Subprime Ravages the Minority Community

A serious example of how consumers have been prodded into financial products that are ill-suited and hazardous is the marketing of subprime mortgages to minority communities. As of mid 2007, the value of subprime mortgages in the U.S. was estimated at $1.3 trillion (Associated Press 2008b). This was a mere 6% of all types of mortgage loans outstanding but represented 43% of the foreclosures stated by third quarter of 2007 (Brooks and Simon 2007). Evidence indicates that African Americans and Hispanics were placed in subprime loans at more than double the rate of White Americans and Asian Americans (Associated Press 2008a) and 61% of borrowers with subprime loans had credit scores high enough to qualify for conventional loans. It is estimated that subprime loans taken over the last 8 years will result the total loss of wealth for people of color is between $164 billion and $213 billion and will result in the single largest drain of wealth from the African American and Hispanic community in history (Rivera et al. 2008).