The financial industry isn’t done victimizing homeowners, leading to a new mortgage crisis hitting struggling senior citizens. USA Today reports on how lenders have targeted majority black neighborhoods for shady reverse mortgages, leaving elderly homeowners fighting to keep their homes, property values diminished, and adult children without the modest homes they expected to inherit.
Reverse mortgages allow senior citizens to tap into the value of their homes to make repairs or just make ends meet, but nearly 100,000 of them have failed, and those failures are hitting predominantly black neighborhoods hard: “USA TODAY found that reverse mortgages end in foreclosure six times more often in predominantly black neighborhoods than in neighborhoods that are 80% white.” The disparity holds steady in neighborhoods where residents earn less than $40,000. Since foreclosures lower property values in surrounding houses, the damage isn’t just to the people facing foreclosure themselves.
Predominantly black neighborhoods also appear to have been targeted by lenders. A statistician hired by homeowners in one lawsuit “found that, in one year, 70% of Urban Financial loans in Chicago went to areas that were at least 80% African American. From 2001 to 2009, the company wrote more than half of its reverse mortgages in zip codes that were 80% black, according to USA TODAY’s analysis.” USA Today found similar numbers for two other lenders, Best Mortgage Services in Detroit and Gateway Reverse Mortgage Group in St. Louis.
The Consumer Financial Protection Bureau tried to put some limits on the reverse mortgage lenders, and fined several. But it hasn’t been enough to protect people who signed their reverse mortgages before protections were put into place, or all those struggling now. Structural racism is real, and it’s still destroying people who’ve worked all their lives to claw out a tiny bit of security and comfort.