Journalist Kirstin Downey at the Washington Post has an article today that’s burning up the Internet today - and burning up a few bloggers who are staunch proponents of self-determination and personal responsibility. Her story, Foreclosure Wave Bears Down on Immigrants(free access, although registration may be required), notes how a large percentage of foreclosures involve immigrants who viewed buying a home as part of the American Dream. Writes Downey: “Nationally, 375,000 high-interest-rate loans were made to Hispanics in 2005, and nearly 73,000 of them are likely to go into foreclosure, said Aracely Panameno, director of Latino affairs for the Center for Responsible Lending.”
My question—which is the operative question being asked across a lot of blogs this afternoon—is this: Is everyone who is foreclosed upon a victim? Granted, the story cites a couple examples where buyers feel duped by an agent or mortgage broker of similar ethnic descent who assured them they could afford the house, but realized afterwards they were put into an adjustable rate mortgage where the payments ballooned beyond what they could pay.
In other instances, though, it seems as if this was a case of individuals who saw their friends and neighbors making easy money from owning a home and wanted in to. For a while, housing in frothy markets like Washington looked like a casino where the dice always came up sevens. Interestingly, Downey’s colleague at the Post, critic Howie Kurtz, in a online chat this afternoon was somewhat critical of the story, and even agreed with a questioner’s point that there was subtle racism at work. The exchange is here, after the jump…
Northern Virginia: Howard, question regarding the headline and terminology used in today's Post story on foreclosures. In both the current washingtonpost.com headline and the lede the term "victim" is used. The word implies predation and an I see an implication that these people aren't smart enough to understand what they're signing when they apply for mortgages. Am I reading too much into this or is there a subtle racism to writing about immigrant "victims"?
Howard Kurtz: I couldn't agree more. I think it was a mistake to describe immigrants who are having their homes foreclosed upon as "victims" when there's no suggestion in the article that they were defrauded. We can have sympathy for them, sure, as we would for anyone losing his or her house. But don't they bear some responsibility for taking out high-interest loans for houses they could not really afford?
I don't know if I agree there was racism, but there certainly was a patronizing tone to the article. Certainly, you feel for anyone who loses a home. But some of the numbers here -- people earning $24,000 taking out a mortgage on a $400,000 home -- is astounding. And in some instances, I'm not exactly sure what they were defrauded out of, since the author cites examples of buyers who didn't put a nickel down, and when they couldn't make payments, they were foreclosed on. So as best I can tell, they didn't lose a down payment. They were out monthly payments, but they probably hadn't built up equity and would have had to pay rent anyway. Sure, they're credit is wrecked for a while, but given the liberal nature of our financial system, I'm sure they'll be able to get a new mortgage in a few years.
For sure, owning a home is considered part of the American Dream, but there seems to be this growing sense that home ownership is a inalienable right and anyone who buys a house they can't afford has been "defrauded." I think some of these individuals would have been better off renting.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.