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A loan given to someone who would not ordinarily be considered creditworthy, or who is unlikely to be able to repay. The proliferation of subprime housing loans in the United States—especially to African Americans and other reverse redlined minority groups—was one of the central factors that led to the 2008 global financial crisis. While Rothstein agrees that it is necessary to extend credit to low-income African American families who have historically been shut out of homeownership, he notes that subprime loans actually do the opposite: they prey on these families by promising them homeownership, then charging them unmanageable, unpayable interest rates and fees that all but ensure that borrowers default, get foreclosed on, and lose their future access to credit. Banks recognized they were doing this and openly celebrated the opportunity to profit by lying to African American buyers. And regulators knew about and approved the whole process, which leads Rothstein to conclude that subprime mortgages constitute a new, sinister form of 21st-century de jure housing discrimination.
Subprime loans Quotes in The Color of Law
The The Color of Law quotes below are all either spoken by Subprime loans or refer to Subprime loans. For each quote, you can also see the other terms and themes related to it (each theme is indicated by its own dot and icon, like this one:
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Chapter 7
Quotes
The consequences of racially targeted subprime lending continue to accumulate. As the housing bubble collapsed, African American homeownership rates fell much more than white rates. Families no longer qualify for conventional mortgages if they previously defaulted when they were unable to make exorbitant loan payments; for these families, the contract buying system of the 1960s is now making its return. Some of the same firms that exploited African Americans in the subprime crisis are now reselling foreclosed properties to low- and moderate-income households at high interest rates, with high down payments, with no equity accumulated until the contract period has ended, and with eviction possible after a single missed payment.
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Subprime loans Term Timeline in The Color of Law
The timeline below shows where the term Subprime loans appears in The Color of Law. The colored dots and icons indicate which themes are associated with that appearance.
Chapter 7: IRS Support and Compliant Regulators
...redlining” that helped cause the 2008 economic collapse. Banks pressured African American people into predatory subprime loans , making them “victims of a market that was not transparent.” Brokers paid on a...
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...not on economic status,” as African American people nearly always took out several times more subprime loans than white people of the same income level. Many ended up living on the street...
(full context)
...American people much more than white people. Anyone with a previous foreclosure, even on a subprime mortgage , cannot get a mortgage ever again. Instead, they are forced back into “the contract...
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