From the subprime mortgage crisis to the subsequent credit crunch, minorities are feeling the heat.
How well a particular industry fares during any given time has an impact on countless other industries and consumers. Case in point — rising gas prices are affecting everything from airfares to the price of getting a pizza delivered. A similar situation is happening with the wave of home foreclosures as the subprime mortgage crisis has fueled an impending calamity on the student loan industry. And minority borrowers, like minority homeowners, stand to emerge as the biggest losers.
There is speculation that the subprime crisis will result in the greatest loss of wealth for people of color in American history, according to United for a Fair Economy’s (UFE) recent study, “Foreclosed: State of the Dream 2008.”
Disproportionately targeted by predatory lenders, minority communities have naturally been affected disproportionately. Despite similar credit scores and income levels, Black and Hispanic borrowers were more than three times as likely to acquire high-interest loans than White borrowers in cities such as Boston, Chicago and Los Angeles just to name a few, even though the majority of subprime borrowers would have qualified for a conventional prime rate loan, according to a report from the Center for Responsible Lending (CRL).
