Dean- In the early nineties I recall the drumbeat to reduce discrimination against lower income minority group members in the mortgage market. One famous study showed blacks in one market being turned down for mortgages at a higher rate than comparable whites. The study then stated, without irony, that this was true even though the default rate for blacks and whites was the same.

So is it fair to believe that years of pressure on lenders to increase mortgages to black and other minorities led, to some extent, to the lowering of standards, the temporary increase in minority home ownership and the inevitable decline back to the original percentage?

No, it is reasonable to conclude that the separation of issuance from the holding of mortgages caused lenders to issue mortgages that they knew couldn't be paid. Countrywide didn't issue hundreds of thousands of garbage mortgages because they were worried about pressure from community groups. they issued these mortgages because highly paid idiots were buying them up as fast as possible in the secondary market.

Dean,
I like your style.
Yes the seperation of power and responsibility is a dangerous thing.
Outsourcing...
Congress....
....

I can't resist. A classic example of bad reporting showed up yesterday in my local paper, the stupidly and very conservative Harrisonburg Daily News-Record. The headline was "Local Housing Market Turns Around." Yes, sales this Oct were up to 97 from 81 last Oct. But the average price fell from about $241,000 to about $223,000. Duh.

Dean-

Isn't that the general explanation for all the loans that are in default? How does that explain the disproportionate effect on blacks that you report? I'm not saying this pressure was the cause of the entire effect. I was rather pointing out the irony that when lenders based their loans on default rates people cried bigotry. When the concern about default rates went away (because of the pressure and/or the greed) people complain about predatory lending having a disporportionate impact on minorities.

While I'm sure that Dean Baker can explain the factors effecting (or is it affecting?) the rate of home ownership by black people, I've seen at least one article idicating that, even now, blacks with the same income, credit history, etc., as a white person, are often able to only a mortgage with a higher interest rate than the similar white person(s).

Having to pay more/month baed on the same income, savings, etc. might be one factor in a higher default rate.

Two omissions/typos:

First sentence should read, While I'm sure Dean Baker can explain more clearly and completely than me . ...

and "having to pay more/month based (not baed). . ..

I aboslutely hate that the sleazy mortgage companies are even bringing up how they were pressured to basically act responsible to minorities and are now using that as some sort of defense.

the goal was to put more minorities into homes, not into FORECLOSURE. these sleazy mortgage companies are just using excuses. there is nothing "ironic" about the subprime mortgage problems.

I have been speaking the English language for almost 200 years, and I have yet to come across Dean Baker's use of the word "plunge."

Was the plunge in homeownership the recent quarter change from 68.2% to 68.2%? Or was the plunge the 0.8% spread over 5 quarters, that is, .16% a quarter?

Pretty scary .16%/quarter freefall.

Was the plunge the 2% rise from a decade ago?

Erik-
First problem: lenders base their loans not on default rates but on race.
Second problem: lenders throw out standards altogether. Two separate wrongs.
Now they're trying to revise history by pretending that they had to relax standards in response to their earlier discriminatory practices, when, in fact, the proper response to acting discriminatory was simply to NOT act discriminatory.
What caused them to relax their standards was their own greed, (because they were making money hand over fist by making and then selling loans that they and everyone else knew were crappy loans). Their current attempt to revise history is just as repugnant, and just as unsurprising, as the rest of their sorry conduct.

gladstone,

A 0.8% fall in the homeownership rate means that roughly 900,000 families have lost their homes. I'd call that a plunge, all right. When was the last time this happened?

Dean,

Aren't you always harping on the need to translate abstract figures into something more meaningful?

Thanks Ragout -- point well taken.

What about context for the 900,000 families? How many families are there in the U.S. with a population of 310,000,000?

The death rate per capita has been declining at 2% a year - much faster than the decline in homeownership of 0.6%, yet you don't talk about a plunge in cancer deaths, right?

gladstone wrote, The death rate per capita has been declining at 2% a year - much faster than the decline in homeownership of 0.6%, yet you don't talk about a plunge in cancer deaths, right?

Uh, that's because the overall trends are different: one has been historically increasing, one has been historically decreasing.

...meaning, you overlooked Ragout's point: When was the last time this happened?

Not surprising from someone who wrote this a few comment sections back:

Here is the logic of the good doctor in a letter he wrote to a journal: "The method used by Richards et al might lead one to conclude that the deaths of tens of thousands American men have been avoided through improvements in early diagnosis and treatment. The fact of the matter is that prostate cancer mortality in the United States is now slightly higher than it was in 1950." ---------- Of course, considering that life expectancy is higher now than in 1950 where prostate cancer is much more likely to occur today in the far larger elderly population.

He ignores this.

Here our technophile Gladstone is either unaware of age adjustment in epidemiology, or blithely assumes H. Gilbert Welch (the "good doctor") is.

From p. 149 of Should I Be Tested for Cancer? Maybe Not, and Here's Why (H. Gilbert Welch, 2004):
The three cancer statistics discussed in this chapter are always adjusted for age. The most important rationale for this adjustment is to make comparisons across years "fair" in the face of an aging population (to compare prostate cancer mortality in 1970, say, with prostate cancer mortality in 2003). Because older people are more likely to both get and die from virtually all adult cancers, without age adjustment incidence and mortality rates would continue to rise as the population ages. Health officials, however, want to distinguish changes in the frequency of cancer independent of the effects of an aging population.

Foreclosures Hit a Snag for Lenders

By GRETCHEN MORGENSON
Published: November 15, 2007
A federal judge in Ohio has ruled against a longstanding foreclosure practice, potentially creating an obstacle for lenders trying to reclaim properties from troubled borrowers and raising questions about the legal standing of investors in mortgage securities pools.

Judge Christopher A. Boyko of Federal District Court in Cleveland dismissed 14 foreclosure cases brought on behalf of mortgage investors, ruling that they had failed to prove that they owned the properties they were trying to seize.

The pooling of home loans into securities has been practiced for decades and helped propel real estate prices in recent years as investors sought the higher yields that such mortgage trusts could provide. Some $6.5 trillion of securitized mortgage debt was outstanding at the end of 2006.......

liberal: "Uh, that's because the overall trends are different: one has been historically increasing, one has been historically decreasing."

Irrelevent, and besides, the cancer death rate had also been increasing before it started to plunge 1% a year after 1990. The plunging intensified to 2%/yr after 2002.

When the good doctor wrote the letter , he simply stated that prostate deaths were higher than in 1950, no mention of age adjustment.

It is unfortunate that homeownership is plunging, but if cancer deaths are plunging at twice the rate, then it looks like health care may be getting cheaper.

But Dean Baker should tell his readers of the great news that cancer deaths are plunging in the U.S. They may not have heard.

In a blog about economics, he should talk about health? I didn't realize that the good Doctor was a Doctor.

On another blog, the question was raised, what happens to the subprime owners who get foreclosed? Assuming they paid little or nothing down, are they now worse off than if they had never received the mortgage? I think we need answers to this question before we liberals carry on about subprime mortgage loans.

"they issued these mortgages because highly paid idiots were buying them up as fast as possible"

I worked briefly in a mortgage brokerage, and was astonished to hear lenders encouraging borrowers to lie on their applications. I concluded that they must be planning to sell those mortgages at the earliest opportunity. I just didn't know to whom.