Financial literacy is a must

In her classic play A Raisin in the Sun, Lorraine Hansberry tells the story of an African American family unraveling over too many years living in a cramped apartment in a racist America. The father’s death leaves the family confused and scaredûhusband tu

In the end, it is the home the mother buys with the inheritance money that unites them. They bond together to stand up to their disapproving white neighbors. They have their differences, yes, but the house, they know, is worth fighting for. The same holds true today. For many of us, owning a home is synonymous with achieving the American dream.

But for a disproportionate number of African Americans, subprime lending has become a palpable threat to sustaining the dream. In November, an investigation by the Chicago Reporter found that 88,315 high-cost loans were granted in the Chicago metropolitan area in 2006. Most were issued to African Americans. Of those, the majority went to Black women.

The National Urban League recently reported in its The State of Black America 2008 report that 51.4 percent of subprime loans around the country were issued to AfricanAmerican women versus 21.5 percent of white men. No news is good news as it relates to America’s roiling foreclosure crisis. Last week, reported that foreclosures had hit an all-time high, effecting more than 900,000 households. That’s 2 percent of all mortgages, the highest rate in history.

On top of that, the number of mortgage borrowers who were more than 30 days late on a payment reached its highest rate since 1985. Indeed, Black America’s history of property and land rights has had its share of successes and pitfalls. There was a time in some parts of the country when simply being a Black man who owned his own home could get you killed. But nothing could have prepared us for the veiled threat of subprime loans.

Subprime adjustable rate mortgages, loans that start out with low interest rates that balloon within about three years, are the biggest contributors to the spike in foreclosures. Nationwide, African American borrowers make up the largest percentage of homeowners who have lost their homes. And not all of them started out with bad credit.

African Americans and Latinos with good credit are more likely to be steered into high-interest loans than white borrowers with bad credit, studies have shown. Further complicating the picture is the poor housing market, which has made it difficult to nearly impossible for some homeowners in crisis to sell.

It’s a double-edged sword and, to those old enough to remember, feels like a fresh attack by lending institutions on African American property ownership. I’ll just come right out and say it: Subprime lending is a form of institutional racism. But there is a way to defend against itûit’s called financial literacy.

Let’s face it, another big reason people get trapped in bad loans is a lack of financial knowhow. For Black people, the financial literacy gap takes many forms, from massive credit card debt to chronically late payments to the proliferation of rent-toown franchises in poor neighborhoods. Debt can out-live the items purchased.

There are folks who are still paying for clothes they don’t wear any longer, all because they couldn’t resist the lure of credit card offers and new stuff with no money down. It is essential that each of us learn how to manage our finances through every stage of our personal wealth development.

If you don’t know, ask somebody! You say, “Well, where do I go to learn?” Financial literacy is a curriculum that is sorely lacking in our schools. That is why the Chicago Urban League offers financial literacy courses for African American adults and teens as part of our education initiatives. So far, our programs have reached 350 teens in Chicago Public Schools.

To learn more, contact Quinn Riley at 773-451-3570 or at qriley@ For those facing foreclosure, we offer free foreclosure prevention counseling. Our staff will work with you to help you revise your budget, identify other sources of income and direct you to agencies that provide mortgage assistance. To schedule a counseling session, contact Cynthia Hubbard at 773-285-1500 or at

Many of us know someone who is facing foreclosure. If you’re already in foreclosure, it’s hard to see a way out. But don’t give up. The Urban League will act as a liaison between you and your lender to try to work out the details of a repayment plan. Mortgage rescue efforts and calls for a moratorium on foreclosures have failed to reverse the default trend.

We have to come to our own rescue. We must continue to work together, to inform and to identify resources to stomp out the foreclosure threat for good.

______ Copyright 2008 Chicago Defender. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.  

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