Did The Prosperity Gospel Play A Role In Suprime Crisis? (part II)

Posted: October 15, 2008 in Remember

In part one, I mentioned an article that discussed how the prosperity gospel also played a role in the subprime mess. Here is a press release (?) from HUD further proving the author’s point.

HUD Secretary Reaches Out to Minorities

On June 24, 2002, Housing and Urban Development Secretary Mel Martinez hosted a bilingual “Houses Without Barriers” Town Hall Meeting at Our Lady of Guadalupe Church in Charlotte, North Carolina, to explain President Bush’s initiative to expand homeownership among minority families. The Secretary said that more Americans, particularly minorities, should have the opportunity to share in the American Dream of homeownership.

Secretary Martinez cited several Bush Administration initiatives including (1) the American Dream Downpayment Fund, aimed at helping 40,000 families each year with down payment cost, the most common barrier to minority homeownership; (2) a tax credit for builders of single-family homes; and (3) a housing counseling program to help families through the home buying process and to educate them against unscrupulous lenders.

The Secretary also noted the release of a “how-to-guide” to help faith-based organizations to encourage homeownership opportunities, particularly among minority families. Ten Things Your Faith Community Can Do To Encourage Homeownership offers faith-based grassroots organizations an easy-to-read guide to promoting homeownership in their communities. (source)

But I guess this is somehow blaming minorities when clearly this half baked initiative was brought to their doorstep.

  1. The EL says:

    Interesting point, but efforts to improve Minority ownership is only the tip of the iceberg.

    Subprime was the first wave and in many cases it is very misleading to attribute this wave to minorities only. Loan officers and brokers made a fortune selling good candidates that could have qualified for more standard and less toxic fixed rates into subprime loans because the fees were HIGHER. This was pervasive in California.

    The next wave of mortgages are the ALT A and Option ARM product that were targeted at mostly savvy, economically sound individuals and investor/speculators. And also , owners who REFINANCED are a big part of this problem also.

    Not saying that the targeting of minorities for ownership wasn’t a factor in this market correction, just that is is only PART of the problem along with loose lending standards that made the whole home buying and selling of homes one big CASINO game that many people sat down to play. Owners, buyers, brokers, loan officers, banks , Wall Street,and politicians all share blame.

  2. Duane says:

    Interesting point, but efforts to improve Minority ownership is only the tip of the iceberg.

    I agree wit chu.

    The problem I’m seeing pop up throughout the net is that the moment you mention “minority”, somehow that is placing all the blame on them. There are MANY hands that helped create this mess.

  3. Peg says:

    El & Duane – I’m a Realtor. Doesn’t mean I “know all, see all” – but – you are absolutely correct when you state that this fiasco was caused by very many.

    It was caused by pushes for more lax standards in lending on the part of Democrats, by Wall Street in more & more investing practices that almost no one understood, and by Republicans, for overall poor performance of purportedly being the “small government” party and not living up to their billing – thus losing power and votes in Washington.

    Add in lenders, Realtors and developers who were less than honest (and worse) – plus a public who thought that home values would go up at least 15% annually while incomes went up 3%. Add in people who used the equity in their homes as piggy banks for new cars, vacations, furniture and remodeling – instead of viewing it as safety and security.

    I remember sitting in real estate continuing education classes, and being HAPPY that more people of every stripe would have the opportunity to become homeowners. I do believe that home owners have more interest, for several reasons, in maintaining their homes and keeping their neighborhood healthy – so encouraging homeownership is good.

    We just all went overboard; not everyone is capable of doign it – irrespective of their race.

    Anyway. People who think that our current fiscal crisis is the function of just “subprime mortgages” or minority borrowers or Wall Street or one political party is not enlightened.

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