Real Estate & Property Law
Jesse Jackson Cites ‘Reverse Redlining,‘ Calls for Gov’t. Intervention
Posted Feb 21, 2008, 10:22 am CST
By Martha Neil
A failure to enforce fair lending laws, as banks targeted racial minorities for expensive subprime mortgages, is a major factor in the country's current financial crisis, according to Jesse Jackson.
Speaking at a New York housing conference yesterday, the civil rights activist criticized the Department of Justice for not responding more quickly to lending discrimination issues and called for state prosecutors to hold financial institutions accountable, Reuters reported. He also said the federal government should halt foreclosure proceedings and put the Federal Housing Administration or another agency in charge of implementing a program to replace subprime loans with restructured mortgage financing at affordable terms.
The gist of Jackson's complaint against lenders is that they allegedly targeted minority borrowers for subprime mortgages and gave them to many who qualified for traditional fixed-rate home loans. As a result, borrowers facing major increases in their monthly payments as mortgage terms adjust are at risk of losing their homes, contributing significantly to a huge increase in foreclosures.
"They began to stereotype and target and cluster whole communities," he said of lenders, contending that almost 40 percent of subprime mortgage borrowers are black or Hispanic. "It's kind of like reverse redlining."
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