Blacks/Whites different rates for loans - necessarily wrong or ******?
Remember the ‘redlining’ scandal? This turned out to be total BS - white people living in Roxbury also paid higher interest rates than black people living in Wellesley for loans of the same size and with similar credit scores - - - the difference was that the collateral was higher risk. Mortgages are secured loans - they’re so low-interest to start with, and they sell for only a few bps discount in the secondary market, precisely because they’re secured.
A new report shows different rates for auto loans…. But does that necessarily imply racism? A lot of poor / high crime neighborhoods happen to be largely minority neighborhoods. The car is more likely to be damaged or stolen - same reason the insurance rates are higher.
Consider also that in both cases, most applications are done over the phone with a written follow up - - - the loan officer never sees you - in fact he or she usually actually talks to the car dealer, not you.
This sounds like another fake scandal.
Kermit I completely sympathize and empathize with you, I’ve had similar problems with medical insurance - you change jobs and thus health insurers and the hospital or pediatrician just keeps billing the wrong insurance company and then tell you you have to pay the bill - the $8/hr receptionists are just too lazy to change the info in their system even though you repeat it to them 6 times.
But that doesn’t mean that if minorities are on average paying 25 bps more for mortgages that the banks are ****** - if the mortgages are secured by property in higher-crime / volatile housing value neighborhoods then secured loans will be priced higher.
No Shrink, you’re wrong, it’s a secured loan, the collateral value and risk is a valid concern - sometimes the most important concern - and it’s not at all illegal to consider it.
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interesting point. I’m glad i read your question.
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Great question!
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almost everything is based on creditand statistics, not color!
but yeah probably a fake scandal…cause every time something is unfavorable to certain groups of minorities Racism is used as the reason. it is getting so F rediculous!
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It’s not a scandal if it’s a nationwide trend. It’s just that, a statistic. People can assume that they know for what reasons the statistic is the way it is, but that’s just it- it just is.
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I don’t make enough to qualify for a loan so anyone who can actually get a loan is doing better than me.
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I dont think its as much racism as much as it is statistics.
e.g. Insurance charges more for a bright yellow corvette then a silver mini van or a silver corvette. Because statistically the insurance spends more money on bright sports colors then duller sports colors or minivans.
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black people pay higher rates for loans because they are riskier investments as they are typically poorer than the average person. Therefore, banks and car dealerships require a higher return for those riskier investments because of a higher default risk.
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It is another way to place more government control over our lives. Welcome to liberals.
Liberals need victims to stay in power.
Nothing wrong with what went wrong. If they did not get a good rate, they should negotiate more.
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If the circumstances as you have stated them are true, those loans are illegal.
The key is credit scores and job status. If these two things are equivalent, and the only distinction between different rates is race, then it is discrimination.
The neighborhood is a determination for the insurer, which is reflected in the insurance rate. In this case, the lender can show the higher cost of insuring the loan, and that fee can be passed on to the borrower if it is clearly stated.
Liberal or not, it’s very clear in the law.
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I color is the ONLY reason then it’s wrong. If you present a higher risk then it’s right.
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I don’t know about the black/ white issue on this subject. But it is a fact that illegal aliens are receiving mortgage loans, and at much lower interest rates than citizens. Shouldn’t we be more concerned about this?
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It really seems that rate should be based purely on your credit history, that is reasonable.
SO since that is the way it is, well what can a I say, their credit history caused them to have to pay more.
Sounds like a great lesson in personal responsibility, pay your bills on time get good rates, be late or do not pay, pay high rates.
Isn’t the free market a great tool.