Fed Researchers Find Subprime Loan Discrimination and Redlining

Ruben Hernandez-Murillo

 of the Federal Reserve Bank of St. Louis,

Andra C. Ghent

 of Baruch College (CUNY) - Zicklin School of Business, and

Michael Owyang

 also of the St. Louis Federal Reserve have written Race, Redlining, and Subprime Loan Pricing.  Here is the abstract:

We investigate whether race and ethnicity influenced subprime loan pricing during 2005, the peak of the subprime mortgage expansion. We combine loan-level data on the performance of non-prime securitized mortgages with individual- and neighborhood-level data on racial and ethnic characteristics for metropolitan areas in California and Florida. Using a model of rate determination that accounts for predicted loan performance, we evaluate the presence of statistical and taste-based discrimination, as well as disparate impact and disparate treatment discrimination, in mortgage rates. We find evidence of redlining as well as adverse pricing for blacks and Hispanics.

Comments

[personal injury lawyers new york city]

Subprime loan system isn't that bad, I thought...