By Joel Hall
Earlier this month, President Bush shared the White House's plan to help 1.2 million distressed homeowners at risk of foreclosure due to the sub-prime lending crisis.
The plan, brokered through the U.S. Treasury Department and major industry lenders, proposes to help struggling homeowners re-finance their loans, or freeze the current interest rates for five years.
However, leaders from the Georgia and Clayton County NAACP describe the proposal as a "cop-out," which lacks federal oversight. And local legislators say it doesn't do enough to protect borrowers from foreclosures, or reverse the current trend.
"The government is drafting a bailout plan that is going to shield some of those lending companies from the scrutiny that they deserve," said Francys Johnson, executive director of the Georgia NAACP, stressing that a moratorium on foreclosures -- rather than freezing interests rates -- is needed while the lending industry is re-evaluated.
Johnson believes that many African Americans, and other marginalized groups, are being unfairly targeted by predatory lenders, noting that about 33 percent of African Americans are more likely to get sub-prime loans than their white counterparts with equal income and credit.
"We are not talking about folks who have risky credit or not enough money to pay for the homes that they bought," said Johnson. "We are talking about a group of people, who qualified for prime loans and were targeted for a sub-prime product.
"The red-lining of the 70s and 80s has been replaced by the predatory lending of this decade," Johnson continued. "The plan that has been proposed will only protect the corporations."
Johnson described Clayton County as "the crown jewel" of predatory lenders. A May 2007 report from the Atlanta Regional Commission stated that, out of 913 counties with a population of greater than 50,000, Clayton County had the second-highest foreclosure rate in the nation. Out of the 10 counties in Metro Atlanta, Clayton had the highest foreclosure rate in 2006, with 4.3 percent of residential units in foreclosure.
Dexter Matthews, president of the Clayton County NAACP, said many houses in the county are "overpriced" with interest rates that "are much higher than they should be."
Bush's plan is "too little, too late for the majority of the African-American borrowers," said Matthews. "It's not helping anybody who is about to lose their home. What Mr. Bush did is a shame."
Matthews said the national NAACP is in the process of filing a lawsuit against several major lenders in an effort to make them lower their interest rates.
U.S. Rep. David Scott (D-Georgia) said that Bush's proposal offered a lot of things, but is ultimately, "inadequate."
"In this mortgage crisis, we have to make sure that people stay in their homes," said Scott. "In order to do that, we have to require that, before any of these folks can foreclose on these people ... that they are required to restructure that loan."
Scott said that, last month, Congress passed a predatory lending bill which introduced a toll-free phone number (1-888-995-HOPE) that homeowners at risk of foreclosure can call for advice
However, he said that in the new year, he would push for a national moratorium on foreclosures, and a lending bill that protects borrowers from teaser rates, no-money-down lending, and adjustable mortgage rates.
"A person's home is the whole source of a person's wealth," said Scott. "Once he's lost that, he's lost everything. It's in the best interest of Wall Street and all these other firms to make sure that we have a strong financial system."