Funny......but my impression of the meltdown was a result of mortgage lenders making money by SELLING loans rather than LENDING money. This condition led to said lenders perpetrating fraud in their securitizations as the making of money had to do with the selling of the loans.........not in making prudent loans..... which were sold with no further liability to said lender.
2
Hudson City Savings was apparently praised in the mid-2000s for sticking to strict lending standards and continuing to require substantial down payments. The bank did not engage in so-called predatory lending in low-income areas, which possibly explains why so few branches were opened in those areas "from 2004 to 2010." The fact that low income areas exist in such concentration in the NY suburbs in the first place is due in large part to discriminatory local government housing and zoning policies over which the banks have no control, and which have contributed to making the New York metro one of the most segregated urban areas in the country.
In retrospect, Hudson chose the wrong approach. Those banks which did make reckless loans to non-creditworthy buyers, and in the process contributed to a wave of foreclosures and abandoned properties in poor neighborhoods, became insolvent but were bailed out by the federal government. Hudson, which initially stayed solvent, was done in by the collapse in interest rates. To add insult to injury, it is now accused of "redlining" for having adhered to the same lending practices that the federal government is today requiring of banks, in conjunction with a housing market that is so segregated that simply applying these standards in a profitable way may superficially appear like racial discrimination.
In retrospect, Hudson chose the wrong approach. Those banks which did make reckless loans to non-creditworthy buyers, and in the process contributed to a wave of foreclosures and abandoned properties in poor neighborhoods, became insolvent but were bailed out by the federal government. Hudson, which initially stayed solvent, was done in by the collapse in interest rates. To add insult to injury, it is now accused of "redlining" for having adhered to the same lending practices that the federal government is today requiring of banks, in conjunction with a housing market that is so segregated that simply applying these standards in a profitable way may superficially appear like racial discrimination.
12
Instead of redlining entire communities, it is only fair that each loan be handled on a substantiated case by case basis. Missed payments? Don't have a steady job? Low credit score? No mortgage loan - period.
They cannot force anyone to loan money to a credit risk while excluding entire communities based on race is beyond the pale.
They cannot force anyone to loan money to a credit risk while excluding entire communities based on race is beyond the pale.
Barney Frank and Christopher Dodd did indeed force mortgage lenders to loan money to people who never had a prayer of making house payments or even paying off payday loans. Their attack on housing lenderd either greatly exacerbated the financial crisis in 2008 or coused it 100%.
Yet Fannie Mae & Freddy Mac are behaving in exactly the same way today. Why?
Yet Fannie Mae & Freddy Mac are behaving in exactly the same way today. Why?
1
It seems to me, if you're the director of a small bank with maybe a dozen branches, and you're about to take on the added risk of opening a new branch, you would like to put it in a neighborhood with a lower default rate.
It's a move that is not directed at people of a specific race. It's a move that is directed at people with specific borrowing abilities and habits.
Of course, if an African-American comes into the new branch and qualifies for a mortgage, like any other potential borrower, then that customer is entitled to exactly the same treatment. Anything else would be criminal.
It's a move that is not directed at people of a specific race. It's a move that is directed at people with specific borrowing abilities and habits.
Of course, if an African-American comes into the new branch and qualifies for a mortgage, like any other potential borrower, then that customer is entitled to exactly the same treatment. Anything else would be criminal.
8
This is truly incredible. This is EXACTLY what Barney Frank did in threatening banks with lending to minorities and now the federal gov wants to start this all over again.
What's the definition of insanity? To duplicate processes while expecting different results
What's the definition of insanity? To duplicate processes while expecting different results
3
Barney Frank's "brave" challenge to mortgage lenders was in fact a deceptive performance on behalf of legislation lobbied for and drafted by the mortgage lending industry. The lenders succeeded in getting the charters of the quasi-public mortgage servicers Fannie Mae and Freddie Mac modified, so that those entities would now be obliged to take high-risk subprime mortgages (at the public's expense). This effectively removed private risk for lending, shifting it to the public (i.e. us taxpayers).
When Barney Frank stood at a podium in the late '90s and sanctimoniously asserted that the housing legislation that he and other patrons of mortgage lenders had crafted was intended to help people who had previously been denied mortgages, he was lying. The legislation was a cover for the lenders, who were drooling at the prospect of getting down-payments from subprimes. With the changing of the Mac/Mae charters, and with the collusion of security rating agencies (which have not yet been prosecuted for their willful misrepresentations), those lenders could now collect first payments, and sell off the remaining debt, risk-free.
Barney Frank didn't threaten banks with anything. He was their pet, and he performed his cynical theater on their behalf.
When Barney Frank stood at a podium in the late '90s and sanctimoniously asserted that the housing legislation that he and other patrons of mortgage lenders had crafted was intended to help people who had previously been denied mortgages, he was lying. The legislation was a cover for the lenders, who were drooling at the prospect of getting down-payments from subprimes. With the changing of the Mac/Mae charters, and with the collusion of security rating agencies (which have not yet been prosecuted for their willful misrepresentations), those lenders could now collect first payments, and sell off the remaining debt, risk-free.
Barney Frank didn't threaten banks with anything. He was their pet, and he performed his cynical theater on their behalf.
3
Sadly, Angry Barack wants to tear up or render unrecognizable the nicer neughborhoods because they represent achievement and the long-term family that he never had.
If we really have to replay the mortgage lending crisir liberals created last time, can we at least shut down Fannie Mae and Freddie Mac the second time around? If the dollar survives at all, that is.
Yes life is unfair, but if we have learned anything, it's that government is just a hammer and none of today's peoblems look anything like nails. I really think as liberal a state as Nre Jersey is can fix wrong things better than empire-building crooks in D.C.
If we really have to replay the mortgage lending crisir liberals created last time, can we at least shut down Fannie Mae and Freddie Mac the second time around? If the dollar survives at all, that is.
Yes life is unfair, but if we have learned anything, it's that government is just a hammer and none of today's peoblems look anything like nails. I really think as liberal a state as Nre Jersey is can fix wrong things better than empire-building crooks in D.C.
4
Let's see we bailed them out and now they do this. We should have let the system crash and burn then rebuild it. That was America biggest mistake was doing that we basically gave them a free pass to do it again and they will crash it again and once again the taxpayers of this nation will be called upon to bail them out.
Hi, I was a victim of mortgage fraud and predatory lending a few years ago in Atlanta, GA. The experience (getting 2 high interest loans when my credit score was 754) was devastating. I lost my home to foreclosure and I have felt homeless ever since. Eugenia renskoff
For Blacks in America, it appears that the more things "change" the more they remain the same.
As a member and officer of the Newark (NJ) Jaycees in the mid 1970s, I helped fight redlining. I don't believe that forty years later the same situation exists!
This is a wakeup call for young Blacks. Forty years from now you may (again) be fighting redlining.
As a member and officer of the Newark (NJ) Jaycees in the mid 1970s, I helped fight redlining. I don't believe that forty years later the same situation exists!
This is a wakeup call for young Blacks. Forty years from now you may (again) be fighting redlining.
1
Take my word for it, EVERYONE is having a more difficult time obtaining a mortgage now. Unlike the good-old-days appraisals tend to be lower than value rather than higher. And, the reality is values have NOT gone up for resales. For a bank to resell its mortgages, as most do, the requirements from SONY and FANNIE are overwhelming. Forget efficiency. Forget what when I was a young man had been a local banker who knew the community and made a judgement about my qualification. In those days the banks held on to the mortgages. The charged 7 1/2 % per year when they were paying depositer 3%.
2
"...banks have sharply retreated from providing home loans to African-Americans in the wake of the financial crisis."
One could read into that one line, and see redlining. Yet someone else could read into the same line, and see targeted marketing and prudence in business practice.
Is it a wrong thing to vie for customers with better credit scores, secure personal assets and employment history? I don't hear anyone complaining about those companies specifically seeking out demographics in customers in 18-24 age groups, is that age discrimination too? If we mandate banks to lend to anyone under the sun, are we tacitly pushing these banks toward higher problematic loans that the banks might not be able to serve with higher reserves requirements?
Ultimately, lending is a business. In a way, I'm surprised no one has waded in on this under-served markets and swooped up these customers, big time. Then again, wasn't that exactly what happened last time when subprime customers, with large swath of hispanic and black clientele, before Lehman and Great Recession eventually hit? And who were the ones holding the bag, for getting a mortgage that they could ill-afford? In hindsight, albeit the good intention, has the government been selling false hope to these lower strata in society that they can have (almost "entitled to") the same thing that their wealthier neighbors (white or not) are having, by leveraging more than is prudent?
One could read into that one line, and see redlining. Yet someone else could read into the same line, and see targeted marketing and prudence in business practice.
Is it a wrong thing to vie for customers with better credit scores, secure personal assets and employment history? I don't hear anyone complaining about those companies specifically seeking out demographics in customers in 18-24 age groups, is that age discrimination too? If we mandate banks to lend to anyone under the sun, are we tacitly pushing these banks toward higher problematic loans that the banks might not be able to serve with higher reserves requirements?
Ultimately, lending is a business. In a way, I'm surprised no one has waded in on this under-served markets and swooped up these customers, big time. Then again, wasn't that exactly what happened last time when subprime customers, with large swath of hispanic and black clientele, before Lehman and Great Recession eventually hit? And who were the ones holding the bag, for getting a mortgage that they could ill-afford? In hindsight, albeit the good intention, has the government been selling false hope to these lower strata in society that they can have (almost "entitled to") the same thing that their wealthier neighbors (white or not) are having, by leveraging more than is prudent?
6
The article doesn't even bother to address the issue of default rates, aside from a passing acknowledgement of the issue ("Banks normally try to avoid borrowers who seem likely to default on loans...").
Banks are self-interested economic enterprises - on any normal day, most Times readers would agree about that. And there are a number of reasons why default rates might be higher in minority communities - including the consequences of historical racism - which cast no aspersions on the character or economic savvy of those communities.
Unfortunately, at today's Times, it's all "activism", all the time. And the self-gratifying narrative which it sells to enough of its constituents - righteousness in the face of evil - is simply too delicious, and too easy to get past the paper's current editors, to allow more complicated analyses to undo it.
And of course, none of this is sincerely intended to help African-Americans, or any other disadvantaged communities. Like everything else that our current over-achiever class does that might possibly be construed as expressing a concern for the well-being of others, it's just one more thing to add to one's resume or college application...on the way to that payday.
Banks are self-interested economic enterprises - on any normal day, most Times readers would agree about that. And there are a number of reasons why default rates might be higher in minority communities - including the consequences of historical racism - which cast no aspersions on the character or economic savvy of those communities.
Unfortunately, at today's Times, it's all "activism", all the time. And the self-gratifying narrative which it sells to enough of its constituents - righteousness in the face of evil - is simply too delicious, and too easy to get past the paper's current editors, to allow more complicated analyses to undo it.
And of course, none of this is sincerely intended to help African-Americans, or any other disadvantaged communities. Like everything else that our current over-achiever class does that might possibly be construed as expressing a concern for the well-being of others, it's just one more thing to add to one's resume or college application...on the way to that payday.
7
we had a bubble because we loan to everyone & people were buying who never would have purchased.....here in AZ we try to teach then by making then go to a class to teach then on on how to pay their mortgage but it doesn't help....the first rule is you have to learn how to pay your bills before you party your money away this goes for blacks,browns and whites......if they don't pay their rent on time what makes u think they are going to pay for a mortgage and do they have steady income.......love how the Times makes everything so black & white.......
5
Brooklyn
Maybe you are thinking that the NY times was not aware that we had a bubble. However, this article is not about the bubble, it is about discrimination. So don't sound funny in your skin.
Maybe you are thinking that the NY times was not aware that we had a bubble. However, this article is not about the bubble, it is about discrimination. So don't sound funny in your skin.
Brooklyn is right. When Congress insisted that ne'r-do-wells get houses on easy credit it had no idea how dire the resuts would be.
The Dems did no favors to the people whose support they risked everything to buy.
The Dems did no favors to the people whose support they risked everything to buy.
4
This is another example of using Correlation rather than Causation to prove a point. There can be many reasons for differing percentages of anything. To conclude an ill motive is the cause of a decision based on a statistical difference is logically flawed. It turns the complexity of any issue whether it be loans to different groups after the Great Recession or shootings by police of African-American youth into simplistic statistical analysis.
The banks were correctly criticized, sued and paid billions of dollars in damages for stupidly loose lending standards in the run up to the financial crises. One result of those risky lending practice was the large number of loans to people, black, white, Hispanic, who should not have received loans and the corresponding increase in home ownership. Now, it seems that the. Obama Administration and the groups in this article are critical of banks for utilizing the lending standards they should have used in the past and attributing the result, fewer loans and lower home ownership in certain communities, to discrimination. That is unfair and improper when the only evidence is statistics.
There may, in fact, be discrimination in lending decisions. But, there needs to be evidence that each lender consciously refused to make loans to qualified borrowers based on their skin color, ethnic heritage or geographic locations. Statistics are not enough.
The banks were correctly criticized, sued and paid billions of dollars in damages for stupidly loose lending standards in the run up to the financial crises. One result of those risky lending practice was the large number of loans to people, black, white, Hispanic, who should not have received loans and the corresponding increase in home ownership. Now, it seems that the. Obama Administration and the groups in this article are critical of banks for utilizing the lending standards they should have used in the past and attributing the result, fewer loans and lower home ownership in certain communities, to discrimination. That is unfair and improper when the only evidence is statistics.
There may, in fact, be discrimination in lending decisions. But, there needs to be evidence that each lender consciously refused to make loans to qualified borrowers based on their skin color, ethnic heritage or geographic locations. Statistics are not enough.
15
Alas, flawed logic is all that is available to the government-growing liberals, and I am sure that they will plunge ahead to ''fix'' this like Don Quixote wearing a blindfold.
4
Sorry, but if I owned a bank I would open it in a middle class neighborhood, not in a high crime urban area. And I wouldn't care about the color of anyone looking for a loan . Just about their ability to pay. Does that somehow make me racist?
Part of the reason we had a housing bust was that people took out loans they couldn't pay back. The NY times called that preditory. Now what is the NY times asking for today? That a business must have buildings in the location of the pc media's choice?
Part of the reason we had a housing bust was that people took out loans they couldn't pay back. The NY times called that preditory. Now what is the NY times asking for today? That a business must have buildings in the location of the pc media's choice?
24
Thank you! Very well stated.
Since several months shy of turning 20 when I sustained a permanently disabling traumatic brain injury and 27-months later when I moved out on my own in 09/92, I have ALWAYS been considered low-income, even when I worked for the feds under a Schedule-A appointment.
In '05 when I decided to purchase a small, one-bedroom condo. I knew I wanted to stay in the same area and the amenities offered by the HOA. Because my credit scores were all in the 8's, the bank approved me for several hundred thousand dollars; completely irresponsible on there part.
I went online to the Houston Area Realtors website (HAR.com), plugged in the specifics desired and found what I wanted; received 100% financing @ 6.25% on a 40-year old condo. Down payment assistance covered pre-paids and closing costs; I had to put up $1,000 earnest money. This was 08/22/05.
Fast forward to late April '13. Apply to refinance; ONLY debt is mortgage; low credit score 794. Refied $35K @ 2.75%.
August 13, '15, final mortgage payment - in 10-years; Tues or Wed 08/18-19 go to bank to pay misc taxes to close account. Left teller station and sat down with loan officer to discuss rates on both Home Equity Loans and Lines of Credit. Upon leaving, went across the street to another bank where I have an account and discussed the very same thing.
Managing life is not easy by any stretch of the imagination. But, managing finances is a responsibility, as individuals, none of us can shirk.
Since several months shy of turning 20 when I sustained a permanently disabling traumatic brain injury and 27-months later when I moved out on my own in 09/92, I have ALWAYS been considered low-income, even when I worked for the feds under a Schedule-A appointment.
In '05 when I decided to purchase a small, one-bedroom condo. I knew I wanted to stay in the same area and the amenities offered by the HOA. Because my credit scores were all in the 8's, the bank approved me for several hundred thousand dollars; completely irresponsible on there part.
I went online to the Houston Area Realtors website (HAR.com), plugged in the specifics desired and found what I wanted; received 100% financing @ 6.25% on a 40-year old condo. Down payment assistance covered pre-paids and closing costs; I had to put up $1,000 earnest money. This was 08/22/05.
Fast forward to late April '13. Apply to refinance; ONLY debt is mortgage; low credit score 794. Refied $35K @ 2.75%.
August 13, '15, final mortgage payment - in 10-years; Tues or Wed 08/18-19 go to bank to pay misc taxes to close account. Left teller station and sat down with loan officer to discuss rates on both Home Equity Loans and Lines of Credit. Upon leaving, went across the street to another bank where I have an account and discussed the very same thing.
Managing life is not easy by any stretch of the imagination. But, managing finances is a responsibility, as individuals, none of us can shirk.
3
"The problem, consumer advocates said, had been simmering for years."
And where were the NY Times and other mainstream media?
And where were the NY Times and other mainstream media?
3
I think the issue here is more likely income rather than race. Poor borrowers are worse credit risks, regardless of color. I didn't see anything in the article noting that any of these institutions made loans in lower income white areas while excluding lower income black areas. If you are a mortgage lender specializing in "A" loans, you are not going to be lending much in low income neighborhoods.
14
I work p/t for a national nonprofit focused on providing services for children with disabilities. Yet, our office has a Housing Department that provides the HUD-approved course for low-income first time homeowner's (haven't owned in last 3-years) who qualify for Down Payment Assistance.
Down Payment Assistance programs are specifically designed to help LOW-INCOME households. In order to out if your household would qualify depends on the Area Median Income (AMI) and the number of people who would be living in the home to be purchased. The AMI is different for Houston than Dallas, Austin and San Antonio. Yet, each household must be at least 80% below AMI; the more people in the household the higher the income. For individuals/families living 110% or 120% below AMI the household income increases exponentially.
Despite the assistance available from city, county and state programs, this article fails to address Debt to Income ratios. Yes, credit worthiness is a factor BUT, abusing the credit cards and consistently making the minimum payments is akin to the debt limit increases we see unfold in Congress every several years.
Prequalifying for a mortgage requires years of fiscal discipline before the reality of wasting money on rent sinks in.
Down Payment Assistance programs are specifically designed to help LOW-INCOME households. In order to out if your household would qualify depends on the Area Median Income (AMI) and the number of people who would be living in the home to be purchased. The AMI is different for Houston than Dallas, Austin and San Antonio. Yet, each household must be at least 80% below AMI; the more people in the household the higher the income. For individuals/families living 110% or 120% below AMI the household income increases exponentially.
Despite the assistance available from city, county and state programs, this article fails to address Debt to Income ratios. Yes, credit worthiness is a factor BUT, abusing the credit cards and consistently making the minimum payments is akin to the debt limit increases we see unfold in Congress every several years.
Prequalifying for a mortgage requires years of fiscal discipline before the reality of wasting money on rent sinks in.
10
Do you have any evidence that qualified black buyers were turned down for loans??
19
how can one be qualified and turned down if a bank makes a point of not accepting or marketing for applications from a specific geography?
1
As if commercial lenders would not love to make profitable loans to borrowers of any race. The kind of racial discrimination the government is alleging is tantamount to saying these businesses prefer to leave money on the table, which is not creditable on the face of it. Keep in mind that this kind of politically motivated pressure to force banks to extend loans to poor credit risks on account of their race was a major contributing factor to the 2008 financial crisis. For a comic take on the situation then: https://goo.gl/NGB374
10
Let's get this straight: Hudson stayed prosperous while other banks went broke by offering risky mortgages to minorities who couldn't afford them. Those other banks had to be bailed out by taxpayers, while Hudson stayed solvent. And now, we're punishing the bank that WASN'T reckless and DIDN'T have to be bailed out???
By the way, if banks are holding blacks to higher standards than whites, then black homeowner should have much, much lower rates of mortgage default than whites, right? After all, banks reject all but the best of the best black applicants, so blacks default on mortgages at MUCH lower rates than whites.
Right?
By the way, if banks are holding blacks to higher standards than whites, then black homeowner should have much, much lower rates of mortgage default than whites, right? After all, banks reject all but the best of the best black applicants, so blacks default on mortgages at MUCH lower rates than whites.
Right?
14
"With conventional loans so difficult to secure, many black people found themselves sidelined from the homeownership boom after World War II"
The black homeownership rate went from 23% in 1940 to 43% in 1970 (+20), about the same rise as the white homeownership rate (+21). The end of redlining as an instrument of federal policy more or less came in 1968 with the passage of the Fair Housing Act.
Since the enaction of the FHA, the trend reversed and black homeownership has fallen from 43% in 1970 to 42% today. White homeownership continued to rise, going from 67% in 1970 to 72% today, creating the largest gap between the two since at least 1940.
The black homeownership rate went from 23% in 1940 to 43% in 1970 (+20), about the same rise as the white homeownership rate (+21). The end of redlining as an instrument of federal policy more or less came in 1968 with the passage of the Fair Housing Act.
Since the enaction of the FHA, the trend reversed and black homeownership has fallen from 43% in 1970 to 42% today. White homeownership continued to rise, going from 67% in 1970 to 72% today, creating the largest gap between the two since at least 1940.
6
"Red lining" certainly hurt black families, but it is simplistic to see lenders' practices as targeted at blacks. If you look at the so-called red lining maps and read the reports that went with them, you will see at work a host of ideas and prejudices about likely borrowers. All sorts of people, not just blacks, were viewed as poor prospects for profitable loans and all sorts of neighborhoods were labeled as less than desirable. And it is important to understand that lenders were concerned first about profits and not about prejudices. They did what they did because they believed it was the best way to make a profit.
The lessons for all of us is that such lending practices should be concern for all of us and that we are foolish in the extreme if we expect profit-oriented organizations to do the right thing for the wider community.
The lessons for all of us is that such lending practices should be concern for all of us and that we are foolish in the extreme if we expect profit-oriented organizations to do the right thing for the wider community.
3
Even if the lenders' overt motive was profit and not prejudice, their individual decisions could have been marked by prejudice about which people qualified for loans.
The mere act of redlining demonstrates that people in the "red " regions are not to be judged on their individual merits; that's prejudice in action.
The mere act of redlining demonstrates that people in the "red " regions are not to be judged on their individual merits; that's prejudice in action.
2
It is an untruth that business people and capitalists are only concerned about profits. Many business people and capitalists are not as concerned with profits as they are concerned with maintaining the status quo, which includes maintaining blacks in a subordinate politico-socio-economic status. And, if they can do both, all the better.
2
Earl, this is hogwash. Since when does a company turn down a profit???
2
Did Hudson City's black and Hispanic borrowers have lower default rates and higher loan recovery rates than white borrowers paying similar interest rates?
Unless we know that the answer is yes, we should be careful about assuming the government is correct that it discriminated. Bank regulators are too powerful for banks to fight them over discrimination allegations, which can be used to prevent a bank from even opening or closing branches, so a finding of guilt is essentially a restatement of the regulator's accusation. To know the actual truth, one needs to see if similarly-situated minority borrowers were rejected where white ones were not.
Unless we know that the answer is yes, we should be careful about assuming the government is correct that it discriminated. Bank regulators are too powerful for banks to fight them over discrimination allegations, which can be used to prevent a bank from even opening or closing branches, so a finding of guilt is essentially a restatement of the regulator's accusation. To know the actual truth, one needs to see if similarly-situated minority borrowers were rejected where white ones were not.
10
Would be curious about data and experiences in neighborhoods that the real estate industry (including speculators) has targeted to turn from low-income/long-time residents to a young-affluent demographic?
Is lack of home loans a back-end method to "move out" the lower income residents so that the area can be made available to super-gentrify?
Is lack of home loans a back-end method to "move out" the lower income residents so that the area can be made available to super-gentrify?
5
I'm curious about this as well. Harlem, Bedford-Stuyvesant and Bushwick (once 'no go' areas) could be a data and demographic treasure trove.
1
I doubt it.
If they are so creditworthy, why don't they move to better neighborhoods?
7
Probably because we're more likely to have neighbors who ask these sort of asinine questions...
3
Racism - white america's competitive advantage.
3
Interesting question to ask after reading a story about discrimination. Maybe a re-read is in order?
2
Redlining is also used in rentals.
1
"some banks have quietly institutionalized bias in their operations, deliberately placing branches, brokers and mortgage services outside minority communities, even as other banks find and serve borrowers in those neighborhoods."
So...what's the problem? Businesses aren't being forced to take what they see as risks?
So...what's the problem? Businesses aren't being forced to take what they see as risks?
4
Lenders can run into trouble here entirely by accident. If minority communities are poorer in a region, it won't require malicious intent for that to be reflected in approval rates or terms.
2
Amazing to read commenters jump immediately on "gov't is bad", "banks just want to make a profit", missing entire point so as not face our racism.
I grew up in 50s and 60s til '64 in Santa Barbara and never saw a black person except on TV. There were Latinos who mainly lived in a certain part of town, a few in my small school. I was raised that all people are equal, so it was a huge shock to see dogs and fire hoses turned on blacks in the South---I'd never learned of the KKK or lynchings in history class.
We must begin to teach our actual US history and not gloss the bad over. I couldn't help but get involved in the Civil Rights movement and many of my white friends could hardly believe things could be as bad as blacks were saying. We soon found it true, on levels small & large. I had to learn history on my own and blacks were living a different reality indeed.
Today we can see, via cellphone videos, some of it.
And whites on this board are complaining of gov't overreach.
Someone has to act when one bank can't find but a few minorities to lend to while their competition finds many more.
The whole financial industry needs a sharp eye on it, as they will push every boundary. cf Countrywide mortgage practices, CDSs, LIBOR rigging.....
Covert redlining shows we need federal intervention to get the big boys to play fair. They'll cheat if they can.
I grew up in 50s and 60s til '64 in Santa Barbara and never saw a black person except on TV. There were Latinos who mainly lived in a certain part of town, a few in my small school. I was raised that all people are equal, so it was a huge shock to see dogs and fire hoses turned on blacks in the South---I'd never learned of the KKK or lynchings in history class.
We must begin to teach our actual US history and not gloss the bad over. I couldn't help but get involved in the Civil Rights movement and many of my white friends could hardly believe things could be as bad as blacks were saying. We soon found it true, on levels small & large. I had to learn history on my own and blacks were living a different reality indeed.
Today we can see, via cellphone videos, some of it.
And whites on this board are complaining of gov't overreach.
Someone has to act when one bank can't find but a few minorities to lend to while their competition finds many more.
The whole financial industry needs a sharp eye on it, as they will push every boundary. cf Countrywide mortgage practices, CDSs, LIBOR rigging.....
Covert redlining shows we need federal intervention to get the big boys to play fair. They'll cheat if they can.
6
"I grew up in 50s and 60s til '64 in Santa Barbara and never saw a black person except on TV. "
My experience was just the opposite while growing up in Detroit.
Please, pay for your own sins out of your own pocket.
My experience was just the opposite while growing up in Detroit.
Please, pay for your own sins out of your own pocket.
7
I grew up in the '70's and '80's and saw people of all colors and nationalities. It's you and your family that lived in the all white area, not me. Keep you federal intervention to yourself.
2
Credit scoring is "the devil". Originally meant to take racial bias out of lending, credit scoring can be manipulated, to give fewer positive points or add more negative points, based on the home address, or employers with a higher proportion of employees who are visible minorities, and other parameters. Old style red lining of drawing a red line around a "do not lend" neighbourhood is too obvious.
Credit scoring does the job better and so much more subtlety.
Where are these banks spending their marketing dollars? Don't direct your message to people you don't want. So if the banks don't want to finance properties for members of visible minorities, the banks market through media channels, radio & TV stations, newspapers & magazines, & websites, that do not attract visible minorities.
Not all racists wear white sheets.
Credit scoring does the job better and so much more subtlety.
Where are these banks spending their marketing dollars? Don't direct your message to people you don't want. So if the banks don't want to finance properties for members of visible minorities, the banks market through media channels, radio & TV stations, newspapers & magazines, & websites, that do not attract visible minorities.
Not all racists wear white sheets.
2
There seems to be confusion about the role played by banks. They are not charitable organizations, first of all. Secondly, if they lend they must be compensated for the risk, and poor neighborhoods are riskier than rich neighborhoods. But if they charge a higher rate of interest to be compensated for the higher risk they are accused of predatory lending. If they issue NINJA Loans because they can securitize the risk they are accused of being irresponsible. They just can't win
The fact of the matter is that social lending is where the government steps in so that when the loan fails the government picks up the tab. But since a government is just the sum of its citizens, all tax paying Americans end up picking up the tab for these defaults.
So, commentators: you want poor neighborhoods to receive lending? Call your congressman and tell her that you are in favor of having the government subsidize all these loans even if it means higher taxes all around
The fact of the matter is that social lending is where the government steps in so that when the loan fails the government picks up the tab. But since a government is just the sum of its citizens, all tax paying Americans end up picking up the tab for these defaults.
So, commentators: you want poor neighborhoods to receive lending? Call your congressman and tell her that you are in favor of having the government subsidize all these loans even if it means higher taxes all around
18
To my knowledge banks are a "for profit" business. They will welcome those people who will help them make a profit and rightly ignore those who will not. If some politicians, not the government, what to do charity work and call it a business they are free to do that with their own money. Why force people to engage in business practices that will not turn a profit, that's just wrong.
12
Because somebody has to care about the people, it can't always be about money
Yes, it's always about money. Those who cannot afford to buy a house can rent. Many can't afford a house but would never expect a handout so they can own a home.
1
Allowing white collar criminals in positions of trust and responsibility to pay millions of dollars in fines instead of going to jail for their crimes does nothing to dis-incentivize the crime. If the Justice Department has enough evidence to extract a settlement, they have enough evidence to lock these guys up and send a message to all other bankers that redlining will put you in the slammer with hardened criminals.
The real and most pernicious racism is in the capricious way in which justice is applied in this country. White men in suits are protected while poor people of color are profiled and locked up even though the white men in suits commit the far bigger crimes. If there were justice in this country, our prisons would be filled with bankers wearing orange instead of Armani.
The real and most pernicious racism is in the capricious way in which justice is applied in this country. White men in suits are protected while poor people of color are profiled and locked up even though the white men in suits commit the far bigger crimes. If there were justice in this country, our prisons would be filled with bankers wearing orange instead of Armani.
5
And all that should have nothing to do with a business deciding not set up shop in one location or another.
5
Banks do not note the race or borrowers. To charge discrimination the Justice Dept hired a firm to guess borrowers race from their names and location. No inquiry was made to the credit worthiness of the turned down borrowers since no individual was actually discriminated against. Hudson settled because a financial institution will fold if criminal charges are even filed (Arthur Andersen). How about some facts for this article?
17
sad taxpayer: You're kidding yourself if you think that banks don't note the race of borrowers. Have you ever applied for a bank loan and not had to sit in front of a loan officer who can see your race?
The underlying problem here, which I don't see being mentioned at all, is the conflict of defining exactly what "banking" is - is it JUST a for-profit business, no different from any other retail business? Or is it something more - something that is a vital service to the society as a whole, like a public utility? Therein lies the rub. The banks, of course, argue that they should be able to operate just like a retail store - setting their prices and deciding where to open branches based solely on their own business models. Right up until the moment when a crash happens, when they immediately turn around and demand government bailouts because of the public service they provide.
The answer is to force the banks to make an either/or decision - if a bank wants to operate as a purely profit-driven business, they can do so. But then they forfeit any future claims for government protection (including FDIC insurance).
The answer is to force the banks to make an either/or decision - if a bank wants to operate as a purely profit-driven business, they can do so. But then they forfeit any future claims for government protection (including FDIC insurance).
5
Excellent point, Happy Retiree.Thanks for sharing.
Uh . . . FDIC insurance may help banks by lowering funding costs, but it was really put in place to help small depositors who have little visibility into the business practices and safety of a bank.
2
Presumably when loans go bad, the bank will be blamed for loaning money to minorities who are retrospectively deemed by the government to be poor risks if they default. Imagine if the government decided who should get loans!! Sky high defaults and massive loan forgiveness
2
So, suddenly we're interested in fair lending again? During the Clinton administration, the Justice Department had a long run of fair lending cases that had banks scrambling to comply or face adverse penalties and onerous sanctions.
Then came the long Bush years, best characterized by the clip at a white-tie event where Bush snarked about being with his base. The federal government forgot about fair lending.
Of course the banks are going to revert to business as usual once they're out of the hot seat. The tighter credit standards imposed since the Crash of '08 have given banks the cover they need to steer clear of the low- and moderate-income neighborhoods that in this country are populated by minorities.
I would like to see the Justice Department make fair lending a priority the way it was back in the '90s. Alas, it has its hands full these days just keeping minorities from being murdered by law enforcement. Can things get any worse?
Then came the long Bush years, best characterized by the clip at a white-tie event where Bush snarked about being with his base. The federal government forgot about fair lending.
Of course the banks are going to revert to business as usual once they're out of the hot seat. The tighter credit standards imposed since the Crash of '08 have given banks the cover they need to steer clear of the low- and moderate-income neighborhoods that in this country are populated by minorities.
I would like to see the Justice Department make fair lending a priority the way it was back in the '90s. Alas, it has its hands full these days just keeping minorities from being murdered by law enforcement. Can things get any worse?
1
"Then came the long Bush years, best characterized by the clip at a white-tie event where Bush snarked about being with his base. The federal government forgot about fair lending."
You are kidding, right? During the real-estate bubble of the 2000's I saw mortgages granted to areas of Detroit that in no way were worth the prices being paid or the equity being cashed out. I raised the concern to friends but I was accused of not wanting Detroit to experience the real-estate boom. This concern was also pointed to as a sign of my "prejudices against Detroit". The bust occurred and of course the so called poor victims claimed they knew no better and were tricked by unscrupulous lending practices. And Clinton? He signed the repeal of Glass-Steagall (along with NAFTA and normalizing trade relations with China) which helped make the US the country it it today. Please take your shell game somewhere else.
You are kidding, right? During the real-estate bubble of the 2000's I saw mortgages granted to areas of Detroit that in no way were worth the prices being paid or the equity being cashed out. I raised the concern to friends but I was accused of not wanting Detroit to experience the real-estate boom. This concern was also pointed to as a sign of my "prejudices against Detroit". The bust occurred and of course the so called poor victims claimed they knew no better and were tricked by unscrupulous lending practices. And Clinton? He signed the repeal of Glass-Steagall (along with NAFTA and normalizing trade relations with China) which helped make the US the country it it today. Please take your shell game somewhere else.
9
If this mortgage company was preventing minorities from getting homes in "good" neighborhoods and towns then shame on them. Time is way up for racial profiling in housing. But if they didn't set up shop in bad neighborhoods and dying towns, who can blame them? Camden, NJ, really? I wouldn't put a business there, nor in Brownsville, NYC. Doesn't seem like a good investment despite there being many hardworking folk stuck in those violent decaying places.
12
Why, as the owner of a bank, do I want to loan money in a neighborhood where homes are likely to decrease in value? It is an inconvenient truth, but a truth nonetheless that these same neighborhoods are the most likely to have declining property values. Remember, it is the low end of the housing market most impacted by the subprime crises. It is safe to assume that low income borrowers are more likely to be subprime borrowers. If a bank feels it can make money in a neighborhood it will do so. They only color almost all businesses are interested in is green, the color of money.
18
The comment below regarding an East Indian employee rejecting someone's loan is a problem. The woman should be fired, her credit destroyed and she should no longer be able to get a loan.
You can have education, well paying job and security but the way things are now; especially since 2006-7, it seems blacks were laid off, bad loans were given, there was a push to make folk foreclose and not be able to pay up.
Redlining occurred in NYC, Brooklyn and many lost their homes. Many with good credit were denied mortgages. It seems the karma will come back full circle as property taxes are heightened, perhaps an oncoming tech bubble will force many of the newly bought brownstone owners into foreclosure.
This country is and will be in a sad state of affairs until it does right by African American (slave descendants; 40 acres and a mule), Native Americans and now the hardworking Latino immigrant.
This article does not cover loans approved for people who do not have money with friends are families inside banks. There is too much corruption now in this country and Blacks and Hispanics are the ones dealing with the fallout.
You can have education, well paying job and security but the way things are now; especially since 2006-7, it seems blacks were laid off, bad loans were given, there was a push to make folk foreclose and not be able to pay up.
Redlining occurred in NYC, Brooklyn and many lost their homes. Many with good credit were denied mortgages. It seems the karma will come back full circle as property taxes are heightened, perhaps an oncoming tech bubble will force many of the newly bought brownstone owners into foreclosure.
This country is and will be in a sad state of affairs until it does right by African American (slave descendants; 40 acres and a mule), Native Americans and now the hardworking Latino immigrant.
This article does not cover loans approved for people who do not have money with friends are families inside banks. There is too much corruption now in this country and Blacks and Hispanics are the ones dealing with the fallout.
1
"Banks normally try to avoid borrowers who seem likely to default on their loans, but some stepped over the line, excluding entire communities..."
"...the bank’s competitors generated five times as many mortgage applications from predominantly black neighborhoods in the St. Louis area as Eagle..."
To everyone in the comments assuming that this is merely an issue of banks not wanting to lend to people who can't pay their loans, these passages are part of what you're missing. The legal issue is NOT that individuals are being discriminated against because of their poverty, and unfortunately it just so happens that in our society that means they're disproportionately black and Latino. If that was all the Justice Department had, there could be no lawsuit.
The legal issue has to be discrimination against a protected class. So this is only happening because there's evidence of blacks and Latinos not getting loans from certain banks, and of blacks and Latinos not getting loans at the same rates as whites in similar financial circumstances.
If that narrative seems incorrect or unfair to people, this is why we have trials. The government has to prove its claims. Banks can afford the best lawyers and no one compels them to settle. Any notion that it's tough out there for banks and lenders is absurd.
It's probably good that these claims will be judged under the rules of evidence etc., rather than being judged by some of the unconsidered assumptions on display here.
"...the bank’s competitors generated five times as many mortgage applications from predominantly black neighborhoods in the St. Louis area as Eagle..."
To everyone in the comments assuming that this is merely an issue of banks not wanting to lend to people who can't pay their loans, these passages are part of what you're missing. The legal issue is NOT that individuals are being discriminated against because of their poverty, and unfortunately it just so happens that in our society that means they're disproportionately black and Latino. If that was all the Justice Department had, there could be no lawsuit.
The legal issue has to be discrimination against a protected class. So this is only happening because there's evidence of blacks and Latinos not getting loans from certain banks, and of blacks and Latinos not getting loans at the same rates as whites in similar financial circumstances.
If that narrative seems incorrect or unfair to people, this is why we have trials. The government has to prove its claims. Banks can afford the best lawyers and no one compels them to settle. Any notion that it's tough out there for banks and lenders is absurd.
It's probably good that these claims will be judged under the rules of evidence etc., rather than being judged by some of the unconsidered assumptions on display here.
5
The article provided no specifics regarding whether or not the "5 times as many" loans were all to creditworthy borrowers or if the subprime fiasco was rearing its ugly head again.
While there were numerous "guilty" parties who drove the housing bubble, one of the prime movers was the huge push for more homeowners by both the Clinton and Bush administrations. This was government engineering a social experiment which is not the role of the Federal government and as is the case with the creation of artificially induced markets, it did not end well.
While there were numerous "guilty" parties who drove the housing bubble, one of the prime movers was the huge push for more homeowners by both the Clinton and Bush administrations. This was government engineering a social experiment which is not the role of the Federal government and as is the case with the creation of artificially induced markets, it did not end well.
2
Often, we should stop simply referring to "minorities" and, instead, differentiate between "minorities" and specific minorities. In the case of bank loan discrimination, it would help if the stats were broken down among minorities. Are we talking about Blacks, Asian Americans, those with Hispanic surnames, etc. or all of the above? Is it different with American minorities than with foreigners who are Arabs, Asians, Africans, or Latin Americans?
If we really want to deal with a problem, we need to define it as accurately as possible and not take the lazy way out by lumping all non-"Anglos" together, when that really isn't the issue. Sometimes it is, but sometimes it isn't. By lumping all "minorities" together, we are managing to avoid the reality that Koreans and Blacks, Puerto Ricans and Dominicans, Turks and Arabs, Chinese and Japanese Americans do not necessarily love each other any more than they love "whites" (in and of itself a dubious term.)
In dealing with redlining, which is not only illegal but simply wrong, we nonetheless do need to recognize that some people in all groups simply prefer to live among "their own kind", whether out of fear or to preserve a way of life they choose to live.
We also need to expend the energy to try to tease out the differences between racial/ethnic and class discrimination, not an easy task inasmuch as there is frequently much overlap. Dealing with the two is likely to often require different approaches.
If we really want to deal with a problem, we need to define it as accurately as possible and not take the lazy way out by lumping all non-"Anglos" together, when that really isn't the issue. Sometimes it is, but sometimes it isn't. By lumping all "minorities" together, we are managing to avoid the reality that Koreans and Blacks, Puerto Ricans and Dominicans, Turks and Arabs, Chinese and Japanese Americans do not necessarily love each other any more than they love "whites" (in and of itself a dubious term.)
In dealing with redlining, which is not only illegal but simply wrong, we nonetheless do need to recognize that some people in all groups simply prefer to live among "their own kind", whether out of fear or to preserve a way of life they choose to live.
We also need to expend the energy to try to tease out the differences between racial/ethnic and class discrimination, not an easy task inasmuch as there is frequently much overlap. Dealing with the two is likely to often require different approaches.
2
When banks deny mortgage applications from blacks while accepting them from whites with largely the same credit and income histories, people generally find this unacceptable, and that it’s a legitimate purpose of regulation to punish the practice and seek to end it.
However, when government burdens private lenders to actively seek and accept mortgages that are LESS well-qualified and riskier than others in order to achieve a social end, then government should socialize the cost across all of society to pay for it, rather than enslave private business to pay for it solely themselves.
Is Hudson City Savings Bank receiving mortgage applications from blacks equally qualified for them, then denying them, from ANY neighborhood? Or is CFPB and the Justice Dept. requiring that the bank open branches in impoverished neighborhoods, actively seek mortgage applications that are materially riskier than others, then requiring that the bank GRANT such applications?
When people think of red-lining, they understand the former to be unlawful, as it should be. But there will be resistance to an interpretation that requires the latter, because not only is it likely unsustainable without threatening the financial viability of banks, but it also has an intuitive cess of “bad” to it – collectivism run riot over the rights of private enterprise to seek and develop its markets while required to respect legitimate constitutional rights.
CFPB shouldn't get to hijack the definition of "red-lining".
However, when government burdens private lenders to actively seek and accept mortgages that are LESS well-qualified and riskier than others in order to achieve a social end, then government should socialize the cost across all of society to pay for it, rather than enslave private business to pay for it solely themselves.
Is Hudson City Savings Bank receiving mortgage applications from blacks equally qualified for them, then denying them, from ANY neighborhood? Or is CFPB and the Justice Dept. requiring that the bank open branches in impoverished neighborhoods, actively seek mortgage applications that are materially riskier than others, then requiring that the bank GRANT such applications?
When people think of red-lining, they understand the former to be unlawful, as it should be. But there will be resistance to an interpretation that requires the latter, because not only is it likely unsustainable without threatening the financial viability of banks, but it also has an intuitive cess of “bad” to it – collectivism run riot over the rights of private enterprise to seek and develop its markets while required to respect legitimate constitutional rights.
CFPB shouldn't get to hijack the definition of "red-lining".
28
And that was my question too. Is it racist, or red-lining to cater to high-end home sales only? Or to specialize in high-dollar loans? Can a bank choose a business model that only funds loans on homes that significantly above the median price?
I couldn't tell from the article if the bank was excluding neighborhoods, or an entire price class of real estate.
I couldn't tell from the article if the bank was excluding neighborhoods, or an entire price class of real estate.
1
"Homeownership is a cornerstone of economic mobility, and without a stable group of homeowners, neighborhoods can be left vulnerable to blight and disrepair." Gee - that sounds awfully familiar - when did we last hear that? Oh yeah - in the years immediately preceding the housing collapse - followed by massive amount of foreclosures. Foreclosures that hit - poor neighborhoods the hardest.
Maybe good will come of this forcing banks to give loans in blighted neighborhoods. Then again - maybe not. If the government thinks there is a reasonable business opportunity then let it give the loans. Legally requiring a business to be in a neighborhood that doesn't fit with its risk/reward strategy sounds unconstitutional. How would the NYTimes feel if the government ordered it to set one of its printing plants in a blighted area. Or better yet - its editorial staff offices. Huh?
Maybe good will come of this forcing banks to give loans in blighted neighborhoods. Then again - maybe not. If the government thinks there is a reasonable business opportunity then let it give the loans. Legally requiring a business to be in a neighborhood that doesn't fit with its risk/reward strategy sounds unconstitutional. How would the NYTimes feel if the government ordered it to set one of its printing plants in a blighted area. Or better yet - its editorial staff offices. Huh?
20
When redlining and sub-prime mortgages become the norm in middle class white communities, then maybe we'll see a change. I think 2008 was a big taste of that as white owned mega-mansions sank and took the market with it.
Illegal, immoral, clearly fascist policies will not be rectified until their effects bleed into white communities. See the article on drugs today.
Illegal, immoral, clearly fascist policies will not be rectified until their effects bleed into white communities. See the article on drugs today.
8
A colleague of mine, who is a minority with a PhD and a naturalized citizen, told me that his credit card application was rejected because his social security number had a short record. There is nothing he could have done to change that as he did not come to this country till his doctoral study in the US.
4
The short credit record dictates the rejection. He being a minority was irrelevant. White people with short credit records gets rejected all the times
4
Banks open in middle class and rich neighborhoods because, to quote notorious bank robber Willie Sutton, "that's where the money is."
The idea that the government should force banks to move to poor neighborhoods, where they will be unprofitable, is ridiculous, unless the government wants to open its own not for profit bank in these neighborhoods.
It is not racism to want to run a business in order to make a profit.
The idea that the government should force banks to move to poor neighborhoods, where they will be unprofitable, is ridiculous, unless the government wants to open its own not for profit bank in these neighborhoods.
It is not racism to want to run a business in order to make a profit.
23
It is racist to deny someone a product based on the color of their skin.
2
A study discovered this in Allentown, P.A in 2013. Real Estate agents were sending Hispanic and black applicants to one section of the city, and where refused to show white applicants the area even when asked.
5
Let's define 'redlining' before unloading all our racist comments. Can we do that people? First of all redlining happened because the USA gov't financed the white urban working and middle classes relo to suburbia after WWII. But, look back just a couple decades before that and what happened in the South? Well, the lynching and KKK from after Reconstruction fueled a huge migration of people avoiding marginalization and bodily harm,seeking dignity for their family and themselves and boom: the industrialization in Ohio, Michigan, Illinois. Kept the steel mills going for a bit, until they cashed in and sold out. I'm done. Just let me know if that helps. Oh and did I mention that my time growing up in the 60's and 70's white people called minority communities "bad neighborhoods". I guess I wasn't quite done. Over and out.
6
" Oh and did I mention that my time growing up in the 60's and 70's white people called minority communities "bad neighborhoods". "
I lived in a bad neighborhood. It was bad because of the crime and violence. It became progressively worse throughout the 1970s and 1980s. That's what made it a bad neighborhood. Out.
I lived in a bad neighborhood. It was bad because of the crime and violence. It became progressively worse throughout the 1970s and 1980s. That's what made it a bad neighborhood. Out.
1
One could write exactly the same comment regarding ANY story about race in the United States of America;
Undeniable Fact: This is a deeply racist country.
And that leads to three basic questions:
1. Do White people even know this fact?
2. Is this what White people want?
3. If they want it to be this way, they are the problem, but if they don't want the US to be racist (and seen by the entire world as racist), are they willing to do what is necessary to make it better?
Like it or not, White people, that's the way it is, and has been forever. The ball is (still) in your court.
Undeniable Fact: This is a deeply racist country.
And that leads to three basic questions:
1. Do White people even know this fact?
2. Is this what White people want?
3. If they want it to be this way, they are the problem, but if they don't want the US to be racist (and seen by the entire world as racist), are they willing to do what is necessary to make it better?
Like it or not, White people, that's the way it is, and has been forever. The ball is (still) in your court.
18
Robert bloom, name a country that is less racist than the United States. The answer is none. No country with the amount of racial diversity the US has comes close to managing the diverse population as well. Stop criticizing. If you despise this country so much, leave. Human nature is racist.
6
"Like it or not, White people, that's the way it is, and has been forever. The ball is (still) in your court."
I dunno, I grew up in Detroit and when the Model Cities and other supposed social benefit programs ramped up we saw an increase in crime and violence in our neighborhoods. We were accused of being "afraid of the unknown" or being prejudice against "people who didn't look like us". As things became worse, more crime and violence, we were accused of wanted the African-American government in Detroit to fail. By this time most of the liberals and progressives had move out of the neighborhood and the city. When we raised our voices further (we wanted help from the Democratic party office holders and leaders, none was provided) the liberals and progressives said "why don't you just move out already?" (BTW, our house, a two family flat, was worth $26k dollars in 1989. So forget the story about us accumulating wealth through real state manipulation over generations.)
I wondered how the city government and people would handle the condition of the city and their responsibility for it. We finally moved out and the cries from the same progressives was and is: "see it's all your fault!. How are you going to fix it?"
And on and on it goes...
I dunno, I grew up in Detroit and when the Model Cities and other supposed social benefit programs ramped up we saw an increase in crime and violence in our neighborhoods. We were accused of being "afraid of the unknown" or being prejudice against "people who didn't look like us". As things became worse, more crime and violence, we were accused of wanted the African-American government in Detroit to fail. By this time most of the liberals and progressives had move out of the neighborhood and the city. When we raised our voices further (we wanted help from the Democratic party office holders and leaders, none was provided) the liberals and progressives said "why don't you just move out already?" (BTW, our house, a two family flat, was worth $26k dollars in 1989. So forget the story about us accumulating wealth through real state manipulation over generations.)
I wondered how the city government and people would handle the condition of the city and their responsibility for it. We finally moved out and the cries from the same progressives was and is: "see it's all your fault!. How are you going to fix it?"
And on and on it goes...
5
You really need to keep an eye on your credit scores with those credit agents.
This is what happened to me when I came to this country about 6 years ago. I bought my house and car with cash, then took out a "trade school loan" which I paid off in one year. I took advice that it reflects better on my credit health if I have a paid-off loan on my record.
In the intervening years, I was not approved for a credit card that I mistakenly applied for once ( clicked the wrong buttons, I guess ). Never bothered me until now, I want to vacate this blessed country, go on a business trip. The bank did a check on my credit health and lo and behold, I am supposed to have defaulted on my loan and am supposedly 6 months behind on my payments.
I am flabbergasted, contacted the intransigent credit agents and the FCU. None are particularly helpful, all are rather difficult to come to reach and come to grips with. I am having a difficult time clearing my name. Someone having a bad day decided to say something bad about me out of... bloody-mindedness I guess, and now I am left with a bureaucratic nightmare.
This is what happened to me when I came to this country about 6 years ago. I bought my house and car with cash, then took out a "trade school loan" which I paid off in one year. I took advice that it reflects better on my credit health if I have a paid-off loan on my record.
In the intervening years, I was not approved for a credit card that I mistakenly applied for once ( clicked the wrong buttons, I guess ). Never bothered me until now, I want to vacate this blessed country, go on a business trip. The bank did a check on my credit health and lo and behold, I am supposed to have defaulted on my loan and am supposedly 6 months behind on my payments.
I am flabbergasted, contacted the intransigent credit agents and the FCU. None are particularly helpful, all are rather difficult to come to reach and come to grips with. I am having a difficult time clearing my name. Someone having a bad day decided to say something bad about me out of... bloody-mindedness I guess, and now I am left with a bureaucratic nightmare.
12
It’s only onerous to issue loans to poor people if you insist on terms those borrowers can never meet. It’s not that it’s impossible to issue safe loans,
it’s that if you are invested in taking shortcuts, maybe this is a little difficult.
Race has been a factor somewhere in the decision-making, because it otherwise doesn’t make a lot of sense. Redlining made the residents of those neighborhoods particularly susceptible to predation by fly-by-night mortgage outfits pushing sub-prime loans so they could turn them around on the then-booming secondary market. Hudson executives along with other Banks need some time in jail and a long time.
it’s that if you are invested in taking shortcuts, maybe this is a little difficult.
Race has been a factor somewhere in the decision-making, because it otherwise doesn’t make a lot of sense. Redlining made the residents of those neighborhoods particularly susceptible to predation by fly-by-night mortgage outfits pushing sub-prime loans so they could turn them around on the then-booming secondary market. Hudson executives along with other Banks need some time in jail and a long time.
3
Assume the borrower has good credit, and has their down payment together. The key to the loan getting approved is the appraisal. The property value must be supported by at least 3 recent sales in the immediate area. The lender I worked for had safeguards in place to prevent discriminatory practices. Support for the appraised value is a tough hurdle to get over.
9
Let's see if I've got this. Unqualified borrowers got home loans they couldn't possibly repay, which, very basically, generated a world-wide economic collapse. The middle class was decimated, their children are now unable to afford to go to college, the parents now plan to drop dead on the job since retirement has become a fuzzy fantasy, and their home values are actually NOT recovering. Now banks denying loans to people who can't possibly pay them back is racist? Good god. Give me my money. I'll just put under the mattress.
54
Progressives cannot get their story straight. We are constantly told banks are greedy and making predatory loans to unqualified borrowers. Now we are being told banks are redlining. Which is it? Are we really now supposed to believe that these same "greedy" and evil banks are so racist they won't make profitable loans?
I work in mortgage origination and black. The mortgage underwriting process is completely color blind. You either fit in the banks underwriting box or you don't. It really is that simple. Banks do not all target the same borrowers. Some banks are more stringent than others because they are trying to mitigate their risk. At no point though is race ever a factor. Some banks have higher FICO score requirements, lower DTI requirements, lower loan to value requirements, etc. This is so that they can have a higher quality portfolio of loans that won't default.
The answer is not to demonize banks for being responsible, but to help minorities improve their credit profiles so that they can qualify for mortgages. No bank wants to turn away a qualified borrower. Remember, banks are greedy.
I work in mortgage origination and black. The mortgage underwriting process is completely color blind. You either fit in the banks underwriting box or you don't. It really is that simple. Banks do not all target the same borrowers. Some banks are more stringent than others because they are trying to mitigate their risk. At no point though is race ever a factor. Some banks have higher FICO score requirements, lower DTI requirements, lower loan to value requirements, etc. This is so that they can have a higher quality portfolio of loans that won't default.
The answer is not to demonize banks for being responsible, but to help minorities improve their credit profiles so that they can qualify for mortgages. No bank wants to turn away a qualified borrower. Remember, banks are greedy.
58
The charge here seems to be where offices were opened (or not opened), which determines who applies for loans.
It appears that avoiding high risk neighborhoods opens a bank to the "redlining" charge. If another bank chooses to go into a high risk neighborhood but one does not, the bank that does not is open to charges of redlining.
Forcing banks to use lending as a tool to achieve social engineering distorts the normal business model.
It appears that avoiding high risk neighborhoods opens a bank to the "redlining" charge. If another bank chooses to go into a high risk neighborhood but one does not, the bank that does not is open to charges of redlining.
Forcing banks to use lending as a tool to achieve social engineering distorts the normal business model.
16
Forcing banks to open branches in "undesirable" neighborhoods which generate little business also leaves them open to robberies.
4
Ms. Swarns and the NYT should be applauding payday lenders, who concentrate their lending in low income areas.
The top 5% of people in this country - about 15 million people- have more aggregated wealth than rest - about 300 million people. The bottom 40% have only .2% of the nation's wealth.
Who are the banks supposed to loan to? They aren't looking at the bottom half of the distribution, if they want good incomes and down payments.
If the bank is not loaning money to a black family, and is loaning money to a similar white family, you have discrimination. If the bank isn't loaning to anybody in that bottom 40%, you have inequality.
Who are the banks supposed to loan to? They aren't looking at the bottom half of the distribution, if they want good incomes and down payments.
If the bank is not loaning money to a black family, and is loaning money to a similar white family, you have discrimination. If the bank isn't loaning to anybody in that bottom 40%, you have inequality.
7
Since minorities have lower incomes on average and less job security on average they are on average less likely to repay their loans.
When the government acts to distort the market by forcing the banks to make bad loans and then buying up the bad paper so that the taxpayer is on the hook for defaults, the result is a housing bubble - haven't they learned anything from the great recession?
When the government acts to distort the market by forcing the banks to make bad loans and then buying up the bad paper so that the taxpayer is on the hook for defaults, the result is a housing bubble - haven't they learned anything from the great recession?
22
Loans are made to individuals, not to averages.
6
People thought that all was well after the civil rights laws were passed; never happened. Racism never died, equal rights never happened and red lining was always there. There has never been any investment in the African American communities and probably never will be.
I remember Rev. Wright ans what he said and how the media and many whites reacted to his comments, but I can see why he said what he said.
I remember Rev. Wright ans what he said and how the media and many whites reacted to his comments, but I can see why he said what he said.
2
Banks, like retail outlets, go where they think they can make the most money. If black neighborhoods were more affluent than white neighborhoods, they would go to black neighborhoods.
13
And the neighborhoods are supposed to become affluent without investment how?
4
"And the neighborhoods are supposed to become affluent without investment how?"
Gentrification, about which the NY Times would quickly complain.
Gentrification, about which the NY Times would quickly complain.
2
Article Grade "I" - Incomplete. What are the article and the DOJ saying about the banks in question? Are they saying:
A) Certain banks, when evaluating potential borrowers of EQUAL CREDIT RATING, will reject the minority applications while approving applications from whites; OR
(B) Certain banks are doing much, much less business in minority communities and with minorities themselves than their competitors.
If it's Scenario A, then yeah, that's clearly racist because a decision is being made on the basis of race and not lending risk. If it's Scenario B, the article and investigation seem very incomplete. For instance, are the banks that ARE approving mortgage applications in minority communities taking on greater risk? What interest are they charging to compensate? That should not be hard for an investigating body to determine. How is it possible that NO MENTION whatsoever is made of even the general creditworthiness of any neighborhood discussed in this article? If the banks in question look at a black or Hispanic neighborhood and on the basis of poor credit decide the risk is not worth the reward (at least not without usurious interest rates), but they do a lot of low-risk mortgage lending in white neighborhoods with much better credit, is that racist? It irks me that the matter could have been proven relatively easily but no investigative entity (governmental OR journalistic) made the effort. Instead, we're given an inkblot test.
A) Certain banks, when evaluating potential borrowers of EQUAL CREDIT RATING, will reject the minority applications while approving applications from whites; OR
(B) Certain banks are doing much, much less business in minority communities and with minorities themselves than their competitors.
If it's Scenario A, then yeah, that's clearly racist because a decision is being made on the basis of race and not lending risk. If it's Scenario B, the article and investigation seem very incomplete. For instance, are the banks that ARE approving mortgage applications in minority communities taking on greater risk? What interest are they charging to compensate? That should not be hard for an investigating body to determine. How is it possible that NO MENTION whatsoever is made of even the general creditworthiness of any neighborhood discussed in this article? If the banks in question look at a black or Hispanic neighborhood and on the basis of poor credit decide the risk is not worth the reward (at least not without usurious interest rates), but they do a lot of low-risk mortgage lending in white neighborhoods with much better credit, is that racist? It irks me that the matter could have been proven relatively easily but no investigative entity (governmental OR journalistic) made the effort. Instead, we're given an inkblot test.
23
A few years ago I applied for refinancing my apartment in NYC. I have a very good income, no dependents, excellent credit score, no debts, and another fully paid apartment in PR. The African-American gentleman who processed my application was completely certain that I would not have any problems. It would have been my third mortgage, and the previous two were paid ahead of time. Well, when the application got to the bank offices someplace in the Southwest, the loan officer there over there, a woman with an eastern Indian accent, made my life miserable. She continuously asked for the same documents again and again until it became clear to me that she was railroading me. At that point I called the African-American gentleman, and he knew something was not fair. I once more sent copies of all my correspondence, and a few days later my mortgage was approved, and also received an apology from the Indian woman's supervisor. There are people in those banks who with no doubt are as racist as the next door kkk. Had I been a person without experience or naive enough to think that banks are staffed by people without racist attitudes, I would have lost money, time and my credit damaged by a very stupid person.
6
The government including the CFPB is not serious about redlining or other crimes committed by banks. That was made perfectly clear by President Obama protecting senior management of Wall Street Banks that caused the global 2008 meltdown- no investigations, no accountability. In the following year, 2009, Wall street banks awarded themselves the biggest bonus pools in their history. The fines seem large to ordinary Americans but are quite manageable by these institutions. The government does not want the fines to sink the banks (too costly for the FDIC that insures deposits and liquidating the banks. Also, dollar penalties imposed on banks are subsidized by the taxpayer. Penalties are legitimate deductible expenses for tax reporting purposes. Corporations/companies cannot commit a crime any more than it can cross the street. The employees commit the crimes. If the government truly wants to end recidivism by the financial industry then it needs to make senior management responsible for any crimes committed by its employees and hand out indictments for criminal prosecution. Jail time and a lifetime suspension from returning to the scene of the crime will work miracles.
2
Please....let's not go down that easy credit path again. If the loan makes sense business wise....make the loan. Do not make loans in the name of "fairness" we are still recovering.
43
You so don't understand. All these anti-discrimination laws do is to require banks apply the SAME lending standards to everyone. They had nothing to do with the 2008 crash which was partially caused by mortgage companies like CountryWide (to which the laws do not apply) giving bad loans and selling them to investment banks like Bear Stearns so they they could be bundled into CDO's and sold as safe investments.
6
Len:
There is no evidence here that different standards were applied to equally qualified participants. It's the outcomes that were disparate. One bank did 5 times less business in a black neighborhood. Another did not go into black neighborhoods.
There is no evidence here that different standards were applied to equally qualified participants. It's the outcomes that were disparate. One bank did 5 times less business in a black neighborhood. Another did not go into black neighborhoods.
10
Len:
Boobooyaga-nonsense. Read the piece again. Hudson Savings is being demonized because it hasn't opened branches in impoverished neighborhoods for the sole purpose of attracting mortgage applications that are RISKIER than those in the markets it normally pursues, then GRANTING those applications.
CFPB and Justice have sat on Hudson intentionally to gain a kudo from the left, intimidating a regional bank into forking over $33 million rather than face the unlimited ability of the regulator to make their lives miserable in order to press an ideological agenda that was never legislated -- that calls for private business to be enslaved to paying for the social desires of an elite.
They're not at ALL requiring that banks apply the same lending standards to everyone, but that they establish branches in impoverished neighborhoods, actively seek mortgage applications from the residents that are materially riskier than others, then GRANT those applications. And they've hijacked the definition of "red-lining" to justify their actions.
Boobooyaga-nonsense. Read the piece again. Hudson Savings is being demonized because it hasn't opened branches in impoverished neighborhoods for the sole purpose of attracting mortgage applications that are RISKIER than those in the markets it normally pursues, then GRANTING those applications.
CFPB and Justice have sat on Hudson intentionally to gain a kudo from the left, intimidating a regional bank into forking over $33 million rather than face the unlimited ability of the regulator to make their lives miserable in order to press an ideological agenda that was never legislated -- that calls for private business to be enslaved to paying for the social desires of an elite.
They're not at ALL requiring that banks apply the same lending standards to everyone, but that they establish branches in impoverished neighborhoods, actively seek mortgage applications from the residents that are materially riskier than others, then GRANT those applications. And they've hijacked the definition of "red-lining" to justify their actions.
3
"Grappling with foreclosures, job losses and battered credit scores, many minority borrowers have found it difficult to qualify for mortgages under the more stringent rules."
Gee, mean old banks! Who in business wouldn't want to give mortgage loans to "help out" such people? And they prefer to do business in areas that are more affluent? I guess you think that Harry Winston should open branches in poor minority neighborhoods, too.
Banks are a BUSINESS. They are supposed to make money. They do that by avoiding risk and going after higher mortgages.
There are still credit unions out there that can serve members who are not the most affluent in society. But if you've had a foreclosure, job loss, poor credit rating or a bankruptcy, NO ONE will be lining up to lend you money. It will take a lot of time and effort to rebuild your credit rating. Not doing this is exactly what got us into the previous mess.
Gee, mean old banks! Who in business wouldn't want to give mortgage loans to "help out" such people? And they prefer to do business in areas that are more affluent? I guess you think that Harry Winston should open branches in poor minority neighborhoods, too.
Banks are a BUSINESS. They are supposed to make money. They do that by avoiding risk and going after higher mortgages.
There are still credit unions out there that can serve members who are not the most affluent in society. But if you've had a foreclosure, job loss, poor credit rating or a bankruptcy, NO ONE will be lining up to lend you money. It will take a lot of time and effort to rebuild your credit rating. Not doing this is exactly what got us into the previous mess.
76
Thanks for taking the time to write. Banks normally try to avoid borrowers who seem likely to default on their loans, people without jobs, with poor credit scores, etc. There's nothing wrong with that; that's just good business practice. Redlining is different. Redlining is when banks exclude entire communities from access to home loans, including the creditworthy people who live in them. That's illegal.
25
In one case, Eagle Bank was charged based on a competitor's issuing 5 times as many mortgages in predominantly black neighborhoods. That, by itself, seems like a questionable reason to bring charges. The heavy hand of government may have played a hand in that one.
9
Were you able to confirm that the loans that were made by other banks in areas that Hudson was not lending were all to creditworthy borrowers?
3
"Long Illegal, Bias in Lending Once Again Plagues Minorities"
Yes, this is happening even though making something illegal guarantees that nobody will ever do it. Right?
Can we please not be so naive? Where do you think America's record-setting prison population comes from?
People break laws.
https://emcphd.wordpress.com
Yes, this is happening even though making something illegal guarantees that nobody will ever do it. Right?
Can we please not be so naive? Where do you think America's record-setting prison population comes from?
People break laws.
https://emcphd.wordpress.com
3
As a lawyer, I am keenly aware that banks in the US have a long, shameful history in the United States. They feel entitled to act above and outside the law and make big money by any means necessary--lawful or unlawful. Here's it's utter indifference to the equal protection clause of the Fifth Amendment. This is not just some high-level abstraction. It hurts real people. It's evil. And behind it all are lawyers, finance types, compliance officers and Boards of Directors. It's not just "the banks"; it's people. They know better. And it's part of a pattern. Years earlier, it was wide-ranging, sub-prime mortgage fraud. To make a buck. Big bucks. No one went to prison; some paid big fines (it's only money). More recently, some of the biggest banks were caught violating the federal criminal anti-money laundering statutes. They did it on purpose just to make a buck, in some instances, aiding our international enemies. Again, they got away paying big fines and civil penalties. Just who's at the wheel? Until prosecutors and regulators, starting at the very top in Washington, get it right by demanding accountability and pressing for significant punishment (imprisonment) and civil enforcement--not just talking about it--the banks will have the last laugh. We deserve better.
11
This goes on under Obama-what a failed presidency!
6
that's right, it started in january 2008. never happened under bush.
4
We can't have it both ways.
The bubble burst in 2006 as financial services firm's allegedly preyed on poor minorities to provide loans that they couldn't repay.
Taking that as true, why are all of the comparisons here to minority ownership from 2014 to 2006? 2006 is inflated by the "illegal" loans so we should look at a 30 year trend before we reach conclusions.
I'd also like to see the loss statistics cross cut by race and wealth.
The bubble burst in 2006 as financial services firm's allegedly preyed on poor minorities to provide loans that they couldn't repay.
Taking that as true, why are all of the comparisons here to minority ownership from 2014 to 2006? 2006 is inflated by the "illegal" loans so we should look at a 30 year trend before we reach conclusions.
I'd also like to see the loss statistics cross cut by race and wealth.
51
There was an interesting article in the WSJ yesterday about Ally Financial being forced into an $80MM settlement for alleged racial discrimination. But Ally had no idea of the ethnicity of the applicants and now they don't know who gets portions of the settlement since it wasn't based on specific claims. The Obama vigilantes created an "algorithim" that identified that if you had a black sounding name, you must be entitled to some of the settlement. The algorithim did not identify Obama as black and identified a large number of whites as black. Since the Obama folks don't read the WSJ presumably the scorn didn't bother them. Federal agencies behaving comically.
43
Once again, more information in the comments than in the NY Times article that spawned them.
33
With all of the "big data" that companies now have access to today, do you really believe banks don't know the color of loan applicants?
The answer is no they don't know. Ally was legally prevented from gathering that data on its borrowers. Anyway they didn't make any of the loans, all they did was buy loans from car dealers. The car dealers were the ones discriminating, but it was Ally that paid the penalty. It was easier for the government to go after one big bank than hundreds of car dealers. As always, no good deed goes unpunished.
2
Why should banks open branches in areas where they can't make a profIt? Why should they lend to poor credit risks? Only because they are black?
49
Now you're beginning to understand.
11
The article doesn't say so but I truly doubt that all the loans the banks made to white folks stood up to close scrutiny of credit underwriting. It's also very hard to believe that there isn't a substantial overlap between adequate white loan applications and adequate minority loan applications.
All this is knowable by looking at the data. The article states outright that many banks in Hudson's region made multiples of the loans to minorities that Hudson did. Perhaps the Feds compared results. It wouldn't be that hard to find out, start b looking at default rates.
All banks seek diversified portfolios of loans, some riskier with higher profits. Others less risky with lower profits. They also securitize their loans and sell them still.
I'm with Ta nehisi Coates, after the horrors of contract buying in the past all the while African Americans paid taxes that disproportionately benefited whites. There should be reparations and let Hudson be the start.
All this is knowable by looking at the data. The article states outright that many banks in Hudson's region made multiples of the loans to minorities that Hudson did. Perhaps the Feds compared results. It wouldn't be that hard to find out, start b looking at default rates.
All banks seek diversified portfolios of loans, some riskier with higher profits. Others less risky with lower profits. They also securitize their loans and sell them still.
I'm with Ta nehisi Coates, after the horrors of contract buying in the past all the while African Americans paid taxes that disproportionately benefited whites. There should be reparations and let Hudson be the start.
2
If people decide to live in Manhattan instead of the Bronx are they injecting "bias" into their decision by "deliberately" placing their residences outside minority communities even as others live in those neighborhoods? Where is the line where personal decisions stop and decisions based on "bias" begin and how do these officials determine that line?
15
The government no longer needs to demonstrate intent. If your actions result in a disparate negative impact to minorities, you are presumed to be discriminating against them.
16
@Bob Roberts This is about mortgage loans, not affirmative action at universities. Pls stick to the subject matter.
1
actually disparate impact applied to housing in the most recent ruling
1
The following happened mostly under Obama Administration;
"In 2014, black people held 5.2 percent of the nation’s home loans, compared with 8.7 percent in 2006, according to the Federal Reserve Bank. Hispanics have struggled to regain lost ground as well, accounting for 7.9 percent of home loans in 2014, compared with 11.7 percent in 2006."
Minorities did worse under Democrats. It is a shame,
"In 2014, black people held 5.2 percent of the nation’s home loans, compared with 8.7 percent in 2006, according to the Federal Reserve Bank. Hispanics have struggled to regain lost ground as well, accounting for 7.9 percent of home loans in 2014, compared with 11.7 percent in 2006."
Minorities did worse under Democrats. It is a shame,
5
I had no idea the President of the United States also controlled the nation's banks.
5
Attorney General of USA is appointed by the President and it can set the priorities to prosecute the violators. Justice Department under Obama is reluctant to prosecute Bankers and Wall Street Firms who brought the whole economy on its knees.
3
Oh for heaven's sake. Check the facts. Data without analysis is just junk.
Minority home ownership between 2006 - the peak of the housing bubble - and 2014 went south as a result of the meltdown in 2008. You probably remember it. Subprime loans failures and foreclosures hit many minority communities hard.
Ownership numbers in 2006 included the huge run up of poor loans based on fraudulent data, and predatory loans to good people in neighborhoods that had prices increase 200%. When economy slowed and people lost jobs, these neighborhoods saw huge price impacts, equity losses, underwater loans and foreclosures. The communities have not yet recovered from the predatory manipulation of the mid 2000s.
Few communities - my middle class one included - have recovered from the price losses after 2008. Communities in which a large number of people were recent homebuyers suffered the worse; none of them have recovered.
On the other hand, under the democratic presidency, despite the disappearance of trillions of dollars of wealth almost overnight, we did not slide into a depression.
Minority home ownership between 2006 - the peak of the housing bubble - and 2014 went south as a result of the meltdown in 2008. You probably remember it. Subprime loans failures and foreclosures hit many minority communities hard.
Ownership numbers in 2006 included the huge run up of poor loans based on fraudulent data, and predatory loans to good people in neighborhoods that had prices increase 200%. When economy slowed and people lost jobs, these neighborhoods saw huge price impacts, equity losses, underwater loans and foreclosures. The communities have not yet recovered from the predatory manipulation of the mid 2000s.
Few communities - my middle class one included - have recovered from the price losses after 2008. Communities in which a large number of people were recent homebuyers suffered the worse; none of them have recovered.
On the other hand, under the democratic presidency, despite the disappearance of trillions of dollars of wealth almost overnight, we did not slide into a depression.
1
To those white individuals who do not understand the point of the bias in this situation - two individuals with similar financials - apply for a loan - the whit applicant gets the loan - the black person does not. Many of the comments here imply that black applicants have no job or means of income and are looking foe some kind of hand out. How racist.
6
Sorry, where in this article does it say that the bank in question refused to lend to a minority person with financials similar to a white person who did get a loan?
All it says is that the bank doesn't have branches in predominantly minority neighborhoods in the regions it serves. This could be from discrimination. Or it could be because, in those regions, poorer areas are more likely to be minority. You're blaming the bank for a flaw in our society.
All it says is that the bank doesn't have branches in predominantly minority neighborhoods in the regions it serves. This could be from discrimination. Or it could be because, in those regions, poorer areas are more likely to be minority. You're blaming the bank for a flaw in our society.
41
I do not see reference to equal financials in the article. Where did you get taht?
10
Government officials understand that banks avoid loaning to people who are poor credit risks. That makes good business sense. Redlining, though, is different. What has been particularly striking to government officials in these cases is that other banks working in the same areas generated far more applications from minorities than the banks accused of redlining. The officials say that made it clear that this was much more than an issue of minorities lacking interest or adequate credit scores. Redlining is when banks choke off lending to an entire neighborhood or community, regardless of whether people have good credit or not.
20
There is no simple solution to this problem because any one will be fraught with Catch-22 status. Rather, it's a systemic problem of discrimination over the years that has created this mess. Get to the root and undo the discrimination. Eventually this, and many more, issues go away.
And strangely Obama does nothing to help resolve the biggest underlying problem with affordable housing for minorities.
http://nationalmortgageprofessional.com/news/56314/advocacy-groups-push-...
http://nationalmortgageprofessional.com/news/56314/advocacy-groups-push-...
1
This practice doesn't really make economic sense because, as we all know, if the extension of the loan is risky, banks charge higher interest rates. There is pretty much always an interest rate that makes the loan portfolio profitable, right?
So why don't they go into low income neighborhoods and charge the appropriate risk-adjusted interest rate?
One explanation could be the perverse outcome of disparate impact anti-discrimination laws. If it was shown that the interest rates banks charge correlated with the race of the borrower simply because of different credit risks between different racial populations (due to general income and job status differences), it would look a lot like disparate impact discrimination. So they stay out of the high risk business altogether.
So why don't they go into low income neighborhoods and charge the appropriate risk-adjusted interest rate?
One explanation could be the perverse outcome of disparate impact anti-discrimination laws. If it was shown that the interest rates banks charge correlated with the race of the borrower simply because of different credit risks between different racial populations (due to general income and job status differences), it would look a lot like disparate impact discrimination. So they stay out of the high risk business altogether.
15
The cost of loan originations is fixed, but the interest rate you plan to increase to compensate is based on the loan size. So in poor neighborhoods where houses are worth less, you can't raise rates high enough to compensate for both the risk and the origination costs.
Besides, if you did this, you'd be fined for charging minority communities higher interest rates.
Besides, if you did this, you'd be fined for charging minority communities higher interest rates.
6
This comment is nonsense. Loans are made to individuals, not to neighborhoods. The relevant inquiry is the credit risk of the borrower, not some aggregate purporting to demonstrate differing risks for different racial populations.
Does anyone think banks would choke off any neighborhood of any racial characteristic if they could make money there? It's economics that drives these decisions, not racism. Good news is that bank technologies are improving quickly and soon they will be able to choke off individuals rather than complete neighborhoods.
43
This is precisely how federal and state officials have identified banks that appear to be discriminating. In the cases that I've described, officials have found that other banks operating in the same areas managed to generate far more applications than the banks accused of redlining. Other banks were finding business in these neighborhoods. That's what raised the concern of the regulators.
13
Banks do discriminate but not all in the exact same way because at different times they have different needs and that results in different decision algorithms. You see the same phenomenon of different lending practices by banks in white neighborhoods. Their mission is making money, not conducting racial warfare.
3
What of it? If other banks are servicing the area and one chooses not to for whatever reason what does it matter? The area is still be serviced by several banks, therefore rates are competitive.
You keep saying "gov't officials...." as if the government is incapable of extreme bias. We know the Obama administration is aggressively accusing entities of racism where ever a disparate impact in everything from school discipline to housing to car loans.
You keep saying "gov't officials...." as if the government is incapable of extreme bias. We know the Obama administration is aggressively accusing entities of racism where ever a disparate impact in everything from school discipline to housing to car loans.
There needs to be some economic or business analysis in this article. Why would a for profit institution not want to make profits? Would not that put the bank at a disadvantage to its competitors? And presumably the market/investors would penalize the bank. Let the business sector sort this out. Or is it just government regulators pushing politically correct policies?
And in the internet age. physical location of banks is not that important.
Tangentially related, one of the biggest mortgage lenders in the U.S. (Quicken Loans) is located in the most African-American of our major cities - Detroit. I did my last refinancing through them, never setting foot in Michigan; nor did Quicken visit me.
And in the internet age. physical location of banks is not that important.
Tangentially related, one of the biggest mortgage lenders in the U.S. (Quicken Loans) is located in the most African-American of our major cities - Detroit. I did my last refinancing through them, never setting foot in Michigan; nor did Quicken visit me.
21
I understand that not everyone is comfortable with the internet but I wonder if the regulators tested Zillow Mortgage or Lending Tree? I'm just trying to see where in the process discrimination could occur. Are entire zip codes off limits to banks?
When I go on Zillow to find mortgage rates using zip codes in majority black Prince George's County I get multiple offers and no one asks about my race.
When I go on Zillow to find mortgage rates using zip codes in majority black Prince George's County I get multiple offers and no one asks about my race.
11
If it is discriminatory, then they should be punished.
However, I would like to see a race and gender blind study. These are businesses that are designed to make money, and we know the pitfalls of lowering standards for lending.
However, I would like to see a race and gender blind study. These are businesses that are designed to make money, and we know the pitfalls of lowering standards for lending.
27
It is very important to understand that no one is asking the banks to lower their standards for lending. Federal and state officials are investigating banks that are choking off lending to entire communities, including the people with strong credit ratings who live in those communities. That is illegal.
20
A single bank cannot choke off lending. Redlining was only possible before the deregulation in the late 80's, when the states strictly limited the geographic reach of small commercial banks. It is impossible to harm communities with redlining now because other banks can easily move in and offer loans at competitive rates. The story should be about unnecessary, opportunistic law suits.
1
How many strong credit ratings wuold you expect to find in Newark?
The Democrats' obsession with continuing to capture black votes led directly to the "sub-prime mortgage" meltdown. Give loans for those who cannot afford to repay them (ditto with Obama's takeover of student loans, now over $1,200,000,000,000 with 20% delinquency!). That makes no economic sense but mucho political sense. Elect Democrats and kill the economy worked in 2007-2008 and will work now.
Http://www.periodictablet.com
Http://www.periodictablet.com
38
One thing you have to admit, Ted: President Obama works really fast, if nothing else. Gets inaugurated on January 19th and absolutely ruins the great economy Bush left him on the 20th....Tea Party is formed on the 21st. Now he takes over student loans, which the banks were handling just swell, and according to Ted from periodic tablet takes the student debt crisis from zero to 1.2 trillion in debt. Absolutely perfect governing for 232 years in the US and along comes a black president to muck it all up in 8. Dow from 6500 to 17,500...means nothing. Go from losing 50,000 jobs/month to gaining 200k jobs/month...irrelevant. Yep, we liberals always bringing up THAT stuff. You know...facts. Oh, that's right, I got it from the lame stream media.
8
Media: "Bad banks are not lending to minorities!"
Banks: "OK, we'll start lending more."
Media: "Bad banks pushing loans to minorities, saddling them with debt!"
Banks: "OK, we'll be lending less."
Rinse, repeat.
Banks: "OK, we'll start lending more."
Media: "Bad banks pushing loans to minorities, saddling them with debt!"
Banks: "OK, we'll be lending less."
Rinse, repeat.
127
A Black Police Officer from the Bronx, bought a house in my Westchester white, middle class neighborhood and what do I hear from my neighbors - "There goes the neighborhood!"
12
Yet he was able to buy it, which pokes a big hole in the premise of this story.
24
Redlining in the classic sense used not only to deny loan opportunities to members of minority groups, but to exclude minority group members from housing opportunities in jurisdictions altogether. I grew up in blue collar family in a mostly middle-class suburb just north of Buffalo in the 50s and 60s, population at the time around 120,000, in which there was not, to my knowledge, a single non-white family. Save one exchange student from Indonesia, all 2000+ students in my high school were white. The school system was quite good, preparing me and a high percentage of other students for college. Meanwhile, south of the city line, residents of Buffalo -- including the largest minority populations -- had significantly inferior schools (though, of course, not as disastrous as they have become since). White privilege is not only for the wealthy, it seems. And current practices, intentionally or not, whether or not able to be passed off as just doing business rationally, point toward the same result.
11
I think the issue with the media today is that it firmly believes cultural groups act the same, behave the same etc on average. That's just not true. I don't know if the reporters aren't coming across that in the personal life or their reporting forays simply don't uncover them but often times I read articles in the NYT and I'm left wondering what country or place are they describing?
It's well known in underwriting circles that Blacks on average have worse credit and financial profiles. Heck this paper goes on daily about this inequality or that one involving blacks. Do you want banks to make loans to people that have are likely to pay back the loans or you just want them to make them on the basis of race?
It's well known in underwriting circles that Blacks on average have worse credit and financial profiles. Heck this paper goes on daily about this inequality or that one involving blacks. Do you want banks to make loans to people that have are likely to pay back the loans or you just want them to make them on the basis of race?
58
All banks should be more or less the same, then. But Hudson bank lent to almost zero black people, while numerous other banks did lend to minorities. It would be one thing if *no* banks would lend to people, then you might assume it was for a financial reason. But here we have one particular bank acting much differently from other banks.
6
This is precisely the kind of disparity that raised concerns among federal regulators. They wondered: If other banks were generating a number of loans applications from minority communities, why wasn't Hudson?
10
They chose to focus on more affluent areas, is that a crime? Did they deny an affluent minority a mortgage loan? that to me would be meaningful discrimination not avoiding making loans in poor areas. Bigger banks can tolerate more risk.
4
In many situations we need to stop referring to "minorities" and, instead, differentiate between "minorities" and specific minorities. In the case of bank loan discrimination, it would help if the stats were broken down among minorities. Are we talking about Blacks, Asian Americans, those with Hispanic surnames, etc. or all of the above? Is it different with American minorities than with foreigners who are Arabs, Asians, Africans, or Latin Americans?
If we really want to deal with a problem, we need to define it as accurately as possible and not take the lazy way out by lumping all non-"Anglos" together, when that really isn't the issue. Sometimes it is, but sometimes it isn't. By lumping all "minorities" together, we are managing to avoid the reality that Koreans and Blacks, Puerto Ricans and Dominicans, Turks and Arabs, Chinese and Japanese Americans do not necessarily love each other any more than they love "whites" (in and of itself a dubious term.)
In dealing with redlining, which is not only illegal but simply wrong, we nonetheless do need to recognize that some people in all groups simply prefer to live among "their own kind", whether out of fear or to preserve a way of life they choose to live.
We also need to expend the energy to try to tease out the differences between racial/ethnic and class discrimination, not an easy task inasmuch as there is frequently much overlap. Dealing with the two is likely to often require different approaches.
If we really want to deal with a problem, we need to define it as accurately as possible and not take the lazy way out by lumping all non-"Anglos" together, when that really isn't the issue. Sometimes it is, but sometimes it isn't. By lumping all "minorities" together, we are managing to avoid the reality that Koreans and Blacks, Puerto Ricans and Dominicans, Turks and Arabs, Chinese and Japanese Americans do not necessarily love each other any more than they love "whites" (in and of itself a dubious term.)
In dealing with redlining, which is not only illegal but simply wrong, we nonetheless do need to recognize that some people in all groups simply prefer to live among "their own kind", whether out of fear or to preserve a way of life they choose to live.
We also need to expend the energy to try to tease out the differences between racial/ethnic and class discrimination, not an easy task inasmuch as there is frequently much overlap. Dealing with the two is likely to often require different approaches.
14
Banks only see one color: green.
46
That is their job, they are a business. Thank god.
The banks are not being asked to lower their lending standards, they are being asked to lend to Latinos and African-Americans who are qualified. Why would anyone think they are being asked to lend money to people who do not qualify. My father had a credit rating of 800 and had been on his job as a bus driver for over twenty-years. No chance of being laid off and had trouble getting a loan. When he did get a loan, he was steered to a house where extremely poor whites were living, but no person in their right mind would put money in the home. They politely declined but wondered why anyone would take them there. The house was in need of many, many repairs. They had explained their criteria for a home to the real estate agent and resented the wasted time. The white couple actually refused to speak to them. The government is asking that if the person meets the qualifications, they be shown homes in areas where the homes should increase in value. My father and mother represented absolutely no risk.
18
Thank you for sharing your parents' experience. I'd love to hear more. When did this happen? In what part of the country? And did they ultimately qualify for a mortgage? Please contact me directly at [email protected].
7
You ask, "Why would you think they were being asked to lend money to people who do not qualify?" Because that is exactly what the Clinton and Bush administrations did with their push for increased home ownership which was one of the prime movers (prime as in "initial" not "only) of the housing bubble. Too many people are focused on Wall Street as the housing bubble culprit when the initiators were two successive Administrations and the Fed (with ultra low interest rates and increased liquidity).
2
Hmmm, didn't the banks in the mid 2000s lend to borrowers who lied about their incomes to qualify for a mortgage after the banks came under pressure from Democrats in Congress to extend credit to low-income people? From what I understand didn't this help precipitate the Great recession. Now Congress is back forcing banks to lend to people who have no ability to afford any type of mortgage. As Yogi said, Deja Vu All Over Again.
57
You got your facts wrong. Most people didn't lie about their income. I would even say the numbers who lied is actually quite small but of course they wanted to own a home. And were lied and manipulated into believing they could... The financial crash was the outcome of a Ponzi scheme in which lenders pushed exotic and high-cost sub-prime loans on unwitting consumers who could not afford them. The banks bought the loans and turned them into mortgage-backed securities and collateralized debt obligations, selling these “structured financial products” to banks and speculators around the world. Government regulators blessed the scam and the credit-rating firms gave the toxic securities and CDOs top ratings.
I suggest you stop watching "Fox Faux News", and pick up a book on what truly created the Great recession.
I suggest you stop watching "Fox Faux News", and pick up a book on what truly created the Great recession.
3
Nonsense. The presumption here is that if it's a minority neighborhood, all residents must be low income deadbeats. There are good credit risks in all neighborhoods. All that is asked of the banks is that they stop writing off the whole neighborhood and dispassionately analyze the creditworthiness of the individuals seeking the loan. Is this not the American way - each on his or her own merit?
Or have we discarded that too?
Or have we discarded that too?
4
A number of lenders encouraged people to lie about their income on applications. Most of those people, presumably, have lost their homes. As far as I know, no lenders were ever held accountable (although I may be wrong about that).
Unless one is a professional black athlete then these banks are taking a risk or if so they will offer a much higher rate than they would to a white family. I guess we don't live in a colorblind society after all.
7
I am quite liberal, aware of widespread racial discrimination throughout our society and opposed to it. However, what this article describes is or could be a simple consequence of (1) geographic segregation by race, combined with (2) income disparities by race. When neighborhoods are predominantly populated by low-income minorities living in low-value properties, lending in those areas becomes economically unprofitable. A bank is a for-profit institution, and cannot be forced or expected to lend where it does not expect a profit.
The only viable solution is to break up geographic segregation by race, and help people who live in those neighborhoods move to better ones. This, BTW, is also the only proven solution that reduces the school achievement gap, and therefore lifts people out of poverty in the longer term.
There is no point in treating the symptoms without treating the cause.
Our society as a whole has failed to address the profound race-based, race-driven discrimination that continues in so many forms. This is the work ahead of us, not beating up on private actors whose mandate is profit, not social justice. Congress (acting on our behalf) has the mandate to create "a more perfect union" in practice, not just on paper.
The only viable solution is to break up geographic segregation by race, and help people who live in those neighborhoods move to better ones. This, BTW, is also the only proven solution that reduces the school achievement gap, and therefore lifts people out of poverty in the longer term.
There is no point in treating the symptoms without treating the cause.
Our society as a whole has failed to address the profound race-based, race-driven discrimination that continues in so many forms. This is the work ahead of us, not beating up on private actors whose mandate is profit, not social justice. Congress (acting on our behalf) has the mandate to create "a more perfect union" in practice, not just on paper.
14
You are forgetting that banks are regulated, licensed and insured -- as a result of those governmental authorizations and supports, banks have legal obligations to serve the entire community.
2
Yes, but in the new world of "disparate impact", the government does not even have to prove that the bank deliberately discriminated, deliberately chose certain customers, or deliberately avoided others. All they have to prove is that the bank made more loans to white people than other people. It that's because of the structure of the place the bank does business, too bad.
4
And at the other end of the lending spectrum, you have cities like LA and Miami suing lenders, such as BofA, Chase and Wells Fargo, for having the temerity to lend in poorer neighborhoods. And then when the economy went bust, those neighborhoods and cities allegedly suffered blight, lower tax revenues, and other harms due to defaults and foreclosures. So the banks are generally screwed no matter where or if they lend.
84
OK, you told us about the "fine" - can you tell us if anyone is going to do the "time"?
2
No time, since these were all settlements. Nothing was proven. Not clear that there was any discrimination. Just a business decision on where to put branekes
Banks settle because they can't face risk of trial.
Banks settle because they can't face risk of trial.
3
For the past seven years, the administration and its progressive friends have been screaming at banks to reduce their risks, to take less risk. The venerated Elizabeth Warren and the Dodd - Frank law have been forcing banks to reduce their risks, make fewer sub-prime loans and to stop risking money on poor credits. So is it any surprise when banks do exactly what President Obama, Elizabeth Warren and other progressives have been demanding? Oh, they may never admit that they intended to reduce lending to minority borrowers, but that is the effect of their demands.
71
Institutionalized discrimination over the history of our country has created a complicated problem that needs consistent application of smart regulation to correct. In the case of redlining - it is the lack of lending to people that would otherwise qualify, but for the dark color of their skin.
Advocates of fair lending practices, like myself, are not asking banks to lend to people that are a high risk, but to lend to all people that qualify regardless of where they live and what they look like.
I realize that this is complicated by the fact that those of darker skin have been at a competitive disadvantage since the founding of our country. Not in every place to the same extend, but as a general trend backed by well documented evidence.
Once of the big challenges - how this historical unfairness can be corrected on an individual basis that is in and of itself fair. How can it be corrected without seeming like a handout? How can it be corrected so that everyone has the same chance at building wealth if they so choose?
I think it will continue to take a few broad national policies - like ending redlining and predatory lending combined with many localized ones that take the specific historical challenges of the disaffected group into account.
Advocates of fair lending practices, like myself, are not asking banks to lend to people that are a high risk, but to lend to all people that qualify regardless of where they live and what they look like.
I realize that this is complicated by the fact that those of darker skin have been at a competitive disadvantage since the founding of our country. Not in every place to the same extend, but as a general trend backed by well documented evidence.
Once of the big challenges - how this historical unfairness can be corrected on an individual basis that is in and of itself fair. How can it be corrected without seeming like a handout? How can it be corrected so that everyone has the same chance at building wealth if they so choose?
I think it will continue to take a few broad national policies - like ending redlining and predatory lending combined with many localized ones that take the specific historical challenges of the disaffected group into account.
1
Not 'minority borrowers', but poor borrowers who, like student borrowers, who are also poor, are more likely to default on their loans, at which point the taxpayer is stuck with them.
If there are more poor people amongst minorities, that is a separate issue.
If there are more poor people amongst minorities, that is a separate issue.
3
Banks restrict lending to certain groups because they like to be paid back. There is no other logical explanation.
94
It is appropriate for a bank to restrict lending to certain INDIVIDUALS because they appear, on rational analysis, to be poor risks. It is not appropriate for a bank to restrict lending to certain GROUPS because bank officials believe that members of a group, generally, are poorer risks. Groups don't receive or pay back loans, individuals do. When a bank makes decisions based on group membership, rather than individual merit, then it is illegally discriminating.
36
If many individuals do not pay back the banks and many of those individuals belong to similar groups or group. That does not mean necessarily that the group was discriminated against but that many of the people who do not pay back the banks belong to a certain group. After the fact, it may be shown that the individual of a certain group that will indeed pay back the banks is indeed the outlier, whereas perhaps most of the group feel the bank does not deserve to be paid back.
4
Maybe the bank is "avoiding" certain neighborhoods because they are too poor to have enough people in them to originate enough loans? Maybe the structure of the society in which the bank does business is stratified so that certain poor neighborhoods have a high percentage of minorities. In such a case, a bank avoiding poor neighborhoods looks *just like* a bank avoiding minorities. Do you have enough information from this story to judge the bank as motivated by racism?
10
if banks are forced by the federal government to lend to those with poor credit rating then we will have a repeat of 2008.
88
If?
3
I don't feel comfortable with the government forcing companies to open branches and advertise where they see fit. I would assume that another bank would see an opportunity and try to make money in an underserved market. Just the thought of the government micromanaging any market seems odd.
52
Actually, it's unconstitutional.
1
We need to increase interest rates and get government out of the loan business (both real estate and education). Then, and only then, will prices fall down to realistic levels and people will have more equity in any loans they get. Unfortunately, the banks do not want you to own more. They want to keep prices artificially high and interest rates artificially low. Wake up!
7
This I believe illustrates more the failure of the Obama administration's economic policies which have done little to benefit the middle and lower classes. Big government works for big business creating a form of oligarchy the "progressives" pretend to despise.
10
Are there loans the government can give out for housing in poor/underserved areas to both help avoid predatory loans and also combat discrimination? It's a double-edged blade of the same sword.
3
I'm all for smart bank regulation and holding them responsible for misdoings.
But this is the government holding one industry/company for the failing of our entire society, with our government right at the head of it. For the most part, as other commentors have mentioned, this has nothing to do with the bank's refusal to give loans to minority borrowers. It is the stark math that as a country and as a society we continue to marginalize minorities. They make less, have less wealth, live shorter lives, are incarcerated more often, etc.
This issue needs to continue to receive focus and attention and honesty from all Americans, not just tired platitudes about bootstraps. But suing banks for not lending to people without the proper incomes, because those people weren't white, is misguided.
But this is the government holding one industry/company for the failing of our entire society, with our government right at the head of it. For the most part, as other commentors have mentioned, this has nothing to do with the bank's refusal to give loans to minority borrowers. It is the stark math that as a country and as a society we continue to marginalize minorities. They make less, have less wealth, live shorter lives, are incarcerated more often, etc.
This issue needs to continue to receive focus and attention and honesty from all Americans, not just tired platitudes about bootstraps. But suing banks for not lending to people without the proper incomes, because those people weren't white, is misguided.
29
Please reread the article. This is NOT about "suing banks for not lending to people without the proper incomes, because those people weren't white..." It is about NOT EVEN TAKING applications from individuals in certain neighborhoods. The fact that other banks were able to generate applications speaks loudly.
2
Suing banks for the reasons given is not misguided. It's racist.
America has a rich documented 400 year history of redlining and systematically discriminating against blacks and minorities.
And yet certain oblivious Whites R Us folks still pretend discrimination doesn't exist in America.
At least admit America was founded, owned, operated and expanded on the flourishing of racial discrimination throughout this land's 400-year history.
Then maybe we can start to solve our disgraceful racial problems in this country.
You can't expect people who have been systematically redlined and discriminated against civilly, legally and economically for four centuries to magically rise up from their torture chamber and suddenly become economic success stories.
"What racial problem ?" says America's White Wonder Bread Caucus.
White 'free-dumb' is a serious problem.
And yet certain oblivious Whites R Us folks still pretend discrimination doesn't exist in America.
At least admit America was founded, owned, operated and expanded on the flourishing of racial discrimination throughout this land's 400-year history.
Then maybe we can start to solve our disgraceful racial problems in this country.
You can't expect people who have been systematically redlined and discriminated against civilly, legally and economically for four centuries to magically rise up from their torture chamber and suddenly become economic success stories.
"What racial problem ?" says America's White Wonder Bread Caucus.
White 'free-dumb' is a serious problem.
86
Made more complex and mystifying by the "discriminated-against" non whites who come here from Asia -- and within one generation claim a surprising percentage of high-school valedictorian honors and show up in surprising numbers amongst our physician, dentist, engineer, business exec and entrepreneur communities. Could it have something to do with or somehow be related to the relative rates of serious and committed parenting vs. out-of-wedlock births? One wonders, even though it is wicked and socially incorrect to do so.
8
You mean like the tens of millions of middle class African Americans, descendants of slaves, who choose to get an education, put off having children until they are married and have a good career, then buy a home in a good neighborhood, and never look back?
Or maybe you mean the immigrants who come here with nothing from countries where they and their ancestors have been oppressed and enslaved for millenia and yet through hard work and savings manage to pull themselves out of poverty and their children go to college?
Or do they not count?
Or maybe you mean the immigrants who come here with nothing from countries where they and their ancestors have been oppressed and enslaved for millenia and yet through hard work and savings manage to pull themselves out of poverty and their children go to college?
Or do they not count?
6
Nonsense. Banks like any business, provision a certain percentage for bad debt.
2
If the government knows this is happening, then they can stop it. Also, every Latino/Latina and African-American affected by this practice, should definitely sue each and every bank and organization. When it becomes to costly, they will stop or go out of business. The money can then be used to purchase nice homes in up and coming areas. Please do not use the banks that practiced this redlining in the past or in the present. Perhaps use banks owned by Latinos and African-Americans. Take your money from the lawsuits to lenders that did not red line. Purchase homes that will increase in value. Purchase homes in areas with excellent schools. Remember, we have been through this before. Now, we know the benefit of suing these awful, racist banks and organizations. Latinos and African Americans definitely have a right to low interest loans when we qualify. Redlining is illegal and is worth a lawsuit!
7
If there are so many profitable minority mortgages out there then why doesn't a liberal like George Soros start a bank and scoop up all of this profitable business?
55
From the story it was abundantly apparent that other banks were in fact doing this.
1
Ask HRC for specifics of what she would do. Ask her before asking Bernie, lest all she do, as per usual, is echo Bernie.
14
Lending Discrimination has a much more pervasive form: more minorities suffer from higher priced loans compared to similarly creditworthy whites. Redlining is a problem but fee packing in the loan based on race is a bigger problem.
Other ways banks discriminate and hide it from the government is by discouraging applicants from completing their loan application. Or saying that the bank cannot loan below a certain threshold eg. 150,000. This is a proxy for not making loans in low-income minority neighborhoods.
Other ways banks discriminate and hide it from the government is by discouraging applicants from completing their loan application. Or saying that the bank cannot loan below a certain threshold eg. 150,000. This is a proxy for not making loans in low-income minority neighborhoods.
1
The deeply ingrained biases that the majority of whites hold against black people has not significantly changed since the 1960s, except in that it is not quite as explicit. These biases will continue to be perpetuated on the back of segregation - which is the direct result of practices like redlining.
How can these biases ever be challenged if whites are only surrounded by other whites?! We see poor blacks on the news when discussions of welfare are at hand, ignoring that welfare also helps the young and elderly. On PBS last night there was a story about black families moving to Wisconsin for work - and they ran into people who had quite literally never seen a black person before!
Is it any wonder that the ingrained biases flourish when the only things you know about them are what your family and the news tells you?
How can these biases ever be challenged if whites are only surrounded by other whites?! We see poor blacks on the news when discussions of welfare are at hand, ignoring that welfare also helps the young and elderly. On PBS last night there was a story about black families moving to Wisconsin for work - and they ran into people who had quite literally never seen a black person before!
Is it any wonder that the ingrained biases flourish when the only things you know about them are what your family and the news tells you?
2
What a hit piece (both by the NY Times and the administration). The amount of work that it takes to grant a loan is relatively constant. The profit in granting a loan is directly proportional to the value of the loan. Consequently, low property value areas are low (or negative) profit areas. Further, lower income earners are excessively vulnerable to layoffs, which increases substantially the risk and reduces the profit of loaning to them.
This is not discrimination against black people, it's chasing profitable customers. However, since we've catastrophically failed our Latino and Black populations, they have been most significantly affected by this.
This is not discrimination against black people, it's chasing profitable customers. However, since we've catastrophically failed our Latino and Black populations, they have been most significantly affected by this.
62
The article does not say nor are these institutions being asked to lower underwriting standards. The issue is that they are not equally serving all the customers of the communities they are located in. The fact that other institutions in the same area are able to make loans to a much higher percentage of black and latino customers indicates that this kind of behavior (redlining) is taking place.
24
No, the data only says that others make more loans to minorities. It most definitely does not establish intent
5
I realize that the plural of anecdote is not data. But here's my anecdotal experience.
I had (and still have) an impeccable credit rating and a secure, very well-paying job when I bought a house in a low-income San Jose neighborhood in 2007. My mortgage broker arranged a loan with a giant bank, which I won't name here.
A few months later, the bank sold my loan to a legal entity that included the bank's name but legally was not the bank! Then the housing market collapsed, even here, and my home lost half its value. Interest rates plummeted and I wanted to refinance but couldn't.
The California attorney general reached a settlement with certain banks, including my original mortgagee, under which they would allow qualified underwater customers to refinance. I applied. To make a long story short, my original mortgagee said I wasn't qualified because it no longer owned the loan. The bank told me that the entity to which it had sold it, which included the bank's own name but had some extraneous words in its title, was a company with which it had no affiliation (!) and onto which it was dumping subprime loans. (The word "dumping" is my interpretation, of course.)
I was astounded. I'm not a subprime mortgagor. But I do live in a low-income neighborhood that is dominated by hard-working and honest but usually quite poor Latinos. Maybe that explains the sale of the loan.
I had (and still have) an impeccable credit rating and a secure, very well-paying job when I bought a house in a low-income San Jose neighborhood in 2007. My mortgage broker arranged a loan with a giant bank, which I won't name here.
A few months later, the bank sold my loan to a legal entity that included the bank's name but legally was not the bank! Then the housing market collapsed, even here, and my home lost half its value. Interest rates plummeted and I wanted to refinance but couldn't.
The California attorney general reached a settlement with certain banks, including my original mortgagee, under which they would allow qualified underwater customers to refinance. I applied. To make a long story short, my original mortgagee said I wasn't qualified because it no longer owned the loan. The bank told me that the entity to which it had sold it, which included the bank's own name but had some extraneous words in its title, was a company with which it had no affiliation (!) and onto which it was dumping subprime loans. (The word "dumping" is my interpretation, of course.)
I was astounded. I'm not a subprime mortgagor. But I do live in a low-income neighborhood that is dominated by hard-working and honest but usually quite poor Latinos. Maybe that explains the sale of the loan.
10
Mortgage loans are repackaged and sold all the time. If the bank that made your loan doesn't own it, what do you expect them to do? They don't own it.
2
Ordinarily, that would be true. But the original loan came from [Name of Bank]. The loan was sold to [Name of Bank] Mortgage Investors or some similar nomenclature. The bank was disavowing any connection with or obligation arising from the activities of another legal entity that contained its very name!
Eventually, I did refinance, at a marvelous 2.875% APR, with a different lender. When I did, the original giant bank lender, which had rebuffed my assiduous efforts to refinance with it before, wrote me a nice letter suggesting I refinance with it instead. It was to laugh.
Eventually, I did refinance, at a marvelous 2.875% APR, with a different lender. When I did, the original giant bank lender, which had rebuffed my assiduous efforts to refinance with it before, wrote me a nice letter suggesting I refinance with it instead. It was to laugh.
2
"Over just the past 12 months, federal, state and city officials have successfully required banks to expand minority lending programs "
****
Didn't we see how this ended when the Community Investment Act drove things to the point where banks couldn't merge without a certain amount of identity-lending and benefits (ex., welfare) were considered "income" for the purpose of qualifying for a mortgage?
Looking at lending only through the prism of race seems misguided. There are many other factors to consider, like default rates. And it hasn't only been minorities who have had trouble getting loans. Small businesses have had difficulties as well. It's a major theme of Carly Fiorina for a reason.
****
Didn't we see how this ended when the Community Investment Act drove things to the point where banks couldn't merge without a certain amount of identity-lending and benefits (ex., welfare) were considered "income" for the purpose of qualifying for a mortgage?
Looking at lending only through the prism of race seems misguided. There are many other factors to consider, like default rates. And it hasn't only been minorities who have had trouble getting loans. Small businesses have had difficulties as well. It's a major theme of Carly Fiorina for a reason.
44