|
|
|
| Current Issue |
|
|
| Resources |
|
|
|
Discrimination in Mortgage Lending
| Article
# : |
20142 |
|
|
Section : |
MODERN THOUGHT
|
| Issue
Date : |
2 / 1992 |
2,466 Words |
| Author
: |
Shanna Smith
|
The most significant capital investment Americans make is in their home. Yet many Americans do not understand how each step of the mortgage loan process works or how decisions and delays can affect the final outcome of their mortage loan application. In part it is the lack of knowledge about the process that allows discriminatory practices to continue. The issue is not whether mortgage lending discrimination is occurring, but where in the lending process it is happening and how to identify and eliminate these practices.
In the 1970s "redlining" was the term used to describe discrimination in mortgage lending. Bankers would draw a red line around a neighborhood on a map and simply refuse to make loans in these neighborhoods. Historically, lenders have discriminated against racial, ethnic, and religious minorities and women. In the 1930s appraisal textbooks warned that residential neighborhoods should be protected against the "infiltration of inharmonious racial groups." One text ranked race and nationalities in order of their impact on the value of property, with the most favorable on top and least favorable at the bottom:
1.English 2.North Italians 3.Bohemians or Czechs 4.Poles 5.Lithuanians 6.Greeks 7.Russians, Jews (lower class) 8.South Italians 9.Negroes 10.Mexicans
Lenders, of course, relied heavily on appraisers to make assessments regarding the value and loan risk of properties. Using race as a determining factor for value established a dual housing market--one standard for whites and another standard for minorities.
The standard appraisal form recommended by the U.S.League of Savings Associations as late as 1974 identified the ethnic composition of area and allowed the appraiser to check "stable" or "unstable."
The 1968 Fair Housing Act became the first federal law to comprehensively address the problems of housing discrimination in the United States. Yet, even the passage of this law did not guarantee equal opportunity in the lending process. Public statements by lenders and federal regulatory agencies continued to express the view that it was proper to take the race of an applicant or racial composition of the neighborhood into account when deciding property value and loan risk. HUD even published a document in 1975 supporting the racial model of neighborhood decline.
Growing concern of fair lending
...
Read Full Article
Look for this article in Ask.com
|
|
