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Is Subprime Lending Leading to Reverse Redlining and Price Discrimination? Author: Abhishek Mamgain Dissertation School: University of Southern California Pages: 44 Publication Date: 01/2006 Availability: Access Number: 5023 Abstract: The research paper takes a critical look at the subprime mortgage market to evaluate the presence of reverse redlining in tracts with high minority concentrations in Los Angeles County area. The research finds that some of the concerns regarding reverse redlining and price discrimination might be exaggerated. The study finds that the household income and loan characteristics explain much of the reasons for subprime originations and that subprime lenders are not targeting low-income minorities, even in tracts with high minority concentrations. The study does find presence of higher rate spreads for low-income African-American and Asian households, in comparison to White households, in high minority tracts. However such difference in rate spreads can also arise from differences in borrower- and property-related risk factors, which are not being accounted for in this investigation. Furthermore, the study has found evidence that low-income minority households are more likely to utilize the prime refinance mortgage products, in comparison to low-income White households, suggesting upward mobility of largely minority subprime borrowers, who might be refinancing out of the subprime mortgage after accumulating sufficient home equity through home price appreciation. Thus overall, the study finds limited support for reverse redlining in subprime originations for Los Angeles County region. |
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