The recovery from the housing meltdown of 2007-10 has been “uneven and painful” for communities of color, and it may take generations to restore what was lost, the director of the CFPB said Tuesday.
In remarks to the Ohio Land Bank Conference in Cleveland, CFPB Director Richard Cordray said that the financial drain was especially dramatic in Hispanic and African-American communities, where average household debt was almost cut in half.
The consumer bureau leader said that, while protections were passed by Congress in the wake of the financial crisis (including creation of the bureau) to defend against a future crisis, he said they do not erase the damage done to millions of families.
“The floor gave way beneath many whose wealth was tied up in their homes, especially in communities of color,” Cordray said. “When some owners lost their initial teaser rates, the costs of their mortgages jumped and, for many, became unaffordable. When risky mortgages began to collapse, home values plummeted in many communities and others became exposed to losing their homes. Homeownership, long the ticket to prosperity for middle-class Americans, betrayed millions of people as foreclosures dumped them out of their homes, stripped them of their wealth, and ruined their credit records.”