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~生まれた町で夢見てきた...~
"In the city of my birth, I had a dream..."
Institutionalized descrimination in my face (and yours) first thing in the morning. 
14th-Sep-2005 05:46 am
Accordion
I will say it 'til I'm blue in the face: Some things are not a matter of opinion; anecdotes are wholly ineffective at infallibly proving larger truths. Some things do not go away (and indeed get worse) when you pretend they don't exist. Some things are not solved by blaming the victim.

Know what? I think there are a lot of people out there in dire need of sensitivity training. So next time you regurgitate some racist, conservative rhetoric at me, be sure you've done your research--and I mean *real* research--first. Take some classes--and actually do the freakin' work! Read the works of scholars, or if you find that beyond your meager brainpower, at least pick up some widely-recognized textbooks. Some lessons in formal logic might help too if you want to argue with me 'cause you sound like a moron when you use faulty logic. Wakatta???

Blacks Hit Hardest by Costlier Mortgages

By EDMUND L. ANDREWS
The New York Times
September 14, 2005

WASHINGTON, Sept. 13 - Regardless of income levels, blacks were about three times as likely as whites to borrow through more expensive "subprime" mortgages last year, according to a nationwide lending survey released Tuesday by the Federal Reserve.

The new report, based on data collected from 8,853 lenders, is the Fed's first attempt to look for evidence of racial and ethnic discrimination in the booming business in exotic mortgages and subprime lending.

Among low-income homebuyers, about 39.2 percent of blacks but only 12.9 percent of whites took out high-priced mortgages, which the Fed defined as loans with interest rates about 2 percentage points higher than those for "prime" customers with good credit.

For buyers of a $200,000 house last year, that would have meant about $3,000 extra in annual interest payments.

In its report, the Fed cautioned that its study included no data on the credit ratings of individual borrowers, which greatly affects the rates they must pay. The Fed also said that part of the gap could be explained by differences in the kinds of mortgages that people used and by differences among lenders.

But even after adjusting for those differences, blacks were nearly twice as likely as whites at every income level to take out expensive mortgages.

Douglas Duncan, chief economist for the Mortgage Bankers Association in Washington, said the Fed's report showed little evidence of racial or ethnic discrimination.

"To us, it seemed they were saying you could explain the majority of differences," Mr. Duncan said. "You would expect to see higher-priced loans in higher-priced categories."

But Dean Baker, co-director of the Center for Economic Policy Research in Washington, said this merely pointed to a larger issue: "The discrimination is about why you end up going to a subprime lender in the first place," Mr. Baker said.

"It is striking to see such a difference" between members of minority groups and whites, Mr. Baker said. "What it shows is that blacks and Hispanics are paying a lot more for mortgages than whites who appear to be comparably situated." Under a longstanding mandate from Congress, the Federal Reserve has for years analyzed the rates at which people in different ethnic groups were being denied mortgage loans.

But that measure had become increasingly dated as banks and other mortgage lenders developed a kaleidoscope of high-cost subprime mortgages for people who would have simply been rejected outright in the past on the basis of poor credit or insufficient income.

Subprime mortgages, almost nonexistent 10 years ago, accounted for more than 10 percent of all new home mortgages last year; analysts say they are a major reason that homeownership rates have climbed sharply among African-Americans and Hispanics.

The new study raised but did not answer the question of why blacks, and to a lesser extent Hispanics, have been induced to pay higher rates.

Even among high-income borrowers, which the Fed defined as people who earned more than 120 percent of the median income in their area, blacks and Hispanics were far more likely to take out high-cost mortgages.

Among higher-income borrowers, 23.9 percent of blacks took out high-cost mortgages, compared to 17.4 percent of high-income Hispanics and 5.8 percent of whites.

Asian-Americans, by contrast, were less likely on average than whites to take out high-cost loans.

In its study, the Fed said that a large part of the contrast between mortgages to blacks and whites could be attributed to differences in lending institutions.

Put another way, the gap between blacks and whites who borrowed from the same lenders was much smaller that the overall gap between blacks and whites.

According to the Fed's data, the vast bulk of high-priced subprime lending was handled by a small number of institutions. Of the 8,800 mortgage lenders that provided data, only 500 said they had made more than 100 subprime loans last year. Ten lenders accounted for 38 percent of all the loans that were made.

The Fed study could provide new ammunition to critics of subprime lenders who accuse such institutions of predatory lending practices.

In addition to paying much higher interest rates than "prime" borrowers with strong credit, subprime customers are often locked into their mortgages for three to five years and forced to pay big penalties if they try to refinance with a cheaper mortgage.

In an attempt to shed more light on the issue of discrimination, Fed researchers delved into data from eight major subprime mortgage lenders that was collected by Georgetown University's Credit Research Center.

END

You know, the deeper you delve beneath the surface, the uglier this country gets. It's bad enough that people really do believe in the American Dream and social mobility when in fact they are far, far more likely to land somewhere in the vicinity of where they started than rocket to the top.

But here's an example of discrimination that you, the individual, would never know about unless someone--such as this study--informed you about it. And that's the thing. The discrimination doesn't go away, it just goes underground and becomes less obvious to the casual eye. The forces that keep minorities down persist, and they persist apart from the actions of any single individual. That's why it's "institutionalized."
Comments 
14th-Sep-2005 12:47 pm (UTC)
Good Morning!! ^__^

*sighs*

I coulda told you this first hand... At the mortgage company I worked for, interest rates were set by the loan officers. There was a base rate the company set, but the loan officers could set a higher rate and pocket the excess.. It's a pretty common practice in the industry. As a processor I got to see all the application details, and almost without exception, those paying the highest interest rates were less educated, less affluent, and less white... It wasn't that the company was charging a higher rate based on income and race, etc., it was a perk they allowed for the loan officers, and these were the people least likely to realize their friendly loan officer was ripping them off. Of course, they were also least likely to be able to afford a big down payment, meaning they also had to pay mortgage insurance on top of interest....
14th-Sep-2005 04:26 pm (UTC)
I think it's more than just individual loan officers deliberately choosing to rip off the "wrong" kinds of people. In the article, it says:

In its report, the Fed cautioned that its study included no data on the credit ratings of individual borrowers, which greatly affects the rates they must pay. The Fed also said that part of the gap could be explained by differences in the kinds of mortgages that people used and by differences among lenders.

But even after adjusting for those differences, blacks were nearly twice as likely as whites at every income level to take out expensive mortgages.

This suggests, to me at least, that the problem doesn't lie solely with corrupt loan officers but with fundamentals of the system itself--which makes it much more complicated than merely hiring trustworthy employees.
14th-Sep-2005 05:58 pm (UTC)
I think there is more of an anti-poor bias built into the system now. My company at least didn't charge higher rates based on location or income, which I hear a lot more about now.. It would be interesting to know exactly why blacks are more likely to take out high interest loans.. In my own experience it was just greedy loan officers taking advantage of people who didn't question or shop around.. My guess is now it's a combination of that sort of thing, plus added in premiums for perceived risk..
This might be telling:

Put another way, the gap between blacks and whites who borrowed from the same lenders was much smaller that the overall gap between blacks and whites.

The question is why would blacks at higher income levels take out more expensive loans? Assuming they're more educated and sophisticated, it's hard to understand, especially when loan information, including rates and fees, is a lot more available now than it used to be.. But then, not everyone has a finance degree and experience in mortgage banking ^^;;

You know, we had to include race on applications for government reporting. The customer could decline filling out that section, but in those cases the loan officers would fill it in later without the customer knowing....
14th-Sep-2005 11:59 pm (UTC)
Put another way, the gap between blacks and whites who borrowed from the same lenders was much smaller that the overall gap between blacks and whites.

Hmm. So it's probably not just individual greedy lenders squeezing minorities for all they're worth and giving whites a sweeter deal...

Some of it could be really insidious, too...like certain companies "catering" primarily to whites or to blacks. Or issues of access. I really do believe that this sort of discrimination is built into the system, outside of the will or whim of any individual.
15th-Sep-2005 12:26 am (UTC)
Some of it could be really insidious, too...like certain companies "catering" primarily to whites or to blacks. Or issues of access.

Oh well, that’s definitely true for lending in general, or at least companies that cater to affluent or poor.. Around here in poor (and primarily black) areas, you see a lot of places offering short term cash advance loans, with ridiculous interest rates of course.. I *think* it’s being more regulated now, but I’m not sure... But yeah, different companies have different target markets, and treat them differently..

My favorite, which is not necessarily aimed at one group or another, is the places offering to help “consolidate” your credit card and other loans payments by taking advantage of the built up equity in your home.. Translation: replace your unsecured debt with a big loan secured by your house. Can’t pay, lose your house....
I also at least once a week get official looking letters telling me I have to rush to consolidate my student debt.. Thing is, they’re all from private banks and such, which you wouldn’t know by just a quick glance..

Missing messages again, weird...
15th-Sep-2005 01:02 am (UTC)
Translation: replace your unsecured debt with a big loan secured by your house. Can’t pay, lose your house....

*sighs* But a heck of a lot of Americans are doing it; taking out a second mortage on their home based on inflated real estate prices and using the money to buy consumer goods. It's what's powering the economy these days, doncha know? *bleh* The party's gonna end really soon. What new bubble will be there to float us out of the mire of our own making?
14th-Sep-2005 03:57 pm (UTC)
I would have thought this would be more obvious, actually. I use this sort of things as one of my examples when I argue with people about the difficulties of getting out of poverty. People who are less well off and less educated, regardless of color, get ripped off. I think there is definitely racism involved, but I think classism just as much. I am white, but I had to really search for a fair home loan. Despite the great home buyer's market and interest rates at the time, people were trying to charge us unbelievable rates! Finally I got to one and told him I was tired of fucking around, I knew what I qualified for, etc. And I got a better deal than anyone I know. But it took a lot of work and research that a lot of people might not have been able to do. I think poverty on whole affects way more black people, and when you go to a poor black neighborhood, you see exploitation of them everywhere. From rental furniture stores that charge outrageous interest rates with "no money down" and "no credit checks" to check cashing places that gouge them of their paychecks.
14th-Sep-2005 03:58 pm (UTC)
Okay, excuse the typos. I was rushed. I suppose it would have been faster to edit myself the first time...
14th-Sep-2005 04:30 pm (UTC)
*nod nod* And the problem just gets worse if you're a member of more than one oppressed group. God forbid you be black AND poor AND female AND gay--consider yourself royally screwed. Not to mention that there are disadvantages to being, say, poor and black that accrue on account of being BOTH. That doesn't just mean you suffer what poor people and black people suffer; you've got problems all your own. I really do believe that our society is fundamentally structured so that there really isn't as much social mobility as we'd like to believe. The odds are stacked against the rich person becoming destitute and the poor person becoming a millionaire.
14th-Sep-2005 06:21 pm (UTC)
It truly is structured that way. I don't think of it so much as a belief as something tangible that we can prove. There are just so many odds stacked against anyone who is poor. I hear a lot of people who claim racism doesn't exist, and that poor white people have it bad. Poor whites do have it rough because all of society, including themselves, thinks of them as just the worst sort of losers because being white should make them automatically upwardly mobile or something. But that's not true. However, having been extremely poor and even homeless, I can vouch for the fact that white privilege does indeed exist. There is no way to deny that, as most of us have seen it/experienced at one time or another.
14th-Sep-2005 11:54 pm (UTC)
I don't think of it so much as a belief as something tangible that we can prove.

Oh yes, and it has been, in abundant ways. And yet, people still say that they're suffering because they don't try hard enough. When even studies have shown that even members of the American underclass (often black and female, incidentally) believe in the American Dream as much or even more than the people on the top--even though it's not likely to be a reality for them ever. The more I learn about it, honestly, the angrier I get.

I can vouch for the fact that white privilege does indeed exist. There is no way to deny that, as most of us have seen it/experienced at one time or another.

*nods* Absolutely. The ironic part is that I never *really* understood white privilege (I look Asian...err, obviously, if you've seen my userinfo) until I lived in Korea and was presumed to be a member of the majority. I was (mistakenly) treated in ways that I never had been in the US. It was always assumed that I belonged and would do no harm. The comparison is a valuable experience; I think everyone who has the opportunity to experience what it's like to be both minority and majority in different places. Talk about consciousness-raising.
15th-Sep-2005 05:12 am (UTC)
Doesn't surprise me. Not one bit. Although what I found interesting is that you lumped racist and conservative together. Rhetoric, I agree with, but racist and conservative? Or is this really targeted at one individual who shall be unnamed?
15th-Sep-2005 11:51 am (UTC)
If you look closely at conservative rhetoric, it is either implicitly racist or explicitly refusing to solve the underlying problems that cause discrimination. This is no secret, either.
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