By Jesse Herman, contributing editor
Lead by the NAACP and the Leadership Conference on Civil Rights, among others, a coalition of groups is urging mortgage lenders to adopt a six-month moratorium on foreclosures to work out a new plan. The group is speaking on behalf of families with high-risk mortgage loans whose terms are questionable. They believe these borrowers should not be kicked out of their homes for delinquent payments on home loans.
The problem lies in the fact that people took loans at very expensive terms—sometimes unbeknownst to them. This happened mainly in the subprime mortgage market, where people pay more for their loans because the prime market considers them a higher risk then many borrowers.
As a result, many people are forced to take second jobs, sell family possessions and rent out another room just to make payments.
While it may seem justified that borrowers have to work harder after accepting loans they could not afford, the coalition is claiming that subprime borrowers were mislead. Some are finding themselves shocked when loans go into default and expensive terms of a loan kick in.
"It is not a surprise that so many homeowners are facing foreclosure when you take a look at the loan terms," Josh Nassar of the Center for Responsible Lending told reporters. "People are qualified generally just to pay for the initial rate, not the adjusted mortgage rate, which includes a payment shock of well over 30 percent."
Further reinforcing the belief that home lenders were misleading borrowers is the chosen demographic: lower income African-Americans and Latinos. Greedy lenders swept through low-income neighborhoods with a loose contract and the promise of the American dream—also known as homeownership.
Lenders have not agreed to a moratorium on foreclosures. The hope is that the industry will be forced to throw out questionable mortgages in favor of repayment terms that subprime borrowers can sustain.
“We have resources to generate pressure, said Wade Henderson, the president of the Leadership Conference on Civil Rights explaining through “the use of civil rights law, consumer laws, congressional pressure and grass-roots advocacy.”
