5 - The Implications of the Collapse of the Mortgage-backed Securities Market for Consumer Borrowers

Summary

Chapter 5 examines the subprime market collapse and the impact it had on consumer borrowers. It is important to understand the impact the collapse had on consumer borrowers who had these predatory subprime mortgages. Massive bailouts for the financial sector juxtaposed with ineffective government efforts to assist African Americans facing foreclosure, illustrate the antithesis of fairness principles discussed in chapter 2. The system that responded immediately to the crises in large financial institutions was not responsive to the plight of millions of mortgage borrowers at risk. The disadvantage and unfairness were exacerbated because African Americans had little or no access to traditional banking services to secure bridge financing to survive the financial crisis. All these initiatives were aimed at protecting financial institutions and their investors. The system that responded immediately to the crises in the large financial institutions was not so responsive to the plight of millions of mortgage borrowers at risk. For these individuals, the lack of financial relief from their mortgage obligations meant millions of foreclosures.