Applying for a mortgage can be a stressful experience. Aside from the difficulty of gathering all the necessary documents, there is the stress of waiting to find out what type of loan one qualifies for, and for what amount. A lot depends upon those two pieces of information. One hopes that one’s race is not one of the factors taken into consideration by the bankers when deciding what loan to approve you for, but a 2015 study by BYU Sociology Professor Jacob Rugh, proves that that is not the case, at least in the city of Baltimore in the early 2000’s.
Of all the mortgage financing options available, subprime loans are perhaps some of the least desirable, as they carry higher interest rates and are designed for those who don’t qualify for prime loans. Dr. Rugh and his co-authors, discovered that, in that city at that time, even if some African Americans qualified for prime loans, they were given subprime loans. Furthermore, extra clauses and more fees were often attached. Their study was published in the journal Social Problems. In June of 2016, it was awarded the John Hope Franklin Prize for the Best Article on Race, Racism and the Law. The prize is named after a historian and civil rights pioneer who studied racial politics.
The Result: Large Settlement
- implement, or advocate the implementation of, increased civil rights enforcement by institutionalizing ongoing audits and other cost-effective means to monitor racial disparities and increase transparency in ways that remediate systematic patterns at the level of structure and policies rather than isolated acts of individuals.
- offer only safe, fixed-rate mortgages and down payment ratios that make home ownership, wealth accumulation, and social mobility accessible for borrowers of color.
- own other assets besides a mortgage, thus reducing your risk