Elderly Black homeowners were explicitly targeted with false advertising and eventually bankrupted by aggressive lenders, according to an eye-opening report from USA Today.

USA Today collaborated with Grand Valley State University and the McGraw Center for Business Journalism to examine $1.3 million loan records and government foreclosure data. The data revealed the startling extent of the damage done to Black homeowners across the country since 2000.

The study found that thousands of elderly homeowners in low income, predominantly Black neighborhoods throughout Chicago, Baltimore, Miami, Detroit, Philadelphia and Jacksonville were pushed into taking out dangerous reverse mortgages that overwhelmingly ended in foreclosure.

Since 1997, Black homeowners took on reverse mortgages at two to three times the rate of white homeowners, leading many into financial disaster.

Reverse mortgages allow the elderly to take out loans against the appraised value of their home and became popular as the economy tanked in 2007 and 2008. The loans often give financial flexibility to homeowners. As long as all bills and taxes are paid, things usually work out in their favor.

However, lenders targeted elderly Black homeowners in low income areas, over-appraising their homes and offering them loans that eventually grew far beyond the actual value of their home.

The study notes that this is a vicious cycle. Any neighborhood with at least one foreclosure loses at least 1% of its value. As each house forecloses, this figure grows exponentially. More homes lost their value as the size of their loans continued to grow, exacerbating the problem.

These types of loans are risky because as soon as you miss one payment lenders are allowed to initiate foreclosure proceedings, which they almost always did.

These foreclosures have robbed a generation of Black families of thousands of dollars and the chance to build equity. One of the most startling aspects of the report was that these loans are marketed explicitly for the elderly. As a result, their close relatives often find out about the debt after their deaths.

The situation was so bad that the Department of Housing and Urban Development has had to spend the past few years developing rules to protect homeowners from being lured into these intentionally dangerous loans mortgages.

"Consumer advocates said the analysis supports what they have complained about for years – that unscrupulous lenders targeted lower-income, black neighborhoods and encouraged elderly homeowners to borrow money while glossing over the risks and requirements," Nick Penzenstadler and Jeff Kelly Lowenstein wrote.

"USA TODAY found that reverse mortgages end in foreclosure six times more often in predominantly black neighborhoods than in neighborhoods that are 80% white."

In neighborhoods where most residents earn less than desirable income, mortgage foreclosure rates for Black residents were six times as high as white residents.

As USA Today notes, the situation is eerily similar to the subprime loans given out in the early 2000s. Lenders in that situation also targeted low income Black homeowners, expecting them to default. This trend led to the Great Recession in 2008, which the report says forced lenders to go back to the drawing board and find a new way to get commissions.

HUD reported that some lenders canvassed neighborhoods. Lenders went door to door offering "tax-free" loans and immediate loans that required no monthly payment. Lenders flooded daytime syndicated programs with commercials for 800 numbers that offered reverse mortgages.

The Consumer Finance Protection Bureau says lenders outright lied to Black homeowners with a variety of false claims to wipe out debt and always retain ownership.

"Pockets of the country, particularly urban, African American neighborhoods were hit hard by reverse mortgage foreclosures. Many were targeted by reverse mortgage brokers after the recession when money was tight in neighborhoods where credit was traditionally less accessible," they said.

Many elderly Black homeowners took out the loans to cover home repairs or medical bills. Unfortunately, they did not realize that the worse-than-advertised loans would make it difficult for them to pass the home on to their children.

The majority of these reverse mortgages end in the homeowner's death. As a result, surviving relatives are left fat the mercy of lenders. If they're not willing to pay, the home is immediately lost and put into foreclosure.

Urban Financial Group was forced to face the issue after 750 elderly people filed a class action lawsuit saying the company went out of its way to target Black women. Furthermore, the suit claims that the group engaged infalse advertising and offered unacceptable loan rates throughout Chicago.

In 2013, they were ordered to pay each person $672,000. Thankfully, the number of homeowners taking out reverse mortgages has plummeted in recent years by almost 50%

Other rules have been passed to protect homeowners in recent years. The Consumer Financial Protection Bureau made a rule in 2011 that lenders had to notify homeowners that the loan eventually had to be repaid after death, but by then the damage was done.

Philadelphia councilwoman Cherelle Parker told USA Today that reverse mortgages hollowed out her community and adversley affected thosands of Black seniors in her district.

“Now that asset, that equity, is being drained out of some of the most vulnerable communities in America,” Parker told them.

“We’ve asked: Why was Philadelphia so targeted to get this loan product?…America should pay attention.”

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