Rev. Jesse Jackson ‘We’ve been robbed by these companies, and they are preying on decent, working-class people. These companies don’t need to lend money to those they know cannot pay it back.’ —James Sanders, Queens, NY Councilmember

The famed activist came from Chicago to alert financial leaders and the public to the impact of sub-prime lending.

“Some say the sub-prime mortgage crisis is just a ripple in our massive economy and will correct itself. But it’s not just a ripple for the estimated 2.2 million Americans who will lose their homes and approximately $164 billion in equity. It’s not just a ripple for America’s cities and towns where—in 10 states the aggregate loss of tax revenue will equal $6.6 billion in 2008 alone. The resulting decline in property values and taxes will undermine public services and the ability to fund infrastructure, and place our states and cities at risk,” said Rev. Jackson, according to prepared remarks.

“President Bush’s plan is too little, too late, and covers far too few people–only around 840,000 of the over 7 million people with sub-prime mortgages. The Bush plan deals only with those who are current on their payments, and leaves those most at risk out in the rain. There is no recourse for those who have already lost their homes.

“The crisis has hit African Americans and people of color the hardest. These communities were targeted and steered into sub-prime loans that lenders knew consumers could not afford. Thirty percent of loans made to African Americans were ‘higher cost loans,’ as compared to 17 percent for Whites. For refinances, over 52 percent of loans to African Americans were ‘higher cost loans.’ In New York, Blacks were twice as likely to be steered to sub-prime loans: 46 percent of loans to Blacks were ‘high cost loans;’ 21 percent to Whites; 39 percent for Latinos,” he said.

The rally was one of many that took place across the nation to put pressure on the corporate community to address the needs of Americans whose homes have been foreclosed.

“Save our homes!” chanted nearly 200 protestors from various organizations gathered Dec. 10 at Broad and Exchange Sts. in Lower Manhattan, braving cold temperatures. Participants let their voices be heard about a problem many New York City homeowners are facing.

“Two million homes will be at risk for foreclosure by 2008,” said Rev. Jackson. “We need to restructure loans to avoid these foreclosures. Without it, the country is bound to go into recession.”

Problems have arisen in sub-prime loans such as adjustable rate mortgages that start out with low payments for the first two or three years then Interest rates and payments increase greatly over the remaining years of the loan.

Rev. Jackson wants leaders on Wall Street to create long-term, restructured mortgage repayment plans for homeowners. He has met with Federal Reserve Chairman Ben Bernanke and others in Congress to discuss the problem.

The civil rights veteran called the sub-prime crisis a “scheme and unfair practice” that leaves the working-class disadvantaged. He particularly pointed out the number of minorities who are affected.

Blacks make up 28 percent of homeowners in New York City, according to the Urban League’s “State of Black New York City” report. More than 25 percent of that number pays more than 50 percent of their income on housing, compared to 17 percent of White homeowners.

The report also indicated that in neighborhoods like Hollis, Queens, and Bed-Stuy and East New York in Brooklyn, 20 percent of new home purchases are being financed at sub-prime rates.

Councilmember James Sanders, of Queens, was one of several elected officials at the rally. His district is hit hardest because 60 percent of the city’s homeowners live in the borough.

“We’ve been robbed by these companies, and they are preying on decent, working-class people. These companies don’t need to lend money to those they know cannot pay it back,” he said.

Rev. Jackson also blamed lenders for the problem, saying they targeted borrowers they knew cannot afford expensive mortgages.

“This is not about literacy, not about ignorance,” he said. “Most foreclosures result from shady products that have been promoted by sub-prime lenders ultimately financed by Wall Street.”

National Urban League President and CEO Marc H. Morial also joined Rev. Jackson, putting the blame on Wall Street for the foreclosure blunder. He also believes that if the problem persists, it will pile onto the nation’s overall financial problems.

“It is not the availability of sub-prime mortgages that has brought about this meltdown,” he said. “It is the way these loans have been used by fly-by-night brokers to exploit and taint the dream of homeownership for countless urban residents.”

Rev. Jackson announced plans for a January rally during the Rainbow PUSH Coalition’s Wall Street Economic Summit at the Sheraton New York Hotel. At that meeting, foreclosure issues and solutions will be further discussed.

(Final Call staffers contributed to this report.)