If one believes the politicians, then low-income, minority buyers were bamboozled into signing on for homes they could never afford. That's a grim fairy tale unsupported by hard facts.
According to the Washington-based nonprofit Center for Responsible Lending, nearly 90% of subprime borrowers are not first-time homebuyers.
Instead, it was serial financing that fed the subprime gluttons. In the late 1990s and early 2000s, interest rates were low and housing prices were rising. Like other places in the nation, many Queens homeowners took advantage of refinancing deals that provided larger loans than the value embedded in the first mortgages. Then borrowers pocketed the difference.
But to lure a larger number of clients, mortgage brokers changed the rules, abandoning the risk controls that protect against default. Brokers took chances on risky borrowers. Many borrowers had blemished credit histories. Some refinanced three times. Borrowers offered the no-down-payment loans that had low rates. The numbers were affordable, and that "tease" grabbed many into the fold. But those low rates would later adjust, and most applicants faced a rate that floated much higher, putting them at greater risk of default.
Some people were never told that the mortgage would reset at a higher rate. That's criminal. But there are many more who signed on believing the American Dream would take care of them. Let's be clear: The American Dream is available to everyone, but no one is entitled to it. No one. You have to work for it. There are rules. Common sense does apply.
Greed, not race, led to housing woes