!?!?!?! poor blacks in Chicago are now much poorer b/c of new IL law !?!?

[bobbieinok]

http://www.blackprof.com/

A Key Moment in Black History
by Marcus Cole
....

... Tuesday was a key moment in African-American History. On Tuesday, in addition to Mrs. King’s passing and Justice Alito’s elevation, the State of Illinois enacted a law that requires all mortgage applications within nine Chicago zip codes to undergo a process of review by the state’s Department of Financial and Professional Regulation. The department’s review process determines whether mortgage applicants in these neighborhoods must undergo compulsory credit counseling. If they must, then the mortgage lender must pay the cost of the counseling.


Anyone familiar with Chicago geography and demography knows these nine zip codes. They are all neighborhoods on the South and Southwest side of Chicago. They are predominantly African-American neighborhoods. These neighborhoods are some of the most impoverished in the City of Chicago, and indeed, the nation. On Tuesday, they suddenly became much poorer.


Although the legislators responsible for the new law were motivated by good intentions, they failed to consider the inevitable consequences of their bill. They wanted to protect poor homeowners in certain neighborhoods from high interest rates and predatory lending practices. The new law, however, necessarily increases the costs, time and uncertainty associated with mortgage applications in these black neighborhoods. The cost of credit counseling will be born by and charged to mortgage applicants. This, in turn, will necessarily decrease the price that new home-buyers can afford to pay for homes in these neighborhoods. If they can choose to buy in other neighborhoods, where housing money is more affordable, they, on the margin, will. Furthermore, recent studies of credit counseling programs suggest that these programs have little effect on borrower behavior. The end result is that homeowners in these poor black neighborhoods suddenly have less equity in their homes than they had on Monday.


Legislation like this is often motivated by an unspoken belief that poor black people are incapable of making important decisions for themselves. We see this belief reflected in the protection of failed public schools, and now with respect to personal finances. But the very people for whom such a law was enacted were responsible and wise enough to save to make the down payments necessary to buy these homes in the first place. Suddenly, these same people must have their choices reviewed and second-guessed by state bureaucrats who have no stake in the outcome, or accountability for incorrect or unresponsive decisions. It is hard to imagine the fate of a similar but broader law imposing credit counseling upon all Illinois residents, including white professionals residing in the Chicago suburbs of Evanston, Winnetka, or Kennilworth. Would there have been enough votes in Springfield to impose these “benefits” on everyone, rather than just the residents of the Southwest side of Chicago?

....

My wife, who grew up on the Southwest side of Chicago, often says “the great thing about Chicago is that any body that worked hard and saved their money could buy a house there – maybe not the biggest or best – but Chicago is a place where people have a chance.” That chance, I’m afraid, has become part of Black History.

[Norquist Nemesis]

1. Hmmm...hadn't heard about this, but sounds discriminatory

based on race and therefore UNCONSTITUTIONAL.

Gee, I wonder how Justice Alito will vote! :sarcasm:

[Inland]

2. The Chicago Tribune has exposed mortgage fraud

that is systematically robbing people of their homes. People are refinancing through what, is unknown to them, gangs. The criminals walk off with the cash from the equity and the homeowners get the foreclosures.

I didn't read the articles, but I'm assuming that the frauds were concentrated in the nine zip codes.

It seems to me that flagging the particularly questionable refinancing, either because the terms are bizarre, the loan strangely large, and requiring a class to make sure the individual is able to handle the transaction is one way to approach the problem. It doesn't put bureaucrats in charge of anything except the decision to take a class or not.

[madrchsod]

3. unfortunately the acts of a few

greedy banks and loan officers have created the situation where the government has to act. although the bill maybe poorly written it is better than nothing and
at least now the banks that looked the other way can no longer do that. there is also the problem of the gangs using mortgages to "raise money" which also effects the hard working people in chicago getting affordable mortgages. although i don`t have the zip codes / neighborhoods in front of me i think this problem exists in the spainish speaking areas of chicago.