Study: Racism played a role in foreclosure crisis

[ck4829]

Predatory lending aimed at racially segregated minority neighborhoods led to mass foreclosures that fueled the U.S. housing crisis, according to a new study published in the American Sociological Review.

Predatory lending typically refers to loans that carry unreasonable fees, interest rates and payment requirements.

Poorer minority areas became a focus of these practices in the 1990s with the growth of mortgage-backed securities, which enabled lenders to pool low- and high-risk loans to sell on the secondary market, Professor Douglas Massey of the Woodrow Wilson School of Public and International Affairs at Princeton University and PhD candidate Jacob Rugh, said in their study.

The financial institutions likely to be found in minority areas tended to be predatory -- pawn shops, payday lenders and check cashing services that "charge high fees and usurious rates of interest," they said in the study.

http://finance.yahoo.com/news/Racial-predatory-loans-fueled-rb-1069330785.html?x=0

[elleng]

1. NOOOOO. Racism and homeownership??? Couldn't be.

:sarcasm:

[DURHAM D]

2. Red lining was outlawed in the 70s but you would never know it as

they didn't cover all the bases. Just first base was recognized.

Another area of red lining - I manage homeowners association (condominiums/townhomes/etc.) For over 25 years I have received phone calls from lenders or real estate agents wanting to know the number (percentage) of rental units(investor owned) in the complex. I always ask them why they need to know. The response is always - its on the form. Then I ask them if they have the same forms and require the same information when handling a sell in a single family neighborhood that happens to have a homeowners association. The answer, of course, is NO.

Then I tell the caller this is a variation of red lining - shared interest communities BAD - single family homes GOOD. I will not answer the question. Then they tell me that if the sale falls through it will be my fault. And, I response - Change the damn forms and stop asking bias questions. I also tell them not every question deserves an answer. The other thing - if they really want the information they can always get it from the county records and I am just not interested in helping them discriminate against lower and middle class homeowners.

[Brewman_Jax]

3. Tim Wise wrote about this

the article is found here at Of Collateral Damage and Roosting Chickens: Reflections on Racism, the Economy, and the High Cost of White Ambivalence

One of the points in the article is that after the predatory lenders saw that no one was going to stop them as they attacked mostly-black and brown neighborhoods, they turned their attention to mostly-white neighborhoods. Now those areas, even the high-rent sections, are suffering like the not-so-high-rent areas.

[Brewman_Jax]

4. K&R

:kick: