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Borrowing Racism

Racism skeptic? Consider the predatory lending practices that were a defining feature of the recent subprime lending boom and the 2008 economic crisis that it spawned. Predatory lending devastated many communities. But, it had especially dire financial impact on communities of color. “Exploiting a dismal history of residential segregation and housing discrimination, many financial institutions flooded minority communities with toxic loan products” spiking foreclosure rates concentrated in communities of color. This has resulted in broadening the racial wealth gap increasing to historic levels. Predatory lending is a major force the in relationship between racial disparity and access to economic opportunity. This relationship has been clear … but overlooked … for some time.

A Princeton housing bubble study found, that "the greater the degree of Hispanic and especially black segregation a metropolitan area exhibits, the higher the number and rate of foreclosures it experiences." The study concludes that these disparities are largely due to the disproportionate chance that minority borrowers will receive subprime loans.

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