Racial discrimination from lending institutions is still happening in the contemporary society. Historically, the Home Owners’ Loan Corporation (HOLC) developed a “residential security map” to evaluate the risks in different neighborhood. This mapping system steadied the racial segregation in the society and also provided a tool for lending institutions to determine the loan availabilities only for certain group of people (Nier, Charles 622). For example, the Federal Housing Administration (FHA), which was one of the programs that was using the map to discriminate against minority group especially for African American known as redlining practice. Under the FHA, it systematically excluded non-whites from take out home loans since the redlining
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The root cause of the issue is that most of the African American borrowers do not realize the risks of the loans, and they received less options and helps. Also, many laws only address the “past instance” which the harm already occurred, but not dealing with how to avoid “discriminatory loans” from the lending institution (Bybee 141). It is important to empower the borrowers and educate them to make rational decision about which loan they should choose. The possible solution is under the Consumer Financial Protection Bureau (CFPB)’s “Ability-to-Repay” proposal that to provide Qualified Mortgage to borrowers. This proposal is issuing the law that requires lenders to provide loan information to the borrowers and also consider their ability to repay the mortgage. Also, the Bureau is also proposing the final rule to implement there requirements to certain non-profit creditors, home ownership stabilization programs and small portfolio creditor (Bureau of Consumer Financial Protection 1), so that proposal can expand the scope to help more people. Under the ability-to-repay proposal, it will help the African American borrowers who are suffering from the subprime landings to learn more about loan options and avoid being charge high interest …show more content…
The issue of subprime lending is widely concerned by the community. After the CFPB released the draft proposal, the U.S. Senator Patty Murray has sent a letter to them and address the proposed rules, as he says, “I urge you to maintain the strong consumer protection outlined in your proposed rule, and at a minimum I hope to see a final rule that requires an ability-to –pay provision in the underwriting of loan”(1). On the other hand, the Georgia Watch executive director, Liz Coyle also urges the CFPB “to pass a comprehensive policy covering all forms of abusive, high-cost loan and to close any potential loopholes in the current proposal” (1). This rule is craving from the public for a long time to end the discriminatory and “inhuman” lending system, and also bring a good outlook to create a equal society in the
The root cause of the issue is that most of the African American borrowers do not realize the risks of the loans, and they received less options and helps. Also, many laws only address the “past instance” which the harm already occurred, but not dealing with how to avoid “discriminatory loans” from the lending institution (Bybee 141). It is important to empower the borrowers and educate them to make rational decision about which loan they should choose. The possible solution is under the Consumer Financial Protection Bureau (CFPB)’s “Ability-to-Repay” proposal that to provide Qualified Mortgage to borrowers. This proposal is issuing the law that requires lenders to provide loan information to the borrowers and also consider their ability to repay the mortgage. Also, the Bureau is also proposing the final rule to implement there requirements to certain non-profit creditors, home ownership stabilization programs and small portfolio creditor (Bureau of Consumer Financial Protection 1), so that proposal can expand the scope to help more people. Under the ability-to-repay proposal, it will help the African American borrowers who are suffering from the subprime landings to learn more about loan options and avoid being charge high interest …show more content…
The issue of subprime lending is widely concerned by the community. After the CFPB released the draft proposal, the U.S. Senator Patty Murray has sent a letter to them and address the proposed rules, as he says, “I urge you to maintain the strong consumer protection outlined in your proposed rule, and at a minimum I hope to see a final rule that requires an ability-to –pay provision in the underwriting of loan”(1). On the other hand, the Georgia Watch executive director, Liz Coyle also urges the CFPB “to pass a comprehensive policy covering all forms of abusive, high-cost loan and to close any potential loopholes in the current proposal” (1). This rule is craving from the public for a long time to end the discriminatory and “inhuman” lending system, and also bring a good outlook to create a equal society in the