PREDATORY LENDING WITH PEOPLE OF COLOR AS THE PREY

Let the Declaration call for reparations for predatory lending that has resulted in so much human misery.


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

CHICAGO | Mon Oct 4, 2010 7:44am EDT

(Reuters) - 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.

Redlining is the practice of denying or increasing the cost of services, such as banking and insurance, to residents in specific areas, often based on race.

The U.S. economy is still struggling with the effects of its longest recession since the 1930s, which was triggered in large part by the housing crisis, which was in part triggered by the crash of the subprime loan market.

Subprime lending refers to loans made to consumers with poor credit and others considered higher risk. They tend to have a higher interest rate than traditional loans.

The study, which used data from the 100 largest U.S. metropolitan areas, found that living in a predominantly African-American area, and to a lesser extent Hispanic area, were "powerful predictors of foreclosures" in the nation.

Even African-Americans with similar credit profiles and down-payment ratios to white borrowers were more likely to receive subprime loans, according to the study.

"As a result, from 1993 to 2000, the share of subprime mortgages going to households in minority neighborhoods rose from 2 to 18 percent," Massey and Rugh said.

They said the U.S. Civil Rights Act should be amended to create mechanisms that would uncover discrimination and penalize those who discriminated against minority borrowers.

The study is published in the October issue of the journal.

(Editing by Paul Simao)

It's all true.

And, in this case, it's 100% the fault of our government and it's directive

http://open.salon.com/blog/sickofstupid/2011/10/20/how_to_make_trillions_commit_fraud_crash_the_economy

It most likely began with the repeal of the Glass-Steagall Act--which was signed by President Bill Clinton in 1999--combined with the excuse of a government directive to provide more minorities with government-backed mortgages. Banks that accepted regular customer deposits [commercial banks] were no longer legally separated from investment banks--banks that issue securities. This allowed investment banks to speculate with the money from deposits customers had made to the commercial banks. And, rather than seek out and lend to those minorities who were creditworthy, the banks smelled big profits elsewhere.