The social structure of mortgage discrimination

Abstract

In the decade leading up to the U.S. housing crisis, black and Latino borrowers disproportionately received high-cost, high-risk mortgages—a lending disparity well documented by prior quantitative studies. We analyze qualitative data from actors in the lending industry to identify the social structure though which this mortgage discrimination took place. Our data consist of 220 depositions, declarations, and related exhibits submitted by borrowers, loan originators, investment banks, and others in fair lending cases. Our analyses reveal specific mechanisms through which loan originators identified and gained the trust of black and Latino borrowers in order to place them into higher-cost, higher-risk loans than similarly situated white borrowers. Loan originators sought out lists of individuals already borrowing money to buy consumer goods in predominantly black and Latino neighborhoods to find potential borrowers, and exploited intermediaries within local social networks, such as community or religious leaders, to gain those borrowers’ trust.

Riding the Stagecoach to Hell: A Qualitative Analysis of Racial Discrimination in Mortgage Lending

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<em>Plessy</em>'s Legacy: The Government's Role in the Development and Perpetuation of Segregated Neighborhoods

“…Prior to the emergence of subprime lending, most mortgage lenders made mainly prime loans to borrowers with incomes and credit histories that indicated they were unlikely to default on their obligations. In the early 1990s, technological advances in automated underwriting allowed lenders to predict with improved accuracy the likelihood that borrowers with blemished credit histories would repay loans (Steil et al 2018).…”

The boomer penalty: excess mortality among baby boomers in Canada and the United States

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