MBANews is reporting on an article in the American Banker which notes that early results from the Federal Reserve's study of Home Mortgage Disclosure Act data appear "to support the claim by community groups that certain minority borrowers receive more than their fair share of subprime home loans."
"As some press accounts have implied, the data indicate that blacks and Hispanics are more likely to take out higher-priced loans than non-Hispanic whites," conceded Fed Governor Edward Gramlich. Gramlich did note that the HMDA data by itself does not necessarily suggest discrimination on the part of lenders.
Uh, as opposed to what?
1. People of lower income groups get charged more for borrowing money. The higher the risk you are to default, the higher your interest rate will be to compensate for the higher risk. Unfortunately, minority groups in the U.S. still do not have income parity with caucasians. And until they do, they will be paying higher interest. It's all based on the law of large numbers.
Posted at 6:29AM on Dec 19th 2005 by Tino Buntic