Home improvement: black homeownership is up, but at what cost?Mortgage lending to African Americans African American Multiculture A person having origins in any of the black racial groups of Africa. See Race. is on the rise, up 15% in 2003 from 2002, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. July data from the Consumer Bankers Association. CBA See Capital Builder Account. President Joe Belew says for new homes. "lending to blacks surpassed lending to whites by 36%" Two-thirds of all potential home buyers prefer fixed-rate mortgages (FRMs) to adjustable-rate mortgages Adjustable-rate mortgage (ARM) A mortgage that features predetermined adjustments of the loan interest rate at regular intervals based on an established index. The interest rate is adjusted at each interval to a rate equivalent to the index value plus a predetermined spread, or (ARMs), according to a July survey of 1,015 Americans released by the Consumer Federation of America The Consumer Federation of America (CFA) is a non-profit organization founded in 1968 to advance the consumer interest through research, education and advocacy. According to CFA's website, its members are approximately 300 consumer-oriented non-profits, which themselves have . However, the CFA (Computer Fraud and Abuse Act of 1986) Signed into law in 1986, the CFA was a significant step forward in criminalizing unauthorized access to computer systems and networks. The Act applies to "federal interest computers" that include any system used by the U.S. study also finds that African American buyers tend to show a poor understanding of loan risks--and at a time of rising interest rates. 31% are purchasing ARMs. CFA Executive Director Stephen Brobeck says, "Given the high probability of interest rate increases, an adjustable-rate loan made to a family that can barely afford the initial monthly payments represents a ticking time bomb." Traditionally, ARMs have worked for buyers intending to own a property for a limited time (up to seven years). They've also been popular among high-income and high-credit-rated consumers. But the CFA finds that lenders have begun marketing ARMs to unsuspecting lower-income clients who expect to own property for longer periods (15 or 30 years), and it is urging lenders to fully disclose potential costs of adjustable-rate mortgages to uninformed buyers. In investigating which groups tend to choose ARMs as opposed to FRMs, the CFA did not distinguish among African Americans on the basis of income, age, or education, but it found that 33% of all Americans who earn less than $25,000 annually and 26% of those who possess only a high school degree prefer ARMs. More date concerning home buying can be found in a July Gallup report, Blacks More Pessimistic pes·si·mism n. 1. A tendency to stress the negative or unfavorable or to take the gloomiest possible view: "We have seen too much defeatism, too much pessimism, too much of a negative approach" Than Whites About Economic Opportunities. Results show that 86% of whites and 74% of Hispanics think that blacks have home buying opportunities equal to those of the rest of the population. But just 55% of blacks agree, up from the 48% who agreed during the recession in 2002.
2004 Preference for ARMs vs. FRMs
FRMs ARMs
Hispanics 37% 63%
Blacks 31% 69%
Whites 25% 75%
SOURCE: CONSUMER FEDERATION OF AMERICA
Note: Table made from bar graph.
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