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Typically, subprime loans are for persons with blemished or limited credit histories. The loans carry a higher rate of interest than prime loans to compensate for increased credit risk. Many have questioned why minorities appear to be overrepresented in the subprime lending market. Studies reveal that even in upperincome AfricanAmerican neighborhoods one is oneandahalf times as likely to have a subprime loan than persons in lowincome white neighborhoods. In neighborhoods where Hispanics comprise at least 80 percent of the population, they were 1.5 times as likely than the nation as a whole to have a subprime mortgage loan. Some allege this disparity to be attributed to subprime lenders purposefully marketing to AfricanAmerican communitieswhat some have called reverse redlining. They allege lenders will provide loans to these communities, but at a higher cost and with less favorable conditions.

 

Address: 451 7th Street S.W., Washington, DC 20410
Telephone: (202) 708-1112
Website: http://www.hud.gov/offices/fheo/lending/subprime.cfm