Kia Franklin

The New Redlining? Racial Undertones in Subprime Trends

A new study has found racial disparities in the way subprime mortgage loans--which were discussed at length during DMI's last marketplace event--are offered. N.Y.U.’s Furman Center for Real Estate and Urban Policy found racial differences between the New York City neighborhoods where subprime mortgages were common and those where they were rare.

According to NYT:

"The 10 neighborhoods with the highest rates of mortgages from subprime lenders had black and Hispanic majorities, and the 10 areas with the lowest rates were mainly non-Hispanic white."...

“It’s almost as if subprime lenders put a circle around neighborhoods of color and say, ‘This is where we're going to do our thing,’” said Robert Stroup, a lawyer and the director of the economic justice program at the NAACP Legal Defense and Educational Fund Inc.

Careful, there. If this is anything like L.A. or Cleveland, civil rights and economic justice groups will not take this sitting down. For previous discussions of predatory mortgage lending, see here.

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Posted at 10:19 AM, Oct 15, 2007 in Predatory Lending | reports and research
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Again, the left cannot argue without misleading by omission. A word for word quote from the article in NY Pravda, "The analysis provides only a limited picture of subprime borrowing in New York City. The data does not include details on borrowers’ assets, down payments or debt loads, all key factors in mortgage lending. And comparing neighborhoods is inexact; the typical borrower in one may differ from a typical borrower in another.

Jay Brinkmann, an economist with the Mortgage Bankers Association, said there was not enough information in the Furman Center analysis and other studies on the issue to draw conclusions about whether subprime lenders were discriminating against minority home buyers. One of the crucial missing pieces is the credit histories of individual borrowers, he said."

This assertion is misleading garbage.

Posted by: Supremacy Claus | October 15, 2007 11:54 PM

Of course the study isn't conclusive, but it does raise some key questions about the extent to which race plays a part, and it does play a part, even at higher income levels ("A separate analysis of mortgage data by The New York Times shows that even at higher income levels, black borrowers in New York City were far more likely than white borrowers with similar incomes and mortgage amounts to receive a subprime loan.").

And this study only examines what has been a long-running quandary to civil rights advocates and housing advocates: "They say minority communities whose financing needs were starved decades ago because of redlining — banks’ refusal to offer loans or other services in minority areas — are now singled out for high-cost, high-risk mortgages in a kind of reverse redlining."

Posted by: Kia | October 16, 2007 2:49 PM