By Brenda Flanagan
“I saw someone around my home taking pictures,” said Lorian Smith.
Smith bought her East Orange home almost 15 years ago — her piece of the American Dream. But she fell into a subprime refinance debt trap and ended up in foreclosure in 2007. That’s when she saw the guy with the camera.
“And I asked them why they’re taking pictures and I was told my house was up for sheriff’s sale in two weeks. And I didn’t even know that. Two weeks before Christmas,” she said.
“There’s debt by design. And debt by design, largely for women of color. Race and gender matter, in terms of the kind of debt that people are trapped in,” said Trina Scordo.
Scordo calls that “pinklining” and New Jersey Communities United produced a report about it with two other agencies. It says African-American women are 256 percent more likely to get subprime loans than their white male counterparts. Sixty percent of payday loans are made to women with average interest rates of 400 percent. And Scordo says education lenders often target minority women to take on unpayable debts, promising a better life.
“It doesn’t happen. It’s designed to keep somebody trapped, constantly paying it off, right? And it goes toward a very specific demographic. They’re not giving those loans to middle class men,” Scordo said.
The report highlights cases in Newark, Minneapolis and Los Angeles, and comes as no surprise to Rutgers University Provost Jerome Williams who will soon publish a study that found lenders do discriminate against minorities. He says banks make more money on struggling heads of household, especially single women.
“Perhaps living paycheck to paycheck, trying to make the rent, trying to put food on the table, maybe paying bills a bit late. Then they get hit with the fees, which puts them further behind, which takes them even longer to get caught up. And after a while it’s just a never-ending spiral,” he said.
Smith fought off foreclosure, but she’s still struggling.
“You’re angry. And you get on the phone, and you’re talking to someone and everyone is repeating the same thing over and over and over again, but you’re not getting any results,” she said.
The report’s authors want more oversight, especially by the federal Consumer Financial Protection Bureau, so that loans don’t become a nightmare for women, and instead offer them a way to achieve their dreams.