Report Predicts That the Subprime Mortgage Crisis May Result in the Largest Loss of Wealth Among African Americans in U.S. History

Thousands of Americans — both black and white — use the equity in their homes to help finance the higher education of their children. Blacks are already at a severe disadvantage in this regard because less than 50 percent of all black families own their home compared to more than three quarters of white families. In addition, the mean value of housing owned by whites is substantially greater than the mean value of homes owned by blacks.

Now a new report from the United for a Fair Economy, a Boston-based nonprofit organization dealing with the issue of economic inequality, estimates that the subprime mortgage crisis may result in a loss of wealth for black families of between $71 billion and $122 billion. According to the report, titled Foreclosed: State of the Dream 2008, the subprime mortgage crisis will cause the largest loss of African-American wealth in the history of the United States. The authors of the report state that 40 percent of the losses accrued by blacks are a result of aggressive and unethical mortgage practices by subprime lenders.

This vast loss of wealth by black families will make it more difficult in the years to come for many African-American students to afford the cost of higher education.