Minorities and Real Estate Part 2
Subprime lenders charge minority borrowers more, regardless of credit score. One study has just released findings that may just shake the lending industry to it’s core.
With no way to explain themselves, lenders have been caught giving higher prices to minorities. In fact, when comparing applicants with very similar credit histories, apples to apples, give minorities a higher interest rate 1/3 of the time.
And, it’s not merely African American and Latino families that suffer though, all real estate buyers and market investors suffer:
loans, this path to security is made steeper," said Hilary Shelton,
director of the Washington bureau of the NAACP, the lobbying and public
policy branch of the civil rights group. "That means that it’s even
harder for families of color to build equity for their future; it’s
even harder to send their children to college; and it’s even harder to
build wealth for the next generation."
And while the study’s results are disturbing for African-Americans
and Latinos, all borrowers may be at risk from some of the sub-prime
market’s common practices.
The Attorney General in New York, Elliot Spitzer, and some in Congress are trying to pass laws to prevent this practice from continuing, especially amongst the subprime lending market, but they face a difficult time because of the lobbyists from the lending industry.
All real estate investors really should pay close attention to this story.
Relevant Tags: fair housing, housing, lenders, real estate industry, real estate lending, real estate taxes, subprime lending