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Resolution for the National Convention to Address the Homeownership and Foreclosure Crisis Facing the African American Community

WHEREAS, many sub-prime lenders, and specifically those promoting the so­ called "exploding ARMS" loans, disproportionately targeted African Americans, Hispanic Americans, and other racial and ethnic minorities; and

WHEREAS, these loans are characterized by a huge "payment shock" two to three years after the initial loan is made in which an individual's monthly mortgage increases dramatically, usually by 40% and often times more; and

WHEREAS, this payment shock is often accompanied by a prepayment penalty, often of around $6000; and

WHEREAS, the impact of these loans, which were once touted as dramatically increasing homeownership among our nation's racial and ethnic minorities will in fact be devastating to our families and in too many cases, entire communities; and

WHEREAS, too many Americans, a disproportionate number of whom are African American and Hispanic American, risk losing their homes and their attempts at building wealth and equity for themselves in their golden years or to pass on to their children; and 

WHEREAS, homeownership has historically been, and continues to be one of the most effective ways Americans can build wealth; and

WHEREAS, homeownership in our country can oftentimes provide the capital necessary to educate our children through colleges and universities, in this day and age, a necessity for success and prosperity in America. Homeownership can be the single most important determinate for aging Americans, as to whether we will live out the sunset years of our lives in grace and dignity, or squalor and poverty; and

WHEREAS, all over our nation, houses once occupied by African American and Hispanic men, women, and children will be boarded up and sold. The impact on our communities will be nothing short of devastation, demoralization, and destruction; and

WHEREAS, African Americans currently have a median net worth 1115th of white families, $5,598 to $88,000; and

WHEREAS, 52% of African American borrowers and 40% of Hispanics receive sub-prime loans. Even when income is taken into account, African Americans and Hispanics receive a disproportionate number of sub-prime loans; and

WHEREAS, conservative estimates seem to agree that 56% of all foreclosures on sub-prime loans made in 2005 will be against African American or Hispanic households; and

WHEREAS, 52% of ALL loans made to African Americans in 2005 were sub-prime loans (Home Mortgage Disclosure Act data); and

WHEREAS, according to the Mortgage Bankers Association, 60% of au sub-prime loans made in the third quarter of 2005 were non-traditional mortgages; and

WHEREAS, by disproportionately foreclosing on African American and Hispanic homeowners, the sub-prime lenders are ruining families and the dreams of people who just wanted some security for their future as well as for the future of their children; and

WHEREAS, the future appears very bleak as hundreds of thousands of African Americans who once pursued the American dream of owning a home and having financial security in the future. 

THEREFORE, BE IT RESOLVED, that the NAACP joins with other civil rights, housing rights, and consumer rights advocates in calling on lenders, loan services, and investors who may hold these reckless sub-prime loans in which the mortgage holder finds his or her monthly payment suddenly increased, by 30 or even 40%, after the initial "teaser" rate has expired to abide by a moratorium on foreclosures until borrowers can craft a solution to avoid the horrors of losing our homes and our communities; and

BE IT FURTHER RESOLVED, that the NAACP Housing Committee immediately address this problem as one of their highest priorities; and

BE IT FINALLY RESOLVED, that the NAACP call for the elimination of early payment penalties on all sub-prime loans which make it difficult for moderate-income Americans to refinance their mortgages in order to receive more advantageous and manageable payment terms.