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The Dual Mortgage Market: The Persistence of Discrimination in Mortgage Lending

Efforts to promote equal access to mortgage capital by racial and ethnic minorities have historically been a key component of the civil rights agenda in the United States. From the struggle to enact fair housing and fair lending legislation in the 1960s to the community-based advocacy that prompted Congress to pass the Home Mortgage Disclosure Act (HMDA) and the Community Reinvestment Act in the 1970s, housing and civil rights advocates have pursued a common goal of eradicating racial discrimination in home mortgage lending. Today, the fight continues as housing advocates seek to expand regulatory and legislative action to halt predatory lending practices that burden many minorities with mortgages they cannot afford and often do not need.

Successful efforts to promote fair lending must take into account the changing nature of discriminatory practices in the marketplace. In the immediate post-World War II period, racial discrimination in mortgage lending was easy to spot. From government sponsored racial covenants in the Federal Housing Administration (FHA) guidelines to the redlining practices of private mortgage lenders and financial institutions, minorities were denied access to home mortgages in ways that severely limited their ability to purchase a home.

Today, mortgage lending discrimination is more subtle. Even though mortgage loans are now readily available in low-income minority communities, by employing high-pressure sales practices and deceptive tactics, some mortgage brokers push minority borrowers into higher-cost subprime mortgages that are not well suited to their needs and can lead to financial problems down the road.

Consequently, more than three decades after the enactment of national fair lending legislation, minority consumers continue to have less-than-equal access to loans at the best price and on the best terms that their credit history, income, and other individual financial considerations merit.

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The Dual Mortgage Market: The Persistence of Discrimination in Mortgage Lending