Via WaPo: Disparities Found in Sub-Prime Lending
About 29 percent of African Americans who bought or refinanced homes last year ended up with high-cost loans, compared with only about 10 percent of white Americans, according to an a consumer advocacy group’s analysis of new data from 15 large national lenders.About 15 percent of Hispanics received such loans offered to borrowers with damaged credit, known as sub-prime loans, according to the analysis conducted by the National Community Reinvestment Coalition, which represents 640 nonprofit organizations.
Rather than proving that lenders discriminate based on race, doesn’t this just reflect the fact that African-Americans and Hispanics are, in larger proportions, in more economically disadvantaged positions to begin with than whites, and hence due to less impressive credit they get less advantageous rates in higher numbers?
This study may be reflective of broader societal problems, but as evidence of race-based discrimination, it strikes me that the data do not support that conclusion.
If a problem needs to be addressed, let’s at least address the right problem.
Actually there’s pretty good evidence that race-based discrimination is a serious problem in lending. You might want to take a look at this article. One NFHA audit mentioned in the study had teams posing as prospective borrowers who differed from each other only in race i.e. similar incomes, credit history, age, etc. Teams composed of racial minorities were treated very differently by lenders.
Comment by Dave Schuler — Monday, April 11, 2024 @ 6:48 pm
Interesting–and I didn’t mean to imply an utter dearth of racism. However, it is clear that a large amount of the data can be explained by socio-economics.
Comment by Steven Taylor — Monday, April 11, 2024 @ 7:09 pm