For the experts on the board

[Onboard 2.0 9,083]

Just now, David Dennison said:

Well, when it happens disproportionately to minorities, chances are it's racism. 

Again, it definitely could be (as I clearly stated in my first post on the topic) or their customers are in predominantly minority areas, and it's just an ugly, coincidental statistical fact.

I am in no way defending the practice whether they're white, black, yellow, red, or just plain stupid.

[TwiceHorn 32,001]

4 minutes ago, Onboard 2.0 said:

But is that intentional racism or just luck of the draw for the institution ? They'd take advantage of the dumb white people as well I'd imagine.

Well, in Bodymore, Murdaland, land of "ghetto loans" and "mud people," it seems to be pretty intentional.

That just flabbergasts me.

[Brisketexan 106,674]

8 minutes ago, Onboard 2.0 said:

But is that intentional racism or just luck of the draw for the institution ? They'd take advantage of the dumb white people as well I'd imagine.

 

2 minutes ago, TwiceHorn said:

Well, in Bodymore, Murdaland, land of "ghetto loans" and "mud people," it seems to be pretty intentional.

That just flabbergasts me.

Logically, the answer is almost certainly "both."  The bank is happy to have a sucker, regardless of color....but in plenty of cases, what they do is quite intentional based on race.

As for the issue of why are black people more likely to be suckers than white folks, that is absolutely a trailing effect of long-term institutional racism.  For example, when I bought my first house, I had a good idea of everything to look out for, because my parents -- who had bought and sold homes -- filled me in on the process.  Fewer black people have that built-in advantage.  Because their parents and grandparents were less likely to own homes, be experienced in the world of even mid-level finance, etc., that means that today's generation, even if they are solid earners, are behind the curve in terms of financial education and experience.  And THAT is a result of the racism that their parents and grandparents experienced.

It's not their fault that their parents weren't able to educate them the way that mine were.

[Onboard 2.0 9,083]

Just now, Brisketexan said:

 

Logically, the answer is almost certainly "both."  The bank is happy to have a sucker, regardless of color....but in plenty of cases, what they do is quite intentional based on race.

As for the issue of why are black people more likely to be suckers than white folks, that is absolutely a trailing effect of long-term institutional racism.  For example, when I bought my first house, I had a good idea of everything to look out for, because my parents -- who had bought and sold homes -- filled me in on the process.  Fewer black people have that built-in advantage.  Because their parents and grandparents were less likely to own homes, be experienced in the world of even mid-level finance, etc., that means that today's generation, even if they are solid earners, are behind the curve in terms of financial education and experience.  And THAT is a result of the racism that their parents and grandparents experienced.

It's not their fault that their parents weren't able to educate them the way that mine were.

Thanks, and I definitely believe they strategically strategize, so I think it's definitely intentional and racist. 

[clapclapclap 9,000]

15 hours ago, deac_tracy said:

Here's the description of the data set from the Faber article.

  Reveal hidden contents

The HMDA

The HMDA was passed in 1975 to shed light on the mortgage industry. The law requires the large majority (Avery et al., 2007) of lending institutions to report information regarding home loan applications on a yearly basis (Pettit & Droesch, 2008). The HMDA covered 8,886 lending institutions in 2006 (Avery et al., 2007). This rich data set provided by the Federal Financial Institutions Examination Council (FFIEC, 2007a, 2007b) includes borrower characteristics (e.g., gender, race, ethnicity, income), information about the home (e.g., census tract, whether it is owner-occupied, property type), loan decision details (e.g., whether the loan was offered, reason for denial, rate spread, loan amount), and census tract –level data (e.g., percentage of the tract population that is of a minority racial group, median family income, population). A few variables are absent from the HMDA data set, including loan-to-value ratio, applicant credit score, and down payment size, which are typically important when a lender is assessing the riskiness of a potential borrower (Avery et al., 2007; Bocian, Ernst, & Li, 2007). Although this means my Housing Policy Debate 333 estimates are imperfect, HMDA data are the strongest data available because they are the only public, national mortgage data that include borrower race and application neighborhood (Bradford, 2002).2

Beginning in 1989, the HMDA began requiring lenders to ask applicants their race and ethnicity; however, applicants could refuse to answer (Ross & Yinger, 2002). If an applicant refused to answer, the lender could attempt a guess, based on physical characteristics or name. Unfortunately, there is no indication of which party was responsible for the race data. Earlier analyses were hampered by the fact that lenders were not required to request this information for applications processed via telephone, mail, or electronic means, which constituted a growing proportion of mortgage applications through the 1990s (Dietrich, 2002; Huck, 2001). Analysis showed these missing data to be more of a concern in studies of refinance loans than in the studies of purchase loans (Huck, 2001). A 2003 change in reporting requirements forced lenders to request these data from all applicants. The proportion of home-purchase applications missing race or ethnicity information fell from about 18% in 2001 to 12% in 2003 (FFIEC, 2004).3 I coded all respondents into six categories, based on ethnicity and the first race identified.4

Because I was primarily interested in the role that credit plays in expanding homeownership opportunities, I focused on home-purchase loans. This was in contrast to much of the previous research on subprime lending, which has concentrated on refinance loans, but in line with aforementioned concerns regarding housing credit access from earlier eras, which typically focused on home-purchase lending (Scheessele, 2002). I also limited models to owner-occupied borrowers because it requires fewer assumptions about motivations and the impact of subprime loans. Finally, this sampling decision reduced missing race data problems, which have been more common among refinancing loans (Huck, 2001).

Within home-purchase loans, I excluded second liens. This sampling decision was made because it is otherwise impossible to avoid double-counting individuals applying for piggy-back loans, which may have been taken out to avoid mortgage insurance on low down payment loans or to stay within the conforming loan limit (Avery et al., 2007; Been et al., 2008; Pettit & Droesch, 2008). This decision also meant that the loan amounts reported where there were second mortgages did not measure the full credit risk taken by the borrower. It is possible that for those applicants who applied simultaneously for first and second lien loans, the relationship between loan amount and denial or subprime likelihood would have appeared weaker in statistical models because their full risk profile would not have been captured. If this were the case, the statistical consequence of excluding second liens should have biased any effect of loan amount on denial or subprime approval toward 0. This certainly suggests caution when interpreting the relationship between loan amount and application outcomes.

I only included applications for owner-occupied borrowers because loans for other properties were likely occupied by renters or acted as second homes, which is inconsistent with my concern about homeownership access (Avery et al., 2007; Kingsley & Pettit, 2009). Finally, because conventional loans were the large majority of home-purchase loans and, historically, concerns regarding lender fairness have focused on the conventional market (Canner et al., 1999), I chose to leave out Federal Housing Administration, Veterans Administration, Farm Service Agency, and Rural Housing Service loans. Subprime representation was lower among government-backed loans, but because they made up such a small percentage (only 5%) of loan activity in 2006 (Avery et al., 2007), their exclusion from my sample should not have substantively biased my findings in the same way as it may have in analyses of earlier years.5 334 J.W. Faber

My final data set consisted of 3,819,923 loan applications, of which 1,590,267 (41.63%) were denied, 2,023,247 (52.97%) were approved with a prime rate, and 206,409 (5.40%) were approved with a subprime rate. A loan was defined as subprime if it had an interest rate 3 or more points above the federal treasury rate. This definition was consistent with the extant literature, which often used the term high-cost loan synonymously (Been et al., 2008; Kingsley & Pettit, 2009).

The data in Figure 1 present the basic relationship explored by this article. Subprime lending rates varied substantially by race, with Latino borrowers (7.52%) having seen a rate nearly 3 times that of Asian borrowers (2.57%). Mortgage applications by whites (5.10%) resulted in a subprime loan less often than the overall average (5.40%), whereas applications by blacks (7.04%) were above average. Table 1 displays means for each of the covariates included in the regression models employed for the whole sample and for all the applications that resulted in subprime approval. Not surprisingly, there were many notable differences. Black (14.2%) and Latino (20.3%) representations are much higher among subprime originations than in the full sample, whereas those of whites (53.5%) and Asians (2.4%) were lower. Applications with missing race data were less common among subprime originations. Both applicant ($81,388) and neighborhood ($59,623) incomes were lower among subprime origination as well. The average amount borrowed ($190,891) was much lower among subprime applicants. The tracts in which subprime loans originated were less white (69.4%) than in the full sample.

Here is the main result table and its description.

  Reveal hidden contents

 

	Model 1	Model 2	Model 3	Model 4
Outcome: Loan denial
Blacka	3.587 (0.022)***	2.797 (0.017)***	1.757 (0.058)***	3.086 (0.030)***
Latino	2.875 (0.017)***	2.022 (0.012)***	0.683 (0.024)***	2.275 (0.021)***
Asian	1.297 (0.011)***	1.067 (0.009)***	0.258 (0.012)***	1.145 (0.016)***
Other	2.148 (0.041)***	1.670 (0.031)***	1.701 (0.032)***	1.619 (0.030)***
No race identified	2.424 (0.024)***	2.223 (0.023)***	2.226 (0.023)***	2.186 (0.022)***
Multiracial	0.937 (0.021)**	0.946 (0.021)*	0.950 (0.021)*	0.939 (0.021)**
Female	1.127 (0.003)***	1.021 (0.003)***	1.016 (0.003)***	1.021 (0.003)***
Log (income)	0.913 (0.003)***	0.940 (0.003)***	0.883 (0.004)***	0.940 (0.003)***
Has co-applicant		0.618 (0.002)***	0.622 (0.002)***	0.620 (0.002)***
Log (loan amount)		1.151 (0.005)***	1.153 (0.005)***	1.149 (0.005)***
Tract percentage of    people of color		1.004 (0.000)***	1.004 (0.000)***	1.006 (0.000)***
Log (tract income)		0.592 (0.006)***	0.592 (0.006)***	0.591 (0.006)***
In MSA/MD		0.840 (0.007)***	0.851 (0.007)***	0.835 (0.007)***
Mid-Atlantic		1.074 (0.012)***	1.064 (0.012)***	1.070 (0.012)***
East North Central		1.051 (0.011)***	1.041 (0.011)***	1.050 (0.011)***
West North Central		0.954 (0.013)***	0.943 (0.013)***	0.955 (0.013)***
South Atlantic		0.981 (0.011)	0.974 (0.011)*	0.968 (0.011)**
East South Central		1.060 (0.014)***	1.047 (0.014)***	1.054 (0.014)***
West South Central		1.147 (0.014)***	1.160 (0.014)***	1.132 (0.014)***
Mountain		1.243 (0.018)***	1.249 (0.018)***	1.227 (0.018)***
Pacific		1.369 (0.016)***	1.335 (0.016)***	1.355 (0.016)***
Black × log income			1.115 (0.009)***
Latino × log income			1.285 (0.010)***
Asian × log income			1.366 (0.014)***
Black × neighborhood's    percentage of nonwhites				0.997 (0.000)***
Latino × neighborhood's    percentage of nonwhites				0.997 (0.000)***
Asian × neighborhood's    percentage of nonwhites				0.997 (0.000)***
Constant	0.733 (0.011)***	130.792 (13.789)***	167.191 (17.397)***	130.451 (13.849)***
Base outcome: Prime approval
Outcome: Subprime approval
Black	2.559 (0.022)***	2.415 (0.023)***	0.731 (0.038)***	2.576 (0.039)***
Latino	2.601 (0.022)***	2.450 (0.022)***	0.966 (0.051)	2.457 (0.036)***
Asian	0.624 (0.011)***	0.723 (0.012)***	0.067 (0.008)***	0.615 (0.018)***
Other	1.462 (0.057)***	1.609 (0.063)***	1.648 (0.065)***	1.614 (0.063)***
No race identified	1.191 (0.021)***	1.165 (0.021)***	1.165 (0.021)***	1.165 (0.021)***
Multiracial	0.875 (0.042)**	0.855 (0.042)**	0.858 (0.042)**	0.853 (0.041)**
Female	0.944 (0.005)***	0.920 (0.005)***	0.917 (0.005)***	0.920 (0.005)***
Log (income)	0.625 (0.003)***	1.024 (0.006)***	0.941 (0.006)***	1.024 (0.006)***
Has co-applicant		0.651 (0.004)***	0.658 (0.004)***	0.651 (0.004)***
Log (loan amount)		0.780 (0.005)***	0.780 (0.005)***	0.779 (0.005)***
Tract percentage of people    of color		0.998 (0.000)***	0.999 (0.000)***	0.998 (0.000)***
Log (tract income)		0.412 (0.006)***	0.413 (0.006)***	0.413 (0.006)***
In MSA/MD		0.681 (0.008)***	0.690 (0.008)***	0.681 (0.008)***
Mid-Atlantic		1.027 (0.022)	1.013 (0.021)	1.024 (0.022)
East North Central		1.357 (0.026)***	1.343 (0.026)***	1.357 (0.026)***
West North Central		1.481 (0.033)***	1.465 (0.032)***	1.480 (0.033)***
South Atlantic		1.176 (0.023)***	1.167 (0.022)***	1.173 (0.023)***
East South Central		1.546 (0.035)***	1.540 (0.035)***	1.543 (0.035)***
West South Central		1.787 (0.037)***	1.793 (0.037)***	1.779 (0.037)***
Mountain		1.113 (0.026)***	1.113 (0.026)***	1.112 (0.026)***
Pacific		1.286 (0.027)***	1.253 (0.026)***	1.277 (0.027)***
Black × log income			1.337 (0.017)***
Latino × log income			1.243 (0.015)***
Asian × log income			1.699 (0.044)***
Black × neighborhood's    percentage of nonwhites				0.999 (0.000)***
Latino × neighborhood's    percentage of nonwhites				1.000 (0.000)
Asian × neighborhood's    percentage of nonwhites				1.004 (0.001)
Constant	0.607 (0.014)***	6,201.882 (909.609)***	8,493.775 (1,238.971)***	6,120.317 (899.170)***
Observations	3,341,693	3,340,428	3,340,428	3,340,428
Pseudo R 2	.044	.066	.067	.066

 

Description: 

Table 2 presents results from the four multinomial logits where prime approval is the base outcome. The top panel compares the outcome of loan denial with prime approval, and the bottom panel compares subprime approval with prime approval. Because the findings are odds ratios, each coefficient should be interpreted as the effect a one-unit change in the covariate has on the odds of the corresponding outcome being the result as opposed to the outcome of prime mortgage approval.8^8. If a coefficient is greater than 1, an increase in the variable increases the odds. If a coefficient is less than 1, an increase in the variable decreases the odds.View all notes 

For example, comparing black applicants to identical white applicants with respect to the measures controlled for in model 1, outcomes of their applications differed substantially: Blacks were 3.6 times more likely than whites to be denied a loan, and if approved, they were 2.6 times more likely to be offered a subprime loan rather than a prime loan. The first part of this section will discuss the basic, noninteracted models (models 1 and 2). The second part will consider the borrower race interactions with income and neighborhood racial composition (models 3 and 4). This section focuses on the primary variables of interest: borrower race, borrower income, neighborhood racial makeup, and interaction terms of race with income and race with neighborhood racial makeup.

 

 

 

It's a complex topic, but perhaps worth noting that in all 4 models "Multiracial" had lower rates of loan denial than "Whites."

Edited March 4, 2019 by clapclapclap
Counterpoint: How many are 1/1024th multiracial?

[SuingToGetAMessageBoard? 3,861]

20 hours ago, Catdaddyhorn said:

 

 

"Thank are commie/lib education system."

 

 

[David Dennison 19,442]

1 hour ago, BurntEyes said:

Here is the problem.

It happens primarily to uniformed (read mostly poor) people.

Whether that is a historical issue or a financial one (it's both).

So it we say it's a racist issue, then it's a black issue. 

While it may happen more frequently to blacks because they represent a larger population or the uninformed (again whether that be historical or financial, and it's both) then it's a black issue.

It's fucking not.

It is a fucking US issue. Just like the police issue.

If you and other idiots continue to make it about race, then you've put it in a pigeon hole to be largely ignored by or elected officials except when it's election time.

Stop it.

This is a US issue on finance.

Stop fucking making it a race issue.

It's both. White people don't want it to be a race issue because race issues make white people very uncomfortable, and for good reason.

[Brisketexan 106,674]

1 minute ago, David Dennison said:

It's both. White people don't want it to be a race issue because race issues make white people very uncomfortable, and for good reason.

This.

You are not incorrect as to your conclusion, but your disregard for disparate impact is disingenuous.

YES, police brutality (as one easy example) is absolutely an ALL OF US issue.  But it's also relevant that it's MUCH more likely to fall on the head of a black person than it is on your head.  That makes it an issue of particular and heightened concern for black people.  It is important, and good, that the disproportionate plight of any subgroup is important to all of us -- that's how we should be functioning as a society, so I don't disagree with you at all there.  But, the fact that it DOES fall harder on one subgroup, and that there is a "why" behind that that is tied to racism, means that we can't address the issue in its entirety without considering and addressing the racial component.

Both things can be true.  You and I both know that you'd much rather be driving around being white than black.  That's its own problem.  It falls under the overall umbrella of police abuse of power, but to ignore the racial component and slant is to ignore a huge element of the issue.

[Onboard 2.0 9,083]

7 minutes ago, David Dennison said:

It's both. White people don't want it to be a race issue because race issues make white people very uncomfortable, and for good reason.

Race issues don't make me incomforatbale.  They piss me off that some one would use race as a reason for fucking someone over.

[TwiceHorn 32,001]

Race issues make white people uncomfortable when they are joined or coupled with an accusation of racism, either explicit or implicit.

Discussion of racism and its lingering existence and effect doesn't have to be coupled with an accusation of racism.

Defined broadly, to include unintentional (as to the demeaning result) acts that demean or discount others because of their race, everyone is guilty of racism.  And don't give me that "power" shit.  It's either wrong or it isn't.

 

 

Edited March 4, 2019 by TwiceHorn

[Kyle 207]

Agreed. Discussion of racism does not make me uncomfortable. Discussion of racism with cinque does not make me uncomfortable either but it is exhausting: constantly moving goalposts, absolutes, and vapor accusations. Like health care, everybody wants to make improvements but too many are invested in the status quo to really want to change it.

Edited March 4, 2019 by Kyle

[Brisketexan 106,674]

18 minutes ago, BurntEyes said:

Fuck it, it's a race issue.

So I don't have to give a fuck because I'm white.

You win.

Way to miss my point.  Like, completely.

We all have to give a fuck about having clean drinking water.  People in Flint have greater reason to give a fuck than you or I do.  The point being that issues can be important to all of us, but have ACUTE importance to certain subpopulations who are at heightened risk.

We all have an interest in the cops not being trigger-happy when they pull someone over.  Statistics show rather clearly that black folks have an ACUTE interest in that.  It ain't an either-or.  You know that. You just feel like being pissy.

[Buzzrock 15,118]

Is opportunistic and discriminatory the same thing as racist? Do the financial institutions believe that blacks are an inferior race, or just good marks?

I feel like the definition of racism is either ignored these days or has morphed as to be so broad that it’s losing its meaning.

Maybe it’s all the same thing in 2019. On this particular topic it’s certainly an unethical business practice, whatever label you want to slap on it.

[Kyle 207]

3 hours ago, Buzzrock said:

Is opportunistic and discriminatory the same thing as racist? Do the financial institutions believe that blacks are an inferior race, or just good marks?

I feel like the definition of racism is either ignored these days or has morphed as to be so broad that it’s losing its meaning.

Maybe it’s all the same thing in 2019. On this particular topic it’s certainly an unethical business practice, whatever label you want to slap on it.

Guessing there is a pretty clear line between the redefinition and the evolvement of racism as a problem to be solved versus a tool to be weaponized.

[David Dennison 19,442]

4 hours ago, Buzzrock said:

Is opportunistic and discriminatory the same thing as racist? Do the financial institutions believe that blacks are an inferior race, or just good marks?

I feel like the definition of racism is either ignored these days or has morphed as to be so broad that it’s losing its meaning.

Maybe it’s all the same thing in 2019. On this particular topic it’s certainly an unethical business practice, whatever label you want to slap on it.

If it affects minorities disproportionately, it's de facto racial discrimination. 

[Kyle 207]

45 minutes ago, David Dennison said:

If it affects minorities disproportionately, it's de facto racial discrimination. 

Never thought I'd see ole cinque label abortion as racism. Good for you. I won't tell - you might lose your brown shirt.

[Catdaddyhorn 3,462]

 

 

 

 

[Catdaddyhorn 3,462]