Racial Predatory Loans Sparked Housing Crisis

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The spate of foreclosures that led to the housing crisis was triggered by predatory lenders targeting poor minority neighborhoods, according to a new study cited by Reuters.

Housing Crisis

The study published in the American Sociological Review found that racially segregated minority neighborhoods were beset with unreasonable fees and interest rates by lenders beginning in the 1990s.

Because lenders could pool high- and low-risk loans to sell on the secondary market, the study’s authors say, minority areas tended to have lenders that “charge high fees and usurious rates of interest” – such as pawn shops and check cashing services.

Read more at CBS

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