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Discrimination By U.S Mortgage Lenders

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Running Head: Discriminaon in the US mortgage lending market 1
Discrimination in the US mortgage lending market
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Discriminaon in the US mortgage lending market 2
Introduction
Discrimination in the US mortgage lending market is one of the most rampant forms of
discrimination in the American society. Since the early 1930s until 1970s, discrimination in the
mortgage lending market on the basis of race was rampant in the inner city neighborhoods in the
United States. Today, this practice continues to be witnessed in the mortgage lending market of
America (Apgar & Calder, 2005). Based on theoretical and practical explanations, this paper
seeks to analyze the extent and impact of ongoing mortgage lending discrimination in the United
States. Much focus will be given on statistical discrimination and the types of mortgage loans
that are available to lower-income and minority borrowers. The paper will also discuss the
effectiveness of the measures that have been so far put in place to address the problem of racial
gap in home purchase lending.
Mortgage discrimination
Mortgage discrimination is one of the most apparent practices that systematically deny
loans offered by banks, governments and other lending institutions to lower-income and minority
borrowers. The inability of individuals from the minority communities to secure mortgages to
purchase property secured in redlined zones is deemed one of the major contributor to the urban
decay that beset most cities, particularly in the 1990s (John, 1998). While advances have been
made regarding the accessibility of conventional financing among African Americans,
discrimination in the mortgage lending market is still a severe problem. The immediate post-
world war II period saw widespread forms of mortgage discrimination where minorities were
denied access to home mortgages in distinct ways that reduced their financial capability of an
individual from racial and ethnic communities to purchase a home. The predominance of
government-sponsored racial covenants in the Federal Housing Administration (FHA) guidelines
has often promoted the redlining practices of financial institutions and private mortgage lenders
(Apgar & Calder, 2005).
While there are a number of efforts to promote equal access of mortgage loans by racial
and ethnic minorities, these efforts have yielded little results. The enactments of the Home
Mortgage Disclosure Act (HMDA) and the Community Reinvestment Act in the 1970s are some
of the legal interventions that sought to promote fair lending in home mortgage market. The

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Discrimination in the US mortgage lending market Name: University: Course: Date: Tutor: Introduction Discrimination in the US mortgage lending market is one of the most rampant forms of discrimination in the American society. Since the early 1930s until 1970s, discrimination in the mortgage lending market on the basis of race was rampant in the inner city neighborhoods in the United States. Today, this practice continues to be witnessed in the mortgage lending market of America (Apgar & Calder, 2005). Based on theoretical and practical explanations, this paper seeks to analyze the extent and impact of ongoing mortgage lending discrimination in the United States. Much focus will be given on statistical discrimination and the types of mortgage loans that are available to lower-income and minority borrowers. The paper will also discuss the effectiveness of the measures that have been so far put in place to address the problem of racial gap in home purchase lending. Mortgage discrimination Mortgage discrimination is one of the most apparent practices that systematically deny loans offered by banks, governments and other lending institutions to lower-income and minority borrowers. The inability of individuals from the minority communities to secure mortgages to purchase property secured in redlined zones is deemed one of the major contributor to the urban decay that beset most cities, particularly in the 1990s (John, 1998). While advances have been made regarding ...
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