Subprime Lending: The Mirage of Homeownership

Abstract

In the years following end of WWII, the goal of home ownership became synonymous with the American Dream. Buoyed by favorable governmental policies that encouraged low-density housing development, the American society embraced the idea of the single-family home as the embodiment of democracy. Even though the government renewed its commitment to this objective decade later, too many low-income and black and minority families were betrayed by financial institutions that encouraged subprime loans which made the American Dream a cruel illusion. Like the Great Depression of the 1930s, the 2008 economic crises forced the government to reevaluate the very concept of democracy, and governmental and individual responsibilities. Like his predecessor, President George W. Bush, President Barack Obama saw the government’s role as that of protecting low-income (i.e. minority) communities from deceitful policies designed to enhance corporate profits while deconstructing families and dreams.