Subprime Effects Followup
Following up on yesterday's Financial Katrina article, today the NAACP and other housing activists that represent minority groups urged lenders to adopt a six month moratorium on foreclosures. Lenders run a business that's hurting now and it's unlikely they would act in concert to do this without political pressure. This is only the first volley by civil rights organizations to help their communities from foreclosure trouble.
Yesterday's news that pending home sales (c/o Tom) posted healthier than expected results in February boosted the markets yesterday and today. Although the recent exits of subprime lenders will affect future home sales by pulling potential "subprime" homebuyers off the market, it's probably an insignificant percentage with respect to the entire population of homebuyers. The mortgage market will start looking more similar to that before the rise of the subprime products (here's a white paper on the history of subprime lending), and the housing markets will reflect the new loan landscape. That's why analysts find yesterday's news of housing strength a bellwether by demonstrating that subprime's woes will be isolated to a smaller group than anticipated. Unfortunately, that group is comprised of minorities and it will exacerbate America's inequality issues.
Technorati Tags: financial katrina, katrina, foreclosures, subprime, subprime loans, home ownership, NAACP
Hi Pat,
Thanks for the white paper link. I scanned it and will print it out for further reading. It contains a very concise history of why the subprime market grew.
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Glad you appreciate it Jillayne... I thought it was interesting too....
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