Investigating Predatory Lending: Reverse Redlining
Rep. Carolyn Maloney (D-N.Y.) filed this guest post.
Today, I will chair a hearing of the Joint Economic Committee that will examine the economic impact of reverse redlining – the practice of targeting minority borrowers and senior citizens to receive unnecessarily expensive mortgages. We will hear testimony from community, government and academic leaders on how borrowers were pressured into manipulative and dangerous subprime loans, even though some could have qualified for safer prime-rate loans.
Evidence continues to come to light that many of the subprime borrowers who had pay stubs to prove their employment – and may have qualified for prime loans – were steered into more costly no-documentation loans by some lenders. This practice has been shown to have a devastating ripple effect. Concentrated foreclosures increase crime and vandalism and lower surrounding property values.
I am hopeful that a Consumer Financial Product Safety Agency, a body suggested by the Obama administration, will work to prevent this type of predatory lending. We need consumer protections to be the cornerstone of financial regulation.
Among others, testifying today will be James Carr from the National Community Reinvestment Coalition. I look forward to asking him about work the NCRC has done with the National Council of Negro Women showing that African American women are more likely to be mortgage holders than non-minority women, even when controlling for income. And, troublingly, those African American female mortgage holders are more likely to be in higher-cost loans than non-minority women, even, again, after controlling for income.
Since the beginning of 2007, black homeownership has fallen more than three times as much as white, non-Hispanic homeownership, according to our committee's analysis of census data. These shocking numbers show that while the current economic crisis has had a powerful impact on all Americans, communities that were preyed on by discriminatory mortgages were hit even harder.
Rep. Carolyn Maloney (D-N.Y.) chairs the Joint Economic Committee.
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