Monday, February 04, 2008

Frances Taylor and Foreclosures

This story gives me hope.

When I first read the story of Frances Taylor a month or so ago I was appalled, yet unfortunately not surprised. This was not the first time I have heard of or witnessed an elderly person being exploited and robbed of their hard-won financial freedom. Working in banking sometimes gives you a unique perspective on people. A previous manager of mine used to say it was like we were looking through someone's underwear drawer, all of their dirty, embarassing secrets laid open to us. Their debts, their mistakes, their addictions. And in this case, the ability of one person to manipulate and abuse another for financial gain.

Unfortunately, we have seen an entire group of people manipulated for financial gain in this recent subprime credit catastrophe. Borrowers who had insufficient income, inflated collateral value, and a dubious credit history were sold loans by mortgage brokers and lenders out to make a killing off of them. Home ownership has become such an important part of our "American Dream" that it is easy to tell someone who can't afford a home that they should be able to afford one, that it is their right to sign their life away in pursuit of a white picket fence. A good majority of these loans have been peddled in low-income and minority areas; one study I found reported that African Americans and Latinos are three times more likely to have a subprime loan. Multiple other articles and reports I found debated this, as well as the assertion that much of the increased foreclosure rate is due to predatory lenders. Just google search "minorities foreclosure delinquency" and see what you find. While there is a lot more to say about the mess in the larger market due to the CDOs, SIVs, and other derivatives based off these subprime mortgage portfolios, certainly we might have avoided this collapse if the foreclosure rates hadn't doubled in the past year.

I don't want to beat a dead horse; certainly there is enough in the blogosphere regarding these questionable activities in the mortgage field. Personally, I am glad I work for a conservative lender that had one of the lowest exposures to subprime mortgages among all major banks (less than 3% of its portfolio). And I am even more glad to be out of the business of lending. Not having to review credit reports and debt to income statements makes me a happier person. Still I grieve for people like Frances Taylor and families who have lost their homes. And I grieve for the souls of the people who have inflicted this pain, all in the name of the almighty dollar. But I am encouraged by this group of girls who visited Frances, who sought to bring her a little joy in the midst of her suffering, knowing that they would receive nothing material in return. My thanks to Tammy Ko, her friends, and the YWCA program that helped them reach out. Thanks for being a light in Frances' world.

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