American Enterprise Institute colleague Peter Wallison, the Securities and Exchange Commission's chief accountant told disgraced Fannie Mae chief Franklin Raines that Fannie's position on the relevant accounting issue was not even ``on the page'' of allowable interpretations.

Then legislative momentum emerged for an attempt to create a ``world-class regulator'' that would oversee the pair more like banks, imposing strict requirements on their ability to take excessive risks. Politicians who previously had associated themselves proudly with the two accounting miscreants were less eager to be associated with them. The time was ripe.

Greenspan's Warning

The clear gravity of the situation pushed the legislation forward. Some might say the current mess couldn't be foreseen, yet in 2005 Alan Greenspan told Congress how urgent it was for it to act in the clearest possible terms: If Fannie and Freddie ``continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,'' he said. ``We are placing the total financial system of the future at a substantial risk.''

What happened next was extraordinary. For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.

Different World

If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess supply, the market would likely have not existed.

But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter.

That such a reckless political stand could have been taken by the Democrats was obscene even then. Wallison wrote at the time: ``It is a classic case of socializing the risk while privatizing the profit. The Democrats and the few Republicans who oppose portfolio limitations could not possibly do so if their constituents understood what they were doing.''

Mounds of Materials

Now that the collapse has occurred, the roadblock built by Senate Democrats in 2005 is unforgivable. Many who opposed the bill doubtlessly did so for honorable reasons. Fannie and Freddie provided mounds of materials defending their practices. Perhaps some found their propaganda convincing.

But we now know that many of the senators who protected Fannie and Freddie, including Barack Obama, Hillary Clinton and Christopher Dodd, have received mind-boggling levels of financial support from them over the years.

Throughout his political career, Obama has gotten more than $125,000 in campaign contributions from employees and political action committees of Fannie Mae and Freddie Mac, second only to Dodd, the Senate Banking Committee chairman, who received more than $165,000.

Clinton, the 12th-ranked recipient of Fannie and Freddie PAC and employee contributions, has received more than $75,000 from the two enterprises and their employees. The private profit found its way back to the senators who killed the fix.

There has been a lot of talk about who is to blame for this crisis. A look back at the story of 2005 makes the answer pretty clear.





Bail-Out Policy Killing FHA, Fannie Mae, and Freddie Mac


One of the key aspects of the futile effort to "rescue" the global monetary system, has been the effort to prop up the values of U.S. real estate by having the Federal government guarantee mortgages and mortgage-related securities. We warned, when Fannie Mae and Freddie Mac were taken over by the government last year, that they would be turned into bail-out facilities, and that the move would ultimately destroy them. Together, the two companies have already been given $96 billion in Federal funds, and now they need more.

Testifying before the Senate Banking Committee Thursday, Edward DeMarco, acting director of the Federal Housing Finance Agency (FHFA), said that Fannie Mae and Freddie Mac "likely will require additional draws" of Federal funds, and described their outlook as "troubled." The FHFA regulates Fannie and Freddie, which own or guarantee half of all U.S. residential mortgages.

Another victim of the bail-out scam is the Federal Housing Administration (FHA), an agency that insures mortgages. The FHA's loan-insurance volume has soared since the crisis began, with the agency insuring a fifth of all new mortgages issued in the first half of the year. In testimony prepared to be delivered to Congress tomorrow, former Fannie Mae executive Edward Pinto said that the FHA "appears destined for a taxpayer bail-out in the next 24 to 36 months," noting that it faced $54 billion more in losses than it had the funds to cover.

Reality is even worse than these dire statements suggest. The Federal government is desperately trying to prop up the value of real estate in the hope of saving the value of trillions of dollars of mortgage-related securities held by banks and other financial institutions, and has turned the FHA, Fannie Mae, and Freddie Mac into insurance mills which guarantee the inflated values of properties even as the market values of those properties continue to fall.

This is a scheme which is guaranteed to produce huge losses for the Federal government, and the taxpayers. On top of that, it will fail to save the fictitious values of all the mortgage-backed securities, CDOs, and related toxic waste, and thus fail to save the zombie financial institutions which hold that waste. It would be far better to put the whole mess through bankruptcy reorganization and turn our attention to rebuilding our productive base. Let the zombies die, so that we may save the living.

"Whoever would overthrow the liberty of the nation must begin by subduing the freeness of speech".
Benjamin Franklin 1706-1790...



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Sources: C-Span, Fox News, Politico, Bloomberg, AP, Youtube, Google Maps