Soci 101 Notes 11.13

Soci 101 Notes 11.13 - Sub-prime lending (study from 2000)...

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Homeownership - why does homeownership matter? Equity in your life - big % of your net worth Equity - the market value of your property minus mortgage you must pay off 1994 2000 2005 White 70 73.8 75.8 Black 42.3 42 48.2 Native American 51.7 56.2 58.2 Asian/Pac Islanders 51.3 52.8 60.1 Why does this disparity exist? There was discrimination keeping blacks from buying homes There was practice of red-lining - populations of mostly white race were green, some minorities yellow, mostly minority red If an area was red-lined, you could not get a loan to buy a house there Reverse Red-lining (very present today) - the practice of aggressively offering sub-prime loans to people in formerly red-lined neighborhoods, even when their credit qualified them for better loans
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Unformatted text preview: Sub-prime lending (study from 2000) Lower-income blacks 2.4x as likely to get a sub-prime loan as the same income bracket in whites Upper-income blacks 3x as likely to get sub-prime loan as the same income bracket in whites Rate of Denial of Loans (1990) White Blacks <80% of median income 20% 38% 100% - 120% M.I. 10% 23% >120% of M.I. 6% 24% Net Wealth - Everything you own minus your debts Net Wealth in 2002 Census Median Net Wealth White (non-hisp) $87,056 Black $5,446 Asian/Pac Isl $59,292 Cumulative advantage (disadvantage) Where you start out has a huge impact on where you end up Excluding Equity 19,079 1,102 15,244...
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Soci 101 Notes 11.13 - Sub-prime lending (study from 2000)...

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