Earth shattering news hit the stands this morning in the award-winning free daily; the Metro reports: “Home foreclosures’ subprime race rise.” New York City, bastion of free thought and rock solid/sky high real estate value is effected by the subprime mortgage crisis.
But possibly more shocking than any of the news that the Big Apple is also part of the United States economy, this New York City problem is hitting minority communities harder:
And subprime mortgages in our area are disproportionately a problem for African-American and Hispanic communities, the report states…Foreclosure filings went from 10,000 in 2006 to nearly 15,000 in 2007, the report said. Seven of the 10 neighborhoods with the most foreclosures have high rates of subprime loans; all are at least 88 percent nonwhite.The numbers are truly staggering. In the first pages of the Executive Summary readers are introduced to the fact that since the mortgage systems became open to financing and trading, the subprime and predatory loans have become more prevalent. Piggyback loans when from 9% to 28% and increased in values more than 31% in two years. The problem here is that people are borrowing against value that is no longer in their homes…sounds surprisingly similar a few days in 1929.
It seems to this financial neophyte that we have journeyed back to another time when we forgot that money and the economy effect people. So as Bears Sterns and Co choose to make money on nothing and value suddenly disappeared. Shockingly when those paying attention found this to be a bad idea, they sold their holdings causing a massive collapse. While we haven’t quite hit the Great Depression, the system that took us here is the same that took us there. Speculation is based on nothing more than a hunch.
But hey, at least the Ortiz jersey went for $175,000. Some things in this world hold their value.