Even among upper-income buyers, 54.4 percent of blacks and 48.9 percent of Hispanics used high-cost loans. By contrast, just 16.4 percent of higher-income white buyers received such loans.
Were the mortgage agents overtly racist? No, probably not. But this does imply a systemic bias against people of color that resulted in them only being offered expensive mortgages. Else how to explain that upper-income people of color (who presumably weren’t buying in dicey areas and who have financial resources) had virtually the same percentage of high cost loans as did low-income people of color?
Notices of default jumped 45.4% in California in December compared to November.
“We have yet to see the real impact from the ARM resets,” [said a company that tracks California foreclosures.]
That is genuinely scary.
I am truly curious as to why the disparity. I wonder if some of it might be explained by psychological/cultural factors– i.e. an upwardly mobile person from an otherwise economically challenged group might be more likely to stretch for a larger home to emphasize their success.
Other possibilities: Are there cultural facotrs at work that cause a lower job retention for people of color (thus lower scores when applying for loans)? Are people of color more accustomed to living with higher interest rates because those originating in underpriviledged areas are forced to rely on higher-cost credit, like high-interest-rate cards and payday loans? Are there redline areas in which where people of color might buy expensive homes in an otherwise-undesirable city (like Inglewood Heights in Los Angeles for example) where lenders dare not tread?
Otherwise it makes no sense to me– credit agencies don’t track people by color. Two people with the same income and employment– applying for a loan on the same home in the same neighborhood– couldn’t help but get the same loan offerings.
Maybe they were buying in upscale parts of communities of color where interest rates are higher than in Anglo areas?