Racial Discrimination From Lending Institutions Essay

1172 Words Nov 13th, 2015 null Page
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 practice was acceptable (Hernandez 294). Today, redlining considers racial discrimination and it is illegal. Although, this practice had prohibited by law, but it also leads to the new generation of racial discrimination, known as “reverse redlining”. Reverse redlining is practiced by most of the lending institutions as they recommend most of the African American to consider subprime loan or predatory loans to purchase or renew their houses, which they have to pay higher interest rate and face higher risky. One finding shows that, African American borrowers are the targets for those subprime and predatory loans institution since most of them have no or lower credit scores and are denied by the prime loans, so subprime loans become the…

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