Wednesday, June 18, 2008


All of the talk about "post-racial" America and the dawn of the "post-civil rights era" is belied by grim statistics on race and the mortgage market just reported by the Economic Policy Institute. Blacks and Hispanics are nearly twice as likely as blacks to hold high-cost, subprime home loans. In fact, more than half of home loans to blacks and just a little less than half of home loans to Hispanics in 2006 were subprime. The table above compares the percentage of each group holding subprime mortgages.

The cause: persistent discrimination in the home loan market. The EPI's analysis is sobering.

"Recent studies suggest that creditworthiness—alone or in combination with factors other than race—cannot account for these disparities. When researchers from the Federal Reserve and the Wharton School of Business conducted an analysis that took into account the percent of adults in a neighborhood who were a very high credit risk, they still found a positive relationship between the prevalence of subprime loans and the share of minorities in a neighborhood. An analysis by the Center for Responsible Lending found that even after taking into account individual credit scores and other characteristics, Hispanic and African American borrowers were more than 30% more likely to receive higher-rate subprime loans. These and other studies, coupled with the long history of racial discrimination in lending, raise the prospect that discrimination may be a factor in the high rates of subprime loans among Hispanics and African Americans."

We have a long way to go before we can claim that we have overcome.