Sub-Prime Redlining?

"Some analysts suggest that sub-prime lenders are being punished for giving high-risk loans to borrowers in low- and moderate-income neighborhoods and communities of color, people, they say, who perhaps never should have received a loan in the first place. After all, their logic follows, not every American can handle the responsibility of credit and owning a home.

This is a convenient, yet misguided, conclusion to draw from the sub-prime mortgage debacle. In truth, sub-prime lending is just the latest example of how lenders have tarred entire segments of the population as credit unworthy through the mortgage industry's own discriminatory, irresponsible -- and now reckless -- behavior.

[M]ore than 50% of African-American and 40% of Latino mortgage borrowers have sub-prime loans. While of course many of these folks do in fact have poor credit histories, many of them, often targeted by hyper-aggressive marketing campaigns, would otherwise be eligible for low-cost, "prime" loans. A study by the Center for Responsible Lending documented that African Americans and Latinos get high-priced mortgages far more frequently than whites -- even when they are equally qualified for prime loans.

The term sub-prime is engendered with the belief that certain communities represent a lower order of customer species. As a result, sub-prime lenders justify their predatory pricing by claiming that African Americans and Latinos are higher credit risks. In other words, they deserve whatever horrific loans they get."