Study: Black and Latino Borrowers are More Likely to Get High Interest Mortgages -- Even if Credit Scores Are Good
For black and Latino Americans, a good credit score may not translate into the perks financial responsibility is supposed to bring. A recent study by the Economic Policy Institute found that banks disproportionately gave high interest mortgages that are supposed to go risky burrowers to Latino and African Americans with good credit scores.
According to EPI:
From 2004 to 2008, only 6.2 percent of white borrowers with credit scores of 660 and above ended up with higher-rate mortgages. Latinos and blacks with good credit scores, however, were three times as likely to end up with higher-rate mortgages.
The findings provide some explanation for staggering race-linked income inequality. EPI said:
These higher-rate mortgages increased the likelihood of foreclosure among Latinos and blacks. The higher foreclosure rates of these groups help explain why Latinos and blacks have seen such dramatic declines in wealth.
The study is yet another enraging example of how banks exploit borrowers. As EPI said,
Borrowers of all races suffered from the anything-goes attitude of the housing boom. The Wall Street Journal has reported that more than half of high interest rate loans during the peak years of the boom went to borrowers who should have qualified for prime mortgages.
Discriminatory housing practices are one reason why our country needs a strong Consumer Financial Protection Bureau. A powerful CFPB helps make sure that everyone is treated equally and fairly by the financial services industry.