The New Redlining
Mortgage lenders are increasingly imposing new loaning restrictions on risky areas encompassed by entire ZIP codes and county lines, creating what some are calling the "new redlining".
"On Jan. 25, Countrywide Bank sent mortgage brokers a list that categorized hundreds of counties as "soft markets" with rankings from 1 to 5, in ascending order of perceived risk. In areas rated 4 and 5 -- roughly 100 counties in metropolitan areas nationwide -- Countrywide said it will now require down payments that are 5 percentage points higher than from most applicants. If a loan program had previously allowed a minimum 5 percent down payment, applicants in these areas will now be required to come up with 10 percent."
"An additional 970-plus counties are rated more moderate risks, in categories 1 to 3, with down payment increases of 5 percentage points if an appraisal report indicates there is an "oversupply" of houses for sale or a marketing time of more than six months."
"Critics charge that imposing higher down payment standards or other penalties for applicants in an entire county, metropolitan area or Zip code is unfair to homeowners and buyers whose properties are located in submarkets or neighborhoods within those jurisdictions that may not be declining in value, or not by enough to justify punitive underwriting requirements."
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Private biness and redlining
It's been a while now since I had a career in banking, but IIRC any business receiving federal insurance, loans, protection, etc agrees to be subject to the law of the land, which means non-discrimination. I don't know whether Countrywide receives fed insurance, but my old bank did and we couldn't redline without severe penalty.
Best,
D
Enough, already!
Countrywide is a private business, and if they don’t want to make loans in some area, it is their right not to do so. It was pressure from these ignorant busybodies that is responsible for the mortgage mess in the first place. They insisted that “redlining” was wrong, even though it was based on sound business principles (“Don’t loan to people who can’t/won’t pay it back!”) If these fools want to loan to people, regardless of their creditworthiness or the condition of their neighborhoods, they should form their own bank, and make the loans themselves. In the meantime, they need to keep their useless "advice" to themselves.
Let's Discriminate Based On Race As Well As Neighborhood
I agree completely. If a private business doesn't want to make loans in some area, it is their right not to do so. Even if the individual asking for the loan is creditworthy, the loan should be based on the neighborhood, not on the individual's merits.
By the same reasoning, if a private business doesn't want to make loans to people of certain races, it is their right not to do so. Even if the individual is creditworthy, the loan should be based on race, not on the individual's merit.
If these fools want to loan to people, regardless of their race, they should form their own bank, and make the loans themselves. In the meantime, they need to keep their useless "advice" to themselves.
It is unAmerican to say we should judge people based on their individual merit, rather than judging them based on their neighborhood and on their race.
Charles Siegel
What's your point?
Since when is person's creditworthiness (or merit) the sole factor determining whether or not they get a loan?
And, while I "get" the lame attepmt at sarcasm, I don't believe that the government, or anybody else, for that matter, has any right to tell a private citizen that they cannot discriminate against anybody. The fact is, we all do it all the time. The government itself should be absolutely non-discriminatory, as it represents everybody. That rule doesn't apply to the individual, nor should it. There are any number a groups I discriminate against all the time, and I won't apologize for it.
Right On To Discrimination!
Right on! I discriminate all the time based on race, gender, and age, and I won't apologize for it.
Government should not discriminate, but no one has the right to tell private individuals that they should not discriminate. We should repeal all those laws that forbid private individuals to discriminate in employment, housing, and lending, so we can go back to the good old days when your home and your job depended on your race.
Thank you for your "lame attepmt" to shed light on this issue.
Charles Siegel