Subprime Crisis has a Racial Overtone

Hmm it seems that quite a few of these subprime loans have gone to blacks and Hispanics.

Subprime loans – loans made to homebuyers with less-than-perfect credit – were responsible for a large share of the foreclosures that started last year. And minorities received a hefty share of those loans. Just over half of African-Americans and 4 in 10 Hispanics who got a mortgage in 2006 had a subprime loan, according to a 2007 analysis by the Center for Responsible Lending.

I wonder if this was a case of the Subprime lenders catering to the market or did they simply dupe these minorities into signing these loans? I guess it is how you look at it.

"The difficulties have been concentrated in 'subprime' loans, which generally go to borrowers with limited or damaged credit, although there is evidence that some borrowers are shifted into the subprime category because they are African-American or Hispanic," said Rep. Barney Frank (D) of Massachusetts, who chairs the House Financial Services Committee, in a statement last week.

It seems that some lenders might have gone after certain types of unsophisticated borrowers. It just seems so condescending to think that all of these minorities were duped by a bunch of pinstriped bankers. I guess there just weren't enough Hispanics and Blacks saying "how much is this going to cost me if interest rates change?"

That is why Congress needs to set aside some of that money to make a Money 101 class a required course to pass High School. I don't think the problem would have been so widespread if people sat down and analysed what they had to pay through the life of the loans. If there was proper budgeting and thought going into what how rising interest rates would affected the most important asset that most people will ever have.