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States and Regions: 1975, Part C, Financial Characteristics of the Housing Inventory, Annual Survey (1977). Available at http://www.census.gov/prod/www/abs/h150.html [3/10/2003]. Table A.1, Income of Families and Primary Individuals in Owner and Renter Occupied Housing Units, 1975. U.S. Bureau of the Census, American Housing Survey for the United States: 2001, Annual Survey (2001). Available at http://www.census.gov/hhes/www/housing/ahs/ahs01/tab313/html [3/4/2003]. Table 2-20, Income of Families and Primary Individuals by Selected Characteristics—Occupied Units. Note that because of the limitations of the standard survey reporting tables, for the 2001 survey we have defined middle class as earning between $20,000 and $100,000 a year. For the 1975 survey we have defined middle class as earning between $7,000 and $35,000 a year, or $21,000 and $108,000 in inflation-adjusted dollars. “House poor” includes all families spending more than 35 percent of their income on housing, which was the highest level the government even bothered to report in the 1970s. The proportion of these middle-class homeowners spending more than 35 percent of their income increased from 2.8 percent in 1975 to 13.5 percent in 2001.

34 U.S. Bureau of the Census, Data User Services Division, Statistical Abstract of the United States 1993, 113th ed. The National Data Book, compiled by Glenn W. King under the direction of Marie Argana (1993), p. 734, Table 1247, Recent Home Buyers—General Characteristics, 1976 to 1992.

35 Ruth Simon and Michelle Higgins, “Stretched Buyers Push Mortgage Levels to a New High,” Wall Street Journal, June 12, 2002.

36 Calculated from Yongheng Deng, John M. Quigley, Robert Van Order, “Mortgage Default and Low Downpayment Loans: The Costs of Public Subsidy,” National Bureau of Economic Research, Working Paper No. 5184 (July 1995), p. 12.

37 White House, Office of the Press Secretary, “President Hosts Conference on Minority Homeownership,” press release, October 15, 2002.

38 There are several companies affiliated under the “Citigroup” logo. For ease of identification throughout the chapter, we refer to all of these companies under this organization’s best-known moniker—Citibank. Likewise, we use “Chase” as the moniker for J.P. Morgan Chase & Co. For a list of the largest subprime lenders active in the United States, see U.S. Department of Housing and Urban Development (HUD), HUD Subprime and Manufactured Home Lender List, data set (2001). Available at http://www.huduser.org/datasets/manu.html [2/1/2003].

39 Lew Sichelman, “Community Group Claims CitiFinancial Still Predatory,” Origination News, January 2002 (reporting on new claims of CitiFinancial’s predatory practices after settlements with state and federal regulators).

40 Senate Banking, Housing, and Urban Affairs Committee, “Predatory Mortgage Lending,” statement made by Jeffrey Zeltzer on behalf of the National Home Equity Mortgage Association (NHEMA), 107th Cong., 1st sess., July 26, 2001. See also National Home Equity Mortgage Association, “Join NHEMA,” in NHEMA.org. Available at http://www.nhema.org/Join/ [3/4/2003].

41 HUD, Unequal Burden: Income and Racial Disparities in Subprime Lending in America. Subprime Lending Report (April 2000). Available at http://www.hudgov/library/bookshelf18/pressrel/subprime.html [2/1/2003].

42 See Sichelman, “Community Group Claims CitiFinancial Still Predatory.”

43 HUD, Unequal Burden. To be sure, subprime lenders have focused more of their efforts among poorer homeowners; 26 percent of low-income homeowners end up with subprime refinancing, more than twice the rate of moderate-income families.

44 See, e.g., Howell E. Jackson and Jeremy Berry, “Kickback or Compensation: The Case of Yield Spread Premiums,” Working Paper, Harvard Law School (January 2002).

45 Dennis Hevesi, “A Wider Loan Pool Draws More Sharks,” New York Times, August 31, 2001.

46 The charges alleged that Citibank’s consumer finance unit employed deceptive practices to sell home loan insurance. To settle the case, Citibank agreed to pay $240 million, the largest