The Forgotten Subprime Mortgage Victims

Bob Herbert of The New York Times reminds of who the forgotten victims of the subprime mortage scandal are. What we must also remember is it is the lack of regulatory oversight that brought out the greed of the lenders who took advantage of the lack of education and sophistication of lower economic classes. We must also remember which party decries any kind of government regulation. This is where the blame ultimately lies.

For years redlining and other discriminatory practices served as roadblocks to homeownership in neighborhoods with significant numbers of poor and working-class residents, many of them black and brown. Making affordable loans available to such residents was important.

But we have since moved to the opposite extreme. Over the past several years mortgage lenders recognized that there were big bucks to be made in those neighborhoods, and they pounced.

They weren’t satisfied to offer reasonable loans at reasonable rates to customers who could handle them. They went far beyond that. They took advantage of a poorly regulated landscape to exploit unsophisticated home buyers and homeowners with mortgages and refinancing schemes that were all but guaranteed to result in a tragic explosion of foreclosures.

Thousands of poor people like Dorothy Levey, who worked for years to build modest amounts of equity in their homes, have been hammered — wiped out. The most unscrupulous of the mortgage lenders, and there were many of them, swooped in and sweet-talked their targets into signing contracts designed to squeeze them for everything they had in the world.

The fact that this is often legal doesn’t make it right. As insane as it sounds, Ms. Levey is still getting offers to refinance her mortgage.