The Return of Redlining?
This article on rates of subprime lending across neighborhoods beggars belief.
First, the striking finding.
The analysis, by N.Y.U.’s Furman Center for Real Estate and Urban Policy, illustrates stark racial differences between the New York City neighborhoods where subprime mortgages — which can come with higher interest rates, fees and penalties — were common and those where they were rare. The 10 neighborhoods with the highest rates of mortgages from subprime lenders had black and Hispanic majorities, and the 10 areas with the lowest rates were mainly non-Hispanic white.
The analysis showed that even when median income levels were comparable, home buyers in minority neighborhoods were more likely to get a loan from a subprime lender.
Second, the key information.
The analysis provides only a limited picture of subprime borrowing in New York City. The data does not include details on borrowers’ assets, down payments or debt loads, all key factors in mortgage lending. And comparing neighborhoods is inexact; the typical borrower in one may differ from a typical borrower in another.
Jay Brinkmann, an economist with the Mortgage Bankers Association, said there was not enough information in the Furman Center analysis and other studies on the issue to draw conclusions about whether subprime lenders were discriminating against minority home buyers. One of the crucial missing pieces is the credit histories of individual borrowers, he said.
That certainly seems like crucial information to me.
Finally, the hysterical response.
“It’s almost as if subprime lenders put a circle around neighborhoods of color and say, ‘This is where we’re going to do our thing,’” said Robert Stroup, a lawyer and the director of the economic justice program at the NAACP Legal Defense and Educational Fund Inc.
The NYT, which of course faces commercial and “newsiness” imperatives, doesn’t help matters. Even after citing Brinkmann, the author writes,
But the Furman Center study, a summary of which is being released today, still raises questions about the role of race in lending practices. A separate analysis of mortgage data by The New York Times shows that even at higher income levels, black borrowers in New York City were far more likely than white borrowers with similar incomes and mortgage amounts to receive a subprime loan.
This assumes, again, that debt load, down payments, and borrowers’ assets are fundamentally unimportant, and indeed that race is more important than these trivialities.
What we need is more data.
You know we don’t need more data, you know that we would have heard if there was evidence that blacks with the same credit scores were treated worse than whites. Why don’t you just say it? Same thing with the Matt Yglesias comments on teacher pay. “More pay” is a joke and not a new joke. Does everything have to be a conversation, a process?
I say you need to just call ‘bullshit’ or ‘twas ever bullshit’ more. Not everything needs more data or discussion, even for an over-seminared 20-something would-be greatest blogger of all time (Mickey Kaus is the undisputed GBOAT; Arnold Kling of Econlog is the surprise no. 2).
— tom · Oct 19, 05:33 PM · #
Hey friend,
I can’t be a would-be GBOAT: I don’t think of myself as a blogger. I’m thinking out loud, and you’re welcome to go elsewhere. Plenty of other people will call bullshit, as you put it. The fact is that I’m not sure, and that we need transparency. I’ve been wrong before, so I’m not quite to quick to assume away the whole testing and learning process. But good luck with that approach!
— Reihan · Oct 20, 01:16 PM · #
Ok, I guess I should be happy to read fewer posts, and I won’t ask for all my American Scene subscription money back.
But I didn’t think I was being rude, and I thought I made clear that I was commenting as someone who liked your writing and that I was contrasting you to the two people who I think are the best at blogging on social-economic issues.
I also still think that you can, and should, presume that if advocates for a cause don’t make a claim that would very strongly support their side (on credit scores), they chose not to make the claim, and that they probably chose not to make the claim because they don’t think there’s evidence to support it. Maybe the NYT missed something, or maybe the Furman Center and the NAACP are incompetent. But I doubt it!
In reading your post, I thought you hit on everything. You even had a good conclusion. But then you wrote (I would say you tacked on) “What we need is more data”, and it was as if Lincoln had said “Whatever” at the end of the Gettysburg Address. Together with your response on the teacher pay, I thought you were pulling your punches and being unusefully nice. That’s it.
So I’ll accept your un-invitation to read your site even though I think your reaction to my comment was wrong. But I’m still going to read Daniel Larison, because he’s mean.
— tom · Oct 22, 09:24 PM · #