Wealthier minorities more likely than white counterparts to receive subprime loans, study finds

This past week at the 108th Annual Meeting of the American Sociological Association, Furman Center doctoral fellow Jacob Faber presented the findings of his recent paper "Racial Dynamics of Subprime Mortgage Lending at the Peak". Using Home Mortgage Disclosure Act data, the study models home-purchase mortgage lending at the peak of the recent housing boom. While the study finds that black and Latino homebuyers were more likely to receive subprime loans than whites were, Faber adds another layer to his analysis by considering how this trend comes into play for upper income borrowers.

"Income was positively associated with receipt of subprime loans for minorities, whereas the opposite was true for whites. When expensive (jumbo) loans were excluded from the sample, regressions found an even stronger positive association between income and subprime likelihood for minorities, supporting the theory that wealthier minorities were targeted for subprime loans when they could have qualified for prime loans" (Faber 2013).

Read more about Jacob's findings in his paper, "Racial Dynamics of Subprime Mortgage Lending at the Peak", published in Housing Policy Debate April 2013.