Racial predatory loans fueled U.S. housing crisis: study

[DainBramaged]

Predatory lending aimed at racially segregated minority neighborhoods led to mass foreclosures that fueled the U.S. housing crisis, according to a new study published in the American Sociological Review.

Predatory lending typically refers to loans that carry unreasonable fees, interest rates and payment requirements.

Poorer minority areas became a focus of these practices in the 1990s with the growth of mortgage-backed securities, which enabled lenders to pool low- and high-risk loans to sell on the secondary market, Professor Douglas Massey of the Woodrow Wilson School of Public and International Affairs at Princeton University and PhD candidate Jacob Rugh, said in their study.

The financial institutions likely to be found in minority areas tended to be predatory -- pawn shops, payday lenders and check cashing services that "charge high fees and usurious rates of interest," they said in the study.

"By definition, segregation creates minority dominant neighborhoods, which, given the legacy of redlining and institutional discrimination, continue to be underserved by mainstream financial institutions," the study says.

http://www.reuters.com/article/idUSTRE6930K520101004?loomia_ow=t0:s0:a49:g43:r3:c0.072821:b37991474:z0


Of course, all of these people just wanted to live high on the hog........:sarcasm:


http://www.asanet.org/images/journals/docs/pdf/asr/Oct10ASRFeature.pdf

[stray cat]

1. racial or low income and were they given correct info or lied to

if someone gives me a loan with full disclosure it is not their fault if i accept it

[Liberal_in_LA]

3. it's like when minorities are offered car loans at higher interest rates. The individual

doesn't know that across town whites are being offered a lower rate. They just grabbed the best deal they can get.

[Lance_Boyle]

4. And if you get full disclosure and it looks like a raw deal, you pass.

I still cannot fathom why anyone would sign a mortgage contract they didn't intend to uphold. If the terms don't look good, you really don't HAVE to have that house.

[mdmc]

2. ..

[county worker]

5. When I look at the neighborhoods where there are a lot of foreclosures in my area

they are not ones were poorer people tended to live. These are almost always new developments that sprang up during the housing boom. It is plain to see that people bought just before the bubble burst and could not afford the ARMs when the reset. It was not lending to poor people.