Housing "nightmare" tarnishes the American dream

A study released this month by a group of fair housing agencies showed that the price of homeownership was often higher for black and Hispanic borrowers.

The groups examined lending in six major cities including New York, Los Angeles and Chicago and found that black borrowers were 3.8 times more likely to receive higher-cost home loans than were white borrowers. Hispanic borrowers were 3.6 times more likely.

"There's a lot of pain that's occurring and will occur because home ownership was sold at too great a price," said Kevin Stein, associate director of the California Reinvestment Coalition, one of the agencies that worked on the study.

John Taylor, president and chief executive officer of the National Community Reinvestment Coalition, said foreclosure not only devastates the homeowner's credit rating, but also tends to lower the value of properties nearby.

"We're not anti-subprime. There's a role for them. They're important. But these exotic, nontraditional mortgages that are designed to strip wealth need to be eliminated," Taylor said.

He wants lenders to restructure loans to help people stay in their homes, and has called on the Bush administration and Congress to amend rules governing the Federal Housing Administration so that the agency could refinance subprime borrowers' loans that are in default.

For many, any changes would come too late.

Almas Sayeed, an economic policy analyst at the liberal policy group Center for American Progress, said borrowers going through foreclosure had little chance of regaining the financial footing they would need to qualify for another loan.

"This promise of home ownership starts to elude families that tried to buy a home, bought into a loan that they really couldn't afford, and once they foreclosed, the possibility of owning a home again is really, really limited," she said.