Wednesday, December 6, 2023

What's Up Next? SECU CEO Vows To Lead Lending Staff Forward In Expansion Of RBL To Member Mortgage And Home Equity Loans

"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 , 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 ().

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 (; ; ; ; ).

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; ; ; Courchane, 2007; ). 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?