Lending discrimination imperils national prosperity

Our future economic prosperity could depend on mortgage lending discrimination

America is becoming more and more diverse. Given how much middle class wealth depends on home ownership and home values, if we do not significantly reduce mortgage lending discrimination, then we are placing our future economic prosperity at risk.

Heather Mullins Crislip

Heather Crislip

HOME CEO Heather Crislip writes about mortgage lending discrimination in her recent op/ed:

Subprime lending to minority borrowers has abated within the past few years; in its place is a lack of credit and, in turn, opportunity in African-American, Hispanic and low-income neighborhoods. During the housing boom these households were often targeted by unfair lending practices through the distribution of inferior mortgage loan products to qualified borrowers. The Center for Responsible Lending found that African-American and Latino borrowers with good credit were given high interest rate loans three times as often during the housing boom.

According to the US Census, by the end of this decade no single racial or ethnic group will constitute a majority of children under 18. And in about three decades, no single group will constitute a majority of the country as a whole. But as we are growing more diverse, we are also growing more unequal. Both wealth and racial inequality have increased, in some cases dramatically.

Wealth inequality:

The biggest difference between the most-affluent and everyone else, according to research by the Pew Research Center, is that the wealthiest households have their assets concentrated in stocks and other financial instruments, while others’ wealth is concentrated in their homes. Which begs the question, how do low-to-moderate income families in Virginia build wealth when they don’t have access to credit to finance a home?

Racial inequality:

According to a recent study by Duke University: Black and Latino home buyers pay about 3.5% more for housing than whites and Asians. This percentage can translate to about $5,000 or $10,000 per housing sale.

If we do not significantly reduce mortgage lending discrimination, then we are placing our future economic prosperity at risk. If discriminatory lending patterns and practices continue unabated, it will be a problem for the new American majority.

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