Ted Kennedy gave us the immigration mess; Joe Kennedy may have done the same for mortgage loans.

Carolyn Hileman* | December 4, 2007

The economy isn’t the villain. GDP growth in the first quarter of 2007 was above two percent and the unemployment rate (4.7 percent) continues to be low, all of this despite the blow to the financial sector.

How do we know foreclosures are essentially related to subprime loans? An inspection of foreclosures listed on the net provides that answer.

In Essex County, for example, 510 foreclosures are listed. Not all carry sales values, but it’s informative to study the 344 that do.

Geographically, 55 percent are located in Lynn and Lawrence; 18 percent, in Haverhill and Salem; eight percent, in Methuen and Peabody; Amesbury, Beverly and Danvers have nine percent. All other locations in Essex County — the richest ones — account for 10 percent of the total.

Those with limited income and a choppy credit background seek the subprime loan. So it is no surprise to find that the preponderance of foreclosures comes from the low-income communities.

In terms of size, 8 percent of foreclosures carry a sales value above $300,000; 52 percent over $200,000 and 39 percent under $200,000.

This data makes the point once again that subprime loans are the villains, loans that would never have been made as little as a generation ago.

When and why did lending practices change? Who was behind it?

There may be several explanations, but in reviewing the data one name keeps coming to the forefront — Rep. Joseph P. Kennedy II.

Writing in the July 14, 1989, National Review, Susan T. Mandel noted, “Sniffing out ‘discriminatory’ lending practices has been one of Kennedy’s top legislative priorities since he came to Congress in 1987. … Mr. Kennedy’s voting record (is) one of the most liberal in the House.”

Several 1989 studies suggested that bank lending practices were prejudiced against blacks.

There was no denying that minority applications for loans were turned down more frequently, but realists recognized that this was mostly due to disparity in income. Those who chronically play the ethnicity card, however, ever on the alert to find instances of discrimination, pounced on the statistics and charged banks with racism.

Joe Kennedy jumped into the middle of this morass and added his voice and his power to charges being made. And before he was through, an amendment was tacked onto a savings-and- loan bill that changed forever the way loans are made.

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