Regulators Kept Quiet as Subprime Lenders Targeted Minorities

The more information that is released concerning the subprime mortgage paradigm that pervaded most of the past few year’s housing boom, the uglier it all looks.

A recent report revealed that blacks and Hispanics are more likely than whites to be saddled with high-priced home loans.  And the U.S. agencies that supervise the more than 8,000 banks haven’t censured any of them for violating fair-lending laws.

“Black people and Hispanics have been targeted,” said Alphonso Jackson in a story covered by Bloomberg News. Jackson is secretary of Housing and Urban Development, whose department is hiring to expand its own probe of discriminatory lending.

“Low and moderate-income people get one shot at home ownership,” Jackson said in an interview in Washington. “And if they don’t make it work, they don’t get a second shot.”

Subprime loans — those made at higher interest rates to people whom banks consider risky or who have sketchy credit histories — accounted for more than half of the home foreclosures in the fourth quarter of last year. The Fed’s review, conducted by economists from its research and statistics division, covered lending data from 2004 and 2005, the first two years of expanded disclosure requirements for banks and the final two years of Alan Greenspan’s tenure as chairman.