Rev. Jackson Pushing for More Housing Help

His foreclosure tour might take a while. According to a December report by Moody's Economy.com, first mortgage loan defaults surged to 1.5 million annualized in the third quarter of 2007, about double the rate two years earlier. Worse, Moody's forecasts a rise in defaults and foreclosures throughout 2008 and into 2009.

Jackson says President Bush's plan to freeze for five years the introductory "teaser" interest rates on many subprime loans doesn't go far enough. He's calling on Congress and lenders to do more to help people keep their homes. Otherwise, he says, entire communities and neighborhoods are at risk of depression and abandonment.

The neighborhoods bearing the brunt of subprime woes — the ones Jackson has been visiting — are mostly minority ones. Black borrowers are two-and-a-half times more likely to hold a subprime mortgage than whites, according to the 2007 Annual Report on Minority Lending, sponsored by Compliance Technologies and Genworth Financial. Blacks also earn a median of $17,902 per capita, about $10,000 less than whites, according to the U.S. Census. That raises the question of whether the disproportionate exposure of black Americans to subprime credit terms is the result of poverty, racial discrimination or both. Some see clear signs of discrimination. The city of Baltimore on Jan. 8 filed suit against Wells Fargo (WFC), claiming that a review of foreclosure records showed clear signs of predatory and discriminatory lending.

The problem, though, is not just one for minority areas, Jackson says. Foreclosed property that sells at steep discounts — sometimes for pennies on the dollar — puts pressure on neighboring home sellers to lower their prices. "The water came in the hull of the ship; those in the bottom were hurt first," Jackson says with his trademark rhetorical flourish. "But as it rises, it hurts everybody."

In opinion pieces and TV appearances, Jackson has advocated a comprehensive government-sponsored refinancing effort to rescue homeowners saddled with unaffordable loans. We wanted to hear Jackson's opinions on subprime loans and race. True to form, the reverend didn't need to be prodded.

Jesse Jackson: I'm really sad. I was in Brooklyn today, where they're auctioning off people's homes. It's sad to see people line up and the predators and vultures wait and buy them up and people stand there helpless. Banks take the property back because they couldn't get any buyers.... So it's just kind of sad to see people in that predicament. People are so heartless about it.

SmartMoney.com: Does this constitute a crisis? Or did people just get into houses they couldn't afford?

JJ: It's a combination. The magnitude of this crisis takes it beyond blame. You've got several million people in this predicament whose problem bleeds over to the rest of the neighborhood. It's a big deal. It's like your neighbor's house is on fire because they were doing the wrong thing, but the wind is blowing and at this point you both have a problem.

In some instances people who couldn't get money from a regular bank got driven into a riskier deal. It's like you're driving down the highway in your small car and a big truck pushed you into gutter...