Blacks, Latinos With Identical Credit Far More Likely Than Whites To Receive Subprime Loans

When troubled borrower Diane McLeod's debt problems made the front page of The New York Times earlier this week, she ignited a debate over borrowers, lenders and personal responsibility that shows no signs of slowing down.

Op-Ed columnist David Brooks took the opportunity to point out that McLeod's money problems were caused, in part, by her own behavior -- she shopped at the mall to relieve the emotional pain of her divorce and spent thousands on home shopping channels while recovering from surgery. But mortgage companies and credit card lenders also saw her as an easy target, he noted, marketing loans to her they knew she couldn't afford and most likely couldn't repay.

Read the whole story here.

Comments

[kentay305]

i will say this. the focus doesnt need to be on whos being screwed here. there needs to be a focus on why there are so many formulas to determine credit. there should be credit guidelines for every aspect of life. the insurance industry uses 7 different scales of credit to determine who gets what kind of rate. there are variables in everyones community but it needs to be equal for everyone.

same for pay wages as well... this is why alot of major companies, especially down here in florida, are making new employees anti union papers before they are even hired.

[uheardme]

It's important to know your credit history before you apply for a loan and TO SHOP AROUND. A white banker tried to give me a higher rate on my refi. I was ready for this caucasion and when I was finished with him I got a rate 1 percantage lower than the original quote. Don't tolerate this. Document everything and get a attorney if you need one. Try dealing with reputable Black-owned banks and brokers. That helps too.

[iambusto]

this article makes a lot of hints and innuendos but doesnt give the data source.
first show us the following.

1) a caucasian applicant and an african american applicant having same credit score (or within a narrow range of credit scores.

2) they have similar (again within a narrow range) of debt/income ratio.

3) there is a statistically significant number of cases where condtions 1) and 2) satisfy and still the african americans have higher interest rates.

then only one can claim there is a provable evidence of racism there. just saying a vast % of african american applicants are more likey to have subprime doesnt prove anything.

[AngryAmish]

Google "Chicago Reporter" and "minority lending," and you will find all the data your little heart desires--data gleaned from lenders' own HMDA reports. When controlled for income and credit history, African Americans and latinos are far more likely than whites to be placed in high cost loans.

[livewire19]

It's sad that this is happening, especially for those refinancing houses they've lived in a long time.

But is is another case of caveat emptor. The buyer needs to say no to bad deals, and had better fully understand the terms of the loan before signing any papers.

I'm sure what many of these mortgage brokers did was immoral, but not illegal. There are snake oil salesmen all over the place, and most of them act like your best buddy until the sale is made then they disappear. Don't put the house at risk, just say no. No one can force you to sign.

[rosal]

For all those who vote against their interests, please pay attention. Just follow the money, and then make an intelligent decision when voting.

[neocon666]

And that's new because? I watched C-SPAN when that point was brought up by one of the guests several weeks ago, and HUD statistics have long shown that the best qualified AA applicant has a lower chance of securing a mortgage than the lowest qualified white applicant.

OK republicans, let's hear how it's all their fault (and remind us all why 98 percent of AA's are NOT republican).

[danoj]

Ahhhhh, because we read stuff before we sign it. So a lesser educated person does not read the contract or ask questions; so what. Why is that the fault of anyone but the person borrowing the money? I'm a blue collar stiff, not highly educated, and if I was offered anything but a fixed rate i'd walk away. Why didn't these folks? Don't get me wrong the lender has a resposiblity to bear here as well. That's why the gov should not have bailed out the borrowers or the lenders.

[Natec2]

There were document practices where the borrower intentionally withheld information dealing with the interest rate HIKE... That is why over 300 people, dealing with subprime mortgages, were arrested. A CRIME WAS COMMITTED. That is why an interest rate hike FREEZE went into effect for MANY subprime borrowers (without legislation from congress)... Banks don't want to get sued!!!!!!
So I take it the black(s) and latino(s) are the lesser educated people you refer too...huh? Well as uneducated as you claim... under some banks racist guidelines, the bank would still give you a better loan, discounts, and more home (squ. footage) b/c you're less educated, have less income, lower credit score, higher debt to income ratio, and of course, your skin color. Love being white don't you...
Peace

[letsgetsmart]

Reg z forms are completed on every application. This is federal law. Part of the forms are to describe the type of loan and part are to inform the borrower about equal rights laws. State auditors review turn downs closely. When a loan is signed there are repetitions of discrimination laws. Part of any loan package is to ask info about the clients such as race, sex and marital status. The borrower has the right to not give this info but it is required that in these cases the closing agent provides the best guess from observation. When mailers go out, they go to zip codes. Telemarketing calls are right down the list of possible phone numbers. There are some areas that have huge majorities of one type of client but most marketing is aimed at realestate values. You don't call or mail to areas that have limited equity at best. It doesn't matter who lives there if they have equity. I live in a state that has a large population and every few miles you can find all types of properties and all types of borrowers.

[livewire19]

long333 has it right. why would an informed buyer accept bad loan terms? there are tons of bankers competing for business, and no vast conspiracy. they all rely on FICO scores to determine rates. These days you don't even have to meet a banker face to face to get a loan. It can all be done electronically.

[Jakealoper]

That stat sounds like a lie, but since race hustlers constantly lie and obfuscate, then this is the norm. I am so sick of all the race hustlers and their baseless claims of racism, such as crime.

[anthonylee]

Rather than dismissing the stat, based on your ability to deduce what a "lie" sounds like . . . how about providing stats/data (that doesn't lie and obfuscate) that proves your case?

To ignore or dismiss any and all empirical data that in anyway goes counter to your argument . . . that we live in a racially justifiable society . . . . . is the coward's ploy, utilized by most bigots.

[kentay305]

looking at jake's comment it reminds me of what dl hugley said on the kings of comedy.

its not what you say when youre out and around people..its what you say when youre in the comfort of your own home.

you just keep seeing red while the majority is seeking equality and progress.

[uheardme]

I'm sick of white racist reality-deniers.

[long333]

I worked in the finacial sector and I have always wondered about this particular argument. It precludes that their is only one lender that everybody HAS to go to. In your example if I am the one denied by a conspiracy at Bank A why don't I go to Bank B. I really don't get why if I am offered sh*tty or no terma s at BankA I don't just keep shopping. Is it because HUD said that EVERY bank was on in on it an recluded this? It is not a republican argument to wonder why people except bad deals BTW. It is not a republican idea to expect people to shop around and it is only a democratic and leftist idea as I have ever seen that competition among banks means some normal bank among the gazillion baks there are isn't going to lend to a qualified candidate.

[anthonylee]

Stop wondering . . . . .

Average Joe (consumer - Black/White) seeking a mortgage does one of two things . . . . .

a) Gets qualified and then goes directly to a lender fills out an application and waits for the verdict . . . . or

b) Gets qualified and then goes to a broker (who shops the loan - bank A, B, C etc.) and waits for the verdict . . . .

In both scenarios the results can be skewed based on the relationship of the agent and applicant, not to mention purchasing zip code. Either agent has the discretion to market loan packages based on personal beliefs, values and/or commissions.

[Egalitare]

And you are assuming that there are not a significant number of mortgage institutions that are "redlining" by different means. Otherwise, it's just coincidence that we are in the midst of the largest reduction in net worth by African-Americans in at least 35 years.

Or are you naive enough to believe that the mortgage brokers that serve Georgetown owners are the same who service those in Anacostia?

[Robert59]

Lenders are as predatory as lions and sharks. They seek out the weak (meaning the desperate, naive, gullible, uneducated, infirm, very young and very old). Of course they targeted Hispanics because they knew most weren't financially savvy enough to figure out they were agreeing to terms they could never fulfill.

What's even more underreported is how they prey on the young. My teenage kids get credit card offers twice a week. One of them got a credit card charging her 200 dollars to establish then charging her an interest rate of 24.9 % APR. She told them to stick the card.

Credit card companies have desks at all the college registrations offering high interest rates to college kids with no financial means to pay for them.

Lenders deserve zero respect and zero pity.

[sf101]

Here's a point that the neocon corporate MSM will NEVER EVER mention. If some rich white neocon found themselves getting screwed in a bad mortgage deal like these people of color, how much do you wanna bet they'd instantly sick their expensive lawyer on this lender?

[JoeBlough]

This is America and those are the game rules.

[Natec2]

Well surprise, surprise, surprise... More whites benefitting from a system many of them (conservative) claim is fair and balanced. This is not the only racism found in this subprime mess... Many lawyers in MANY cities are suing financial institutions like Wells Fargo for the subprime mess such as in Baltimore. A certain type of home/product was built for predominantly white areas and a different home for black areas. The white area home(s) started at $150,000, the black areas were in the range of $100,000 and below. The home with a price of $150,000 and above RECIEVE A DISCOUNT... Thus no black home owners received a discount... Many of the homes in African American areas were given subprime mortgages and subsequently ended up in foreclosure... unlike their white counter parts with the similar credit scores and income... Blacks were 4x more likely to get a subprime mortgage than whites with similar income and credit score.
Blacks and white most certainly live in 2 Americas.
Source Washington Journal 5-24-08

[ErnestineBass]

Amazing! David Brooks removed his conservative blinkers.

[FaceYourFears]

INo way this is true......No way

[Superbus]

It's a fact that you can take to the bank. It's done by using zip codes (redlining). Blacks and latinos pay higher insurance rates, higher food prices, etc, all becuase of the zip code they live in.

[Nommo]

Not too many comprehend redlining. I have been pointing this out for all the time I have been posting here. Note the the 2 comments immediately above yours---just two examples of "just not getting it". When a community is flat out denied banking and insurance services, I don't care how hardworking the residents are, the best that most will be able to do is maintain. There will be little or no quantifiable growth.

They will always deny the racism, but the qualification for redlining, upon its institution, was the fact that one "minority" was in residence was sufficient to deny a community such services.

[lisakaz2]

Isn't this Kevin Trudeau's point???

[AmandaBC]

It's not just a point, it's a well-documented *fact.* Even shady telemarketers can be right once in a while...