The study's major limitation is that it did not know the credit worthiness of people denied mortgages or refinance loans. It is possible that prime, conventional mortgages dropped so precipitously in communities of color because applicants had low credit scores and did not qualify for conventional mortgages. The study relies exclusively on data the federal government collects from all banks. That data does not include information on credit worthiness, said Iwanisziw.
During the run-up to the subprime meltdown, however, even African-American borrowers with excellent credit, who qualified for prime, conventional loans, were twice as likely as whites to end up in subprime or adjustable rate mortgages they couldn't afford.
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Housing and Development
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Eileen Markey
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The study also urges increased fair lending law enforcement at the U.S. Department of Justice and requiring banks to help restore the neighborhoods they destroyed with predatory mortgage products.
The Restoring Financial Stability Act, which would establish a consumer financial protection agency, is currently before congress. Banks are lobbying heavily against it. National People's Action, a collection of grassroots organizations that was instrumental in fighting redlining a generation ago, is fighting hard for it.
