Sub-Prime Redlining?

African-Americans and Latinos have been particularly hard-hit by the predatory lending practices of sub-prime lenders, writes Mark Winston Griffith, Co-Director of the Neighborhood Economic Development and Advocacy Project.

2 minute read

April 12, 2007, 6:00 AM PDT

By Michael Dudley


"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."

Monday, April 9, 2007 in AlterNet

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