Say Anything Blog

Studies have found that blacks and Hispanics were likely to be charged higher interest rates on subprime loans than whites with similar credit ratings.

When either Congressman Frank, or Reuters, is conscientious enough to make some of these “studies” public, I’ll be more than willing to examine the evidence.  In the meantime, absent anything to back up these charges, this looks more like an election year stunt than a knowledgeable assessment of the facts.

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

Banks used to deny loan applications in certain parts of town based on the risk associated with loans in those areas.  That was deemed racist (redlining), so they developed loans based on individual credit histories with higher rates associated with riskier borrowers.  I’m not sure what else these people want them to do - charge everyone the same rate regardless of their likelihood of paying back the loan?  That’s what these socialists want (short of having the gov’t pay everyone’s mortgage).

I remember Bawney Fwank decrying the inequalities of the home and small business mortgage/loan industry in the late ‘80s and early ‘90s, along with Theadora Kennedy and J Rok. They forced through major changes and opened the Pandora’s Box of Adjustable Rate Mortgages. And now those exact same assholes are screeching that mortgage companies are predatory and abusive. Fucking incredible. And they will be allowed to get away with this shit, yet again.

Una Salus Victus Nullam Sperare Salutem

That’s what these socialists want (short of having the gov’t pay everyone’s mortgage).

Nixon,

Not EVERYONE!  Only those who stupidly bought more house than they could prudently afford, with mortgages they could not reasonably expect themselves to pay, while putting down little or none of their own money to secure equity in the purchased property.

Oh… and it’s not the government which will be bailing these people out of the consequences of their greed-based, imprudent decision making.  Its the rest of us who will bear the burden.  Government doesn’t pay for anything without first taking the wealth from those who’ve earned it.

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

My second thought was: What’s with this statement about blacks and Hispanics being “pushed” into loans?  How is that happening?  Are lenders threatening these minority borrowers?

Apparently, roving gangs of sub-prime lenders are wandering the streets and forcing minorities to sign up for mortgages they cannot afford.  The police really should do something about that.

"Although I can accept talking scarecrows, lions and great wizards in emerald cities, I find it hard to believe there is no paperwork involved when your house lands on a witch.”
- Dave James

Steve,

Those “roving gangs of sub-prime lenders” wandering the streets are easily identified by the Ralph Lauren suits they wear and the BMWs they drive.  Ruthless!

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

“We are still seeing more blacks and Hispanics being pushed into subprime mortgages than they should be and that’s where you’ll see more regulation,”

Does Barney Frank know something that the rest of us don’t? These loans are between two or more consenting parties. Nobody is getting “pushed” into anything, so what the hell is Barney Frank going on about?

Typical for a Democrat, the man is an idiot who doesn’t know what he is talking about.

It’s worth remembering that there’s more to lending situations than a credit score.

Umm, yeah.  Like whether the borrower is Black or Hispanic.

http://www.azcentral.com/home/hb101/articles/0531homeloans0531.html

Black and Hispanic people are 30 percent more likely to be charged a higher rate for high-risk home loans than Whites with similar credit histories, according to a study by a non-profit research organization.

We cant let facts or common sense get in the way of a Juicy Headline.....

willie, would you like to supply a link to the Federal Indictment concerning this? Racial discrimination in lending is a Federal crime, and therefore any lender doing such will have been arrested, put to trial, convicted and imprisoned. So, prove your bullshit.

Una Salus Victus Nullam Sperare Salutem

2H9,

No need to worry about arrests and prosecutions based on Will’s cited article, which referenced a two year old study by the euphemistically named Center for Responsible Lending.

The study is seriously flawed, both in its methodology and the conclusions drawn (as if there was any doubt what those would be!)

The article cited by Will, originally published by Bloomberg, had this to say,

Keith Ernst, senior policy counsel to the center, said his group’s study shows that whites still receive favorable rates when credit histories and loan amounts are taken into account. “We were able to detect differences after controlling for major factors and economic decisions under which the loan was made,”

Along with this,

Lenders said the findings didn’t take into account differences among borrowers in credit scores and other risk factors…

And this,

“Mortgage originators routinely make exceptions to guidelines, but it may be that African-Americans receive fewer favorable exceptions than White borrowers,” the center’s report concluded.

This last is interesting because as anyone who knows something about the mortgage business can attest, mortgage originators, loan officers in other words, do not have the authority to make exceptions to guidelines.  Only an underwriter, and usually a senior one, can make the call on a request for an exception to published guidelines.  Apparently the article’s author didn’t know what he was talking about.

As to the study itself, it would take the equivalent of half its 52 pages to do a detailed rebuttal, but suffice it to say that this type of regressive analysis would only be an effective measure of predicted outcomes if credit scores for each specific Zip Code, and for each racial group, both overall and within each Zip Code examined were also factored in.  They were not.  Nor was any analysis of credit score disbursement among the general population as an authoritative baseline for purposes of comparson.

Furthermore, the credit scores of those cases examined for the study are arbitrarily grouped into several ranges.  But “high interest rate” or “high cost loans” are more specifically scaled than allowed by the study, and though I found no reference within the study, the fact is that interest rates, and the credit scores and other underwriting guidelines used to assess mortgage lending risks, can and do change, sometimes monthly, sometimes weekly, sometimes daily, depending on a number of secondary market factors, none of which are addressed by the study.

The study did include this acknowledgment, however,

The Federal Reserve’s report on 2004 HMDA data included research conducted by the Credit Research Center (CRC).  In their analysis of loan data, CRC found almost no disparities in the proportions of borrowers receiving higher-rate lonas by race or ethnicity, after making adjustments for risk factors such as LTV and FICO scores.

Obviously, a disagreement exists, but I notice that those who cite the CRL study never seem to mention that another such study was done, at the direction of the Fed, with completely different conclusions.

As I said, the methodology and the conclusions are flawed.

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

Can you tell me how to get rid of student loans? They are 18,15,& 13 years old. Why havent they gone away??????? Plus the school closed & wasnt accredaited. So my degree is useless. Thanks Vivian.

Can you tell me how to get rid of student loans?

I got rid of mine by making monthly payment just like I agreed to when I took out the loan.
Not sure what you were expecting to hear but you took out the loan and regardless of the circumstances you were and are responsible for paying it back