Open Access. Powered by Scholars. Published by Universities.®
Articles 1 - 2 of 2
Full-Text Articles in Law
"On The Take": The Black Box Of Credit Scoring And Mortgage Discrimination, Cassandra Jones Havard
"On The Take": The Black Box Of Credit Scoring And Mortgage Discrimination, Cassandra Jones Havard
All Faculty Scholarship
Subprime credit, a relatively new method of risk-based pricing, has been hailed as a way to open up markets and provide access to credit to those who would otherwise be excluded. Evidence suggests that subprime mortgage segmentation increases rather than reduces exclusionary practices in lending. Furthermore, what is unclear is how lenders determine who qualifies as a subprime borrower. This concern became manifested when studies demonstrated that minority borrowers, regardless of creditworthiness, are more likely to receive expensive, sub-prime loans. The disparity is properly attributed to lenders’ credit pricing policies which included discretionary increases despite the objectively-determined risk-based interest rate …
Democratizing Credit: Examining The Structural Inequities Of Subprime Lending, Cassandra Jones Havard
Democratizing Credit: Examining The Structural Inequities Of Subprime Lending, Cassandra Jones Havard
All Faculty Scholarship
This Article critiques the current regime of mortgage lending, which favors economic subordination. Minorities and low-and moderate income persons, regardless of their creditworthiness, are receiving higher loan rates. This is due to three market phenomena- the dominance of sub-prime lenders in the market in which prime lenders are more restricted to lend, the segmentation of the market so that certain products are offered to certain consumers, and the liquidity of the secondary market, which encourages lenders to make loans that are easily sold, but which may be inappropriately and impermissibly priced. Only by incorporating some transparency into the process will …