Bayer, Ferreira, and Ross, 2015 Been, Ellen, and Madar, 2009 Bocian et al., 2011 Courchane, 2007 Rugh, Albright, and Massey, 2015). Numerous quantitative studies have found that black and Latino borrowers over the past decade were frequently charged more for mortgage loans than similarly situated white borrowers (e.g. More recently, the rise of new lending practices that specifically target nonwhite neighborhoods for risky, high cost financial services have further widened racial disparities in home equity and wealth ( Hyra et al., 2013 Lipsitz and Oliver 2010 Renuart, 2004 Ross and Yinger, 2002 Squires, 1992). One of the many forms of neighborhood-based racial discrimination that contributed to current disparities is the legacy of redlining-the denial of credit to non-white residential areas (Rothstein 2017). Historically, these disparities have been driven by multiple forms of discrimination, both public and private, including white mob violence against African-Americans trying to move into formerly all-white neighborhoods, municipal segregation ordinances prohibiting residence by blacks on predominantly white blocks, racially restrictive covenants barring the future sale of a property to non-whites. These gaps in wealth by race are less a product of income disparities than of differential access to good homes in high quality neighborhoods, which in turn produces racial differences in homeownership rates, home values, and the accumulation of home equity, the principal source of wealth for most American families ( Oliver and Shapiro, 1995). According to the Federal Reserve (2014), the wealth of the median white household stood at $141,900 in 2013, 13 times greater than that of the median black household ($11,000) and ten times that of the median Latino household ($13,700). Racial disparities in wealth are currently at their widest levels in decades. Loan originators sought out lists of individuals already borrowing money to buy consumer goods in predominantly black and Latino neighborhoods to find potential borrowers, and exploited intermediaries within local social networks, such as community or religious leaders, to gain those borrowers’ trust. Our analyses reveal specific mechanisms through which loan originators identified and gained the trust of black and Latino borrowers in order to place them into higher-cost, higher-risk loans than similarly situated white borrowers. Our data consist of 220 depositions, declarations, and related exhibits submitted by borrowers, loan originators, investment banks, and others in fair lending cases. We analyze qualitative data from actors in the lending industry to identify the social structure though which this mortgage discrimination took place. housing crisis, black and Latino borrowers disproportionately received high-cost, high-risk mortgages-a lending disparity well documented by prior quantitative studies.
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