Lament and Hope: A Pan African Quad-Centennial Devotional Guide - Flipbook - Page 26
Percentage of higher-rate mortgages among borrowers with
a FICO score of 660 or higher by race (2004-2008 originations)
Hope in Angola
A History of
Subprime loans are loans that carry higher interest rates than prime loans, which are more
desirable since their interest rates are lower. Often, subprime loans are the only loans for
which people considered at higher risk of defaulting can qualify. These “high risk” borrowers
generally have low incomes and/or poor or limited credit histories. Borrowers with subprime
loans ultimately pay more for their homes, since they pay higher interest rates throughout the
mortgage period. The higher monthly interest rate also increases the risk of foreclosure.
Being approved disproportionately for subprime rather than prime loans means African
Americans paid a higher percentage of their income toward their mortgages than their
white counterparts, leaving them with less money for food, savings, and other needs.
Subprime loans devastate African-American communities and eroded wealth that had
been accumulating. Many gains that were being made have been eliminated.
Source: Bread for the World’s Racial Wealth Gap Policy Packet (http://files.bread.org/institute/simulation/Racial-Wealth-Gap-Policy-Packet.pdf)
LAMENT and HOPE: A Pan-African Devotional Guide