My colleauge Carol Brown has a new paper, Intent and Empirics: Race to the Subprime, up on ssrn, which turns to Home Mortgage Disclosure Act filings to dissect the racial disparities in subprime lending. She links that empirical evidence with qualitative evidence of what accounts for at least some of those disparities. Her abstract is as follows:
United States’ history of racially discriminatory banking, housing, and
property policies created a community of black Americans accustomed to
exploitative financial services and vulnerable to victimization by
subprime lenders. My thesis is that black borrowers are experiencing a
new iteration of intentional housing discrimination in the twentieth
and twenty-first centuries; lenders identified a vulnerable “emerging
market” of black homeowners and borrowers and knowingly targeted them
to receive subprime or predatory loan products when equally situated
white borrowers were given superior, prime mortgage products.
This Article explores how disparate lending practices coupled with
banking deregulation undermined the Congressional push for increased
minority homeownership and widened the already burgeoning wealth
divide. Millions of borrowers who accepted subprime loans between 1998
and 2006 already have or will lose their homes to foreclosure,
resulting in a net loss in homeownership for nearly one million
families. Blacks are disproportionately represented among the subprime
victims, especially black women. The lending and financial services
structure that caused this crisis is complicated by evidence of
redlining and of steering blacks into subprime loans, all of which
contributed to the present foreclosure crisis. This subprime dilemma
merely adds new terminology to a long history of racial discrimination
in housing in America. In the end, this Article argues that the search
for an understanding of the cumulative events that facilitated the
exploitation of blacks by subprime lenders illuminates the
institutional and national impediments to reversing the present and
future harm of the subprime crisis and to ensuring blacks equal access
to one of the benefits of full citizenship – property.
First, in
Part II, I contend that the disparities in subprime lending experienced
by black borrowers and especially by black women result from
intentional reverse-redlining and steering by lending institutions,
their loan officers, and brokers. Next, in Part III, I consider why
blacks and black women are disproportionately victims of subprime
mortgages and of predatory lending. Finally, Part IV concludes by
discussing the after-effects of subprime and predatory lending and
offers possible solutions for rethinking how blacks are to overcome
this deeply profound experience with housing discrimination which I
suggest made blacks prime subprime victims. It focuses on the property
dilemma or rather the dilemma of the landless.
I think a lot of people are going to be talking about this article.