Segregation & Foreclosures

Somewhat related to my previous post, here's an interesting article from HuffingtonPost that someone sent me.  But first, let's be clear where the blame lies:

The guilty parties in the foreclosure crisis are many: greedy homeowners, unscrupulous investors, lax underwriters, asleep-at-the-wheel regulators, sloppy mortgage servicers, and more. No doubt all share in the blame.

Focusing on lenders, it's evident that too many lenders do not act ethically, as evidenced by this:

...when subprime lending peaked in 2006, just 18% of white borrowers received subprime loans compared to 54% of African Americans. An unfortunate irony, as the Wall Street Journal reported in 2007, is that over 60% of subprime borrowers had credit scores that qualified them for prime loans, underscoring the discriminatory nature of the marketing.

The article discusses the effect of segregation, and how it allows subprime lenders to target heavily segregated areas.

Discriminatory lending patterns do not happen by chance. As the National Community Reinvestment Coalition has reported, in recent years racial minorities and minority communities were deliberately targeted by predatory lenders for subprime lending. The more segregated a metropolitan area is, of course, the easier it is to find exploitable clients. Segregation creates natural pockets of financially unsophisticated, historically underserved, poor minority homeowners who are ripe for exploitation.

Milwaukee metro area, of course, is one of the most segregated in the United States, so the foreclosure crisis will be with us for a long time.