"The Social Structure of Mortgage Discrimination"[Full article link here]
✅ The authors are academics from MIT, Princeton, Brigham Young, (2017)
Racial disparities in wealth are currently at their widest levels in decades [more so in 2023!]. According to the Federal Reserve (2014), the wealth of the median white household stood at $141,900 in 2013, 13 times greater than that of the median black household ($11,000) and ten times that of the median Latino household ($13,700). These gaps in wealth by race are less a product of income disparities than of differential access to good homes in high quality neighborhoods, which in turn produces racial differences in home ownership rates, home values, and the accumulation of home equity, the principal source of wealth for most American families (Oliver and Shapiro, 1995).
Historically, these disparities have been driven by multiple forms of discrimination, both public and private, including white mob violence against African-Americans trying to move into formerly all-white neighborhoods, municipal segregation ordinances prohibiting residence by blacks on predominantly white blocks, racially restrictive covenants barring the future sale of a property to non-whites. One of the many forms of neighborhood-based racial discrimination that contributed to current disparities is the legacy of redlining—the denial of credit to non-white residential areas (Rothstein 2017). More recently, the rise of new lending practices that specifically target nonwhite neighborhoods for risky, high cost financial services have further widened racial disparities in home equity and wealth (Hyra et al., 2013; Lipsitz and Oliver 2010; Renuart, 2004; Ross and Yinger, 2002; Squires, 1992).
Numerous quantitative studies have found that black and Latino borrowers over the past decade were frequently charged more for mortgage loans than similarly situated white borrowers (e.g. Bayer, Ferreira, and Ross, 2015; Been, Ellen, and Madar, 2009; Bocian et al., 2011; Courchane, 2007; Rugh, Albright, and Massey, 2015). Even after controlling for credit scores, loan to value ratios, the existence of subordinate liens, and housing and debt expenses relative to individual income, Bayer, Ferreira, and Ross (2015) found that black and Latino borrowers in all of the seven metropolitan areas they studied were significantly more likely to receive a high-cost loan than others.
... "Gym Crow"? Yet Another "innovation" at SECU?
Income inequalities only seem to get worse with time. Let’s use college football as an analogy. Over time the Alabama’s, Michigan’s, Ohio State’s, Clemson’s and Georgia’s to name a few have only widened the distance between themselves and the rest of college football programs. Over the last 20 years 10 teams account for 20 championships, all of them big time college athletic programs.
ReplyDeleteWinning begets winning. It’s the same with financial literacy and fairness - winning feeds the next generation of winning. It becomes harder and harder for the disadvantaged to “break through”. Those that are financially literate (mainly white, middle class, males as head of households) pass that advantage to their offspring, and the disadvantaged, unfortunately in way too many instances, pass their disadvantage to their offspring.
For 85 years SECU was a beacon of hope doing all that was possible to help those that needed it the most - people of color, single mothers and the poor to get out of that vicious cycle.
But no more. Selfishness and short-sidedness along with a loss of moral and ethical direction by the previous Board with the hiring of Jim Hayes and propagated by Leigh Brady have resulted in Discriminatory Based Lending, perhaps the worst decision in the history of the organization. A shameful label those people will wear for all time.
There is a battle for the Credit Union’s very soul going right this minute. I fear if the Board can’t be flipped next October SECU will be lost forever. There comes a time if you believe in something strongly you must stand up and be counted no matter the consequences.
you can cheat and still be #1 ...
DeleteThe rich rule over the poor,
Deleteand the borrower becomes the lender’s slave.
the new hires by Hayes and Brady have come right out of banking culture. There is no people helping people in their background. Every product offered now is geared for profit. why is that at a non-profit? Not for profit? Entire leadership team and Board except for the 3 newly elected do not understand that NCSECU was the premier consumer financial institution in North Carolina--a beacon of trustworthiness for the consumer. Set up for State Employees--very middle to lower income people --and their families. How do the leaders go so far wrong in two years?! Nothing to distinguish NCSECU from any other financial institution except worse, more expensive, and mediocre...
Delete"NCSECU was the premier consumer financial institution in North Carolina ..."
Deletepossibly the best in the country! That's why the wolves sought out the sheep!
and with NO advertising it grew to be an industry giant!! Now that's a demonstration of the power of "People helping People"
DeleteWhen Gymbo and cronies said they wanted to go from $50 billion to $100, they weren't interested in the paltry 2 to 3 billion growth a year. Well we get to see what they had in mind. Very few members fall into the A paper so EVERYONE else is paying for their vision of sugar plums.
ReplyDeleteIt's called the Fleecing the Flock!
The only way to turn this around is to vote the other 4 board members out next year so you gain the majority.
SECU People helping ... oh wait it's now STFU!
How many is very few?
Deletemaybe SECU can break down the numbers for us... you know be transparent. My guess is RBL hurts more people than it helps.
DeleteIs the assumption that the SECU board has the data and is wrong and those opposed don’t have the data and are correct?
DeleteSeems backwards…
We shouldn't have to assume anything, the data should be available for all to see. After all it is our credit union not 'The Boards'!
DeleteThese adversaries roam like a lion devouring anybody in their way ... they must not be trusted anymore!
ReplyDeleteSo, as mentioned in other comments/topics on this blog, a new SECU leader doesn't want to hear - people helping people - not for them, huh? As one who annoyingly speaks the obvious, it is obvious that they are only helping a small percentage of members - the A tier. The remaining members, who already find it challenging in this economy, (would) make larger loan payments. Because the payment is higher, they now have less money for other expenses and their credit score is probably going to drop. Obviously, what they are purchasing (home, car, education, etc.) are very expensive but cost them even more than what it cost an A-tier member. That higher payment could keep them from being able to afford a reliable car or a decent home to live it. Stop messing around with a credit union that used to work. Give everyone the same rate – the best rate SECU can offer. It has already been said, HELP ALL THE MEMBERS! If they cannot afford a loan, how can you improve their financial status (consolidation loan, refinance, etc.)? When I was younger, I had to get help because my paycheck was tiny. Every time my auto insurance premium was due, I had to borrow money (paid every 6 months). My roommate felt sorry for me when she saw my salary posted in the newspaper – she told me she would pay all our utility bills! I also remember 5 years ago before SECU was reporting to Experian, I was denied a Home Depot credit card. I had good credit, but it was mostly reported to Equifax. No explanation would change their minds. My situation today is good, but I can empathize with others who are not as lucky. Are the people that are pushing RBL all A-tier members? Would they feel good about NOT getting the best rate SECU has to offer? - obviously, Charity
ReplyDeleteAnybody see the new Facebook post about tier based lending? I swear I wish there was an eyeroll emoji. It pi$$es me off so bad that they try to make it seem like it's a great & fair practice just because other financial institutions do it. We were never just like the others - we were different and treated people equally. There USED to be a difference. Now we're practically turning into predatory lenders punishing people with terrible rates.
ReplyDeleteCan I be so bold as to say the Board members and CEO really don't care about the member/owners of the State Employees' Credit Union?
ReplyDeleteYou will pay the extra and like it!
Read my lips, there is NO discrimination with race based lending…except when it is
ReplyDeletehttps://www.cnbc.com/2023/12/11/wells-fargo-mortgage-lenders-probed-over-racial-discrimination.html
Wells Fargo
was snared in an industrywide probe into mortgage bankers’ use of loan discounts last year, CNBC has learned.
The discounts, known as pricing exceptions, are used by mortgage personnel to help secure deals in competitive markets. At Wells Fargo, for instance, bankers could request pricing exceptions that typically lowered a customer’s APR by between 25 abd 75 basis points.
The practice, used for decades across the home loan industry, has triggered regulators’ interest in recent years over possible violations of U.S. fair lending laws. Black and female borrowers got fewer pricing exceptions than other customers, the Consumer Financial Protection Bureau has found.
“As long as pricing exceptions exist, pricing disparities exist,” said Ken Perry, founder of a Washington-based compliance firm for the mortgage industry. “They’re the easiest way to discriminate against a client.”
Wells Fargo received an official notice from the CFPB called an MRA, or Matter Requiring Attention, on problems with its discounts, said people with knowledge of the situation. It’s unclear if regulators accused the bank of discrimination or sloppy oversight. The bank’s internal investigation on the matter extended into late this year, said the people.
Wells Fargo, until recently the biggest player in U.S. mortgages, has repeatedly felt regulators’ wrath over missteps involving home loans. In 2012, it paid more than $184 million to settle federal claims that it charged minorities higher fees and unjustly put them into subprime loans. It was fined $250 million in 2021 for failing to address problems in its mortgage business, and more recently paid $3.7 billion for consumer abuses on products including home loans.
The behind-the-scenes actions by regulators at Wells Fargo, which hadn’t been reported before, happened in the months before the company announced it was reining in its mortgage business. One reason for that move was the heightened scrutiny on lenders since the 2008 financial crisis.
Wells Fargo later hired law firm Winston & Strawn to grill mortgage bankers whose sales included high levels of the discounts, said the people, who declined to be identified speaking about confidential matters.
‘Proud’ bank
In response to this article, a company spokeswoman had this statement:
“Like many in the industry, we take into consideration competitor pricing offers when working with our customers to get a mortgage,” she said. “As part of our renewed focus on supporting underserved communities through our Special Purpose Credit Program, we have spent more than $100 million over the last year to help more minority families achieve and sustain homeownership, including offering deep discounts on mortgage rates.”
Wells Fargo was “proud to be the largest bank lender to minority families,” she added.
The bank later had this additional statement: “While we cannot comment on any regulatory matters, we don’t discriminate based on race, gender or age or any other protected basis.”
https://www.cnn.com/2023/12/14/business/navy-federal-credit-union-black-applicants-invs/index.html
ReplyDelete