Lenders prey on kids

In case you weren’t already outraged at the bailout for Wall Street, check out this op-ed in the New York Times on how parents are being disproportionately hurt by the mortgage crisis (AKA the predatory lending crisis). According to Eric Nguyen, “Nearly two-thirds of those trying to save their homes in bankruptcy have young children.” Among the many nasty elements of the disastrous bankruptcy bill passed in 2005 was one making it much harder to renegotiate the terms of a mortgage on a primary residence than on investment property.

Nguyen imagines a mother who becomes ill, racks up medical debt, and can’t pay the mortgage on her children’s home, then compares her with a wealthy childless couple who invest in a condo, run up credit card bills, and declare bankruptcy. Who winds up on the street? The kids.

Oh, and by the way, who voted for the bankruptcy bill? John McCain. Barack Obama voted against it. (Shamefully, though, his running mate Joe Biden voted for it.)

Women Prime Victims of Subprime Mess

From the start of the mortgage crisis, I was skeptical of the main defense supporters of subprime lending offered—that it enabled people who otherwise couldn’t buy houses to do so. The stories in the press of actual people caught up in the crisis didn’t fit this picture; they nearly always were about people who already owned their homes and had gotten enticed into refinancing with subprime mortgages.

But along with most of the press, it didn’t occur to me that the subprime debacle might be a women’s story. Thanks finally to The New York Times for its coverage of the sorry truth:

Subprime mortgages, which are driving the foreclosure rate, have gone disproportionately to women. … Though women and men have roughly the same credit scores, the Consumer Federation of America found that women were 32 percent more likely to receive subprime loans than men. The disparity existed within every income and ethnic group. Blacks and Latinos are also more likely to get subprime loans than comparable white borrowers.

Get that? Contrary to the apologists, lenders weren’t offering higher rates in exchange for taking on more risk. They were doing what they could get away with, and they could get away with it because of the whole context of sexism and racism at work in our culture. The Consumers Union attributes some of the gender disparities to the greater income instability women face because of divorce or family medical emergencies (they didn’t mention the added time women spend out of the workforce to care for children or elders). Other experts suggest that mortgage brokers assume that women are less confident to negotiate or shop around, and so they figure they can get away with offering them higher rates (a self-fulfilling prophecy, of course). Pile that sexism on top of the likelihood that a low-income neighborhood is not served by prime lenders and you get a nasty picture of shady lenders preying on the vulnerable: women, people of color, and children. I guess that’s what “women and children first” always really meant.

Because if the subprime crisis is a crisis for women, then it is a crisis for children. A foreclosure counselor for a nonprofit in Baltimore told the Times that his typical client is single and female with two children.

Congress and the presidential candidates, what are you going to do about it? (While John Edwards called for a mandatory foreclosure moratorium, Hillary Clinton has called for only a voluntary moratorium, a freeze on rate increases on adjustable mortgages, but proposes $30 billion in aid to affected homeowners and communities. Barack Obama is not calling for a moratorium, and offering only tax credits to homeowners that would average about $500.)