New York Times: Minorities saddled with risky, high-priced loans
Since the mortgage crisis broke out, it’s been popular for conservative talkers to blame so-called minorities for the industries woes. The claim that too many African-Americans and Latinos were given loans that should have been denied.
While there were individuals and families throughout the market that probably were not qualified properly, minority communities were given loans that they would have never been able to pay off. The New York Times Opinion page details how these communities have been disproportionately affected by these bad loans.
- It seems clear at this point that minorities were more likely than whites to be steered into risky, high-priced loans — even when researchers controlled for such crucial factors as income, loan size and location.
- The Congress that takes office in January can start to deal with this problem by strengthening fair-lending laws, especially the Community Reinvestment Act, which encourages fair, sound lending practices while requiring banks to lend, invest and open branches in low- and moderate-income areas.
- A particularly striking analysis in 2006 by the National Community Reinvestment Coalition found that nearly 55 percent of loans to African-Americans, 40 percent of loans to Hispanics and 35 percent of loans to American Indians fell into the high-cost category, as opposed to about 23 percent for whites. There also were troubling gender differences. Women got less-favorable terms than men.
- A classic discrimination study by the reinvestment coalition found that black and Hispanic people who posed as borrowers received significantly worse treatment and were offered costlier, less-attractive loans more often than whites — even though minority testers had been given more attractive financial profiles, including better credit standings and employment tenures.
As usual, African-Americans and Latinos become the scapegoats for Americas greed and discriminatory practices. This is just another example of how whites get preferential treatment when all factors are equal.
But your local conservative blow hard will tell you that the very folks who were taken advantage of are to blame, giving unethical lenders and their racist practices a pass.