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1) Article never mentions credit scores, debt to income ratios, amount of down payment on house, any prior history as a homeowner.
2) From the article - "Experts say the effective end of credit makes economically distressed neighborhoods more vulnerable to foreclosure, abandonment and blight." On my street, two different "home owners" walked away from their mortgage, and a third simply never took care of their house. Guess what that is doing to the value of property on my street and the neighboring streets?
3) At this point, the banks are trying unload bad real estate and are in no hurry to reacquire any new bad debt. It is the bank's money to lend, not the borrower's money by right. I wouldn't give a home loan for half the houses in the city I live in if I was a bank, and the color of skin on the borrower would be purely irrelevant.
Nice try to keep the "whites are racist, blacks are victims" meme going. That dog won't hunt, but keep peddling this sophomoric racist banality if it makes you feel good.
Quote from another article concerning lending discrimination at Well Fargo: Disclaimer:I am not posting this to change your opinion as I know your opinion is not motivated by FACTS.
I am just posting this to expose that dissent is often not rooted in FACTS....but rather, prejudice.
I'm not saying it's right that they place excessive fees on minority borrowers but they clearly have a metric to back up their method. Literally NO banks ever judge individual borrowers entirely on their merits, credit worthiness, or income. All banks and lending institutions use community averages to determine credit worthiness and unfortunately african American or Latino majority areas have lower median incomes...just as the area my parents grew up in has a low average income.
Like I said in my previous post...my parents (despite a six figure income) were denied a reasonable interest, standard loan until they moved from my hometown. Was it right that they were discriminated against based on their community? No. Is the discrimination motivated by anything other than repayment averages and ROI risk? Also no.
Banks DO NOT CARE what color you are...the only color that matters to financial institutions is green. What you and those like you fail to understand is that your prejudices force you to fit every story into your narrative. You already know that whatever happened is about white rule and minority subjugation....everything. You are the one making prejudicial decisions because you refuse to acknowledge an alternative theory for why minority borrowers were charged more. Maybe they have higher default rates? Maybe Asians are charged less than whites became they have even lower default rates. Maybe my parents were racially discriminated against for being "Appalachian Americans."
To summarize....No, it isn't right that people aren't judged individually. However the motivation is the primary factor to consider and it isn't so that old white bankers can feel giddy about denying loans to minorities despite how badly you may want it to be. It's about underwriting. It's about averages. It's about zip codes. It's about earning interest...And most importantly...it's about gambling on who is safest based on those categories.
Many chalk it up to various sorts of "discrimination" but it comes down to having an understand of wealth building and growing assets. Some AAs such as P. Diddy, Magic Johnson, Puff Daddy and others "got" that message. However by and large the greater AA population has not. Most equate having or earning large sums of money as "wealth" when anyone with half a mind on such matters will tell you it is not.
Your average AA rap or basketball "star" from the projects comes out of the middle to lower classes. The concept of wealth building is totally alien, however the idea of money and what it can purchase is not. It is an expansion of living payday to payday. You work (or whatever) get money, spend, lather rinse and repeat. Young Gary Coleman of "Different Strokes" fame had most of his money from child acting pissed away by his parents. Dionne Warwick is poor and literally bankrupt, Tony Braxton has been in and out of bankruptcy court so often she is a poster child for the reforms that were passed several years ago.
Now contrast this with say a Lance Bass, the young gay former member of the pop band N'sync whose financial affairs were taken into hand and is now quite wealthy from his investments. Same with the young "Harry Potter" actor Daniel Radcliffe whose earnings were plowed into investments including NYC real estate.
In the 1980's sitcom "The Cosby Show" Claire Huxtable summed things up; when one of the daughters complained that her friends thought she was snobby because they were "rich" Dr. Huxtable counters "he and his wife" are wealthy because they earn the money. Mrs. Huxtable corrects her husband with "we are not wealthy, wealth is when your money works for *you*, and we work very hard for our money...". Now Mrs. Huxtable was an attorney, her husband a physician so it is a safe bet that they earned decent compensation. However Claire Huxtable understood that alone is not enough to be wealthy.
These are of course overly general statements. There are plenty of AAs that have gone from poverty to great wealth and managed to remain. However it is telling that so many go from poverty, wealth and back into poverty. I mean when you hear story after story of some poor AA winning tens of millions in the lottery only to be bankrupt in < ten years afterwards, you have to wonder.
Just had to say that the two names bolded above are the same person! Sean Combs is his real name, I hate aliases.
But on the OP, as someone who has worked in the banking industry, AZcardinal's comments below are right on. And FWIW, I am black but the main thing banks think about is "green" and nothing else.
That said, where one lives or has a business does matter and it is a fact that the most minority areas are not considered good places to invest by bank formulas for loans. Also, many people, including black Americans have high debt to income ratios. That, over credit and income, is one of the primary reasons for denial of a loan. My husband and I went through something similar when we were younger even though we both have credit scores above 700. I was not working and he was deemed to have a high debt to credit ratio at the time and we were denied a car loan due to that. Now that we both work, we don't have this problem as we make substantially more than what our debt is right now and we own a lot of assets outright.
Also, wanted to say that we should take entertainers and lottery winners actions with a grain of salt. They do not represent normal, every day black Americans. I remember watching a show where a large group of people (all white) at an employer in TX won over 100 million dollars and after 5 years practically all of them had spent all the money. Most people who have never had much will go a bit crazy with large sums of money. You can see this now with all these tax refunds going out - I know people who will spend up their $10K tax refund in a couple weeks. My dad cracked me up telling me he picked up a lady who told her she just got her refund (he owns a few taxis my dad and also drives one himself). She wanted him to take her to Popeye's chicken and so he did - it was clear across town, the ride there and back was over $50 and she bought about $60-$75 worth of chicken and stuff so she spent over $100 on some chicken and a cab ride lol. This lady was white BTW. Dad thought it was sad, crazy, and hilarious at the same time, almost as funny as the old people he drives to doctors appointments who complain about president Obama being a socialist, yet they are getting a free taxi ride due to Medicaid lol.
But most Americans in general are not familiar with the requirements of mortgages or business loans or other installment loans, lines of credit, etc. Economically our country is pretty ignorant. More education is needed on everyday financial matters and IMO the main problem with black Americans in regards to loans and credit and wealth is the fact that we sell off or lose too many of the assets that were left to us by our forebearers. Many will seek to "move up" and out of "the hood" and just sell off the house in the old neighborhood and go rent someplace later. Homes, even in todays market (which is rebounding nicely) can be large sources of wealth and are important assets. Much more important than a car one is paying off. So losing those houses in the hood or the land down south that was owned by our grand mothers/grandfathers is something that needs to be remedied the most. We can use those assets to make ourselves more attractive for SBA loans or other financing strategies that can be used to further our financial goals.
You can see this now with all these tax refunds going out - I know people who will spend up their $10K tax refund in a couple weeks.
I have not had a tax refund in over 10 years.....even when I did get a tax refund if was RARE that is was over $800.00. How in the heck does someone get a 10k tax refund?
I have not had a tax refund in over 10 years.....even when I did get a tax refund if was RARE that is was over $800.00. How in the heck does someone get a 10k tax refund?
It is called Earned Income Credit, it is actually for low income folks with kids and they get WAY more in taxes back than they pay.
I have not had a tax refund in over 10 years.....even when I did get a tax refund if was RARE that is was over $800.00. How in the heck does someone get a 10k tax refund?
Easy. Make over $150k-ish in household income, pay mortgage/student loan interest, and claim Single-0 on your W4.
Ok but according to the two articles I posted even Black-Americans and Hispanics with good credit scores had issues with getting loans.
Keep in mind you also represented the thread title.
It says: Why Do Poor Whites Get Loans Over Wealthy Blacks?
but the study in your OP doesn't mention wealth (which are your accumulated net assets). it says the people all hadhigh income (which is your annual income).
it also didn't mention
A) What the home values were like in the neighborhoods it profiled
B) What the credit scores were of the borrowers it profiled
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