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Reverse mortgages: subprime's "stealth aftershock" that is costing elderly African-Americans their family homes
Reverse mortgages -- complex home loans -- are aggressively marketed to elderly people, especially in African-American neighborhoods, using deceptive tactics that offer false promised to "eliminate monthly payments permanently" with "a risk-free way of being able to access home equity."
Reverse mortgage sales went into overdrive just before the 2007/8 housing crisis and ramped up after that, and now, a decade later, seniors are discovering that they signed up for a financialized scam that is costing them their family homes, sometimes as a consequence of being widowed.
USA Today has just published the result of its "first-of-its-kind analysis of more than 1.3 million loan records," finding more than 100,000 defaults, with African-Americans being hit the worst: "reverse mortgages end in foreclosure six times more often in predominantly black neighborhoods than in neighborhoods that are 80% white."
Housing wealth is one of keys to understanding racial inequality in America: starting with the official redlining policies that let white families lift themselves out of poverty while condemning Black families to a cycle of rent and debt accumulation whose effects were felt down through subsequent generations -- and on to today, with home-ownership at historic lows and rents jacked up to historic highs, a parent's housing wealth may be the only way to escape the cycle.
Black homeowners were the hardest-hit by the housing crisis: targeted for the most predatory, complex and deceptive financial "products," first evicted when those loans blew up. But the reverse-mortgage crisis had a longer fuse, one that's just burned all the way down, creating a "stealth aftershock" to the crisis. Read the rest
Original Link: http://feeds.boingboing.net/~r/boingboing/iBag/~3/-lPGHXPuE_o/redlining-2-0.html