While expanded access to credit is critical, there is growing evidence that some lenders may be engaged in predatory lending that is making homeownership far more costly for blacks and poor families than for whites and middle-class families. Subprime loans are three times more likely in low income neighborhoods than in high-income neighborhoods.
Subprime loans are five times more likely in black neighborhoods than in white neighborhoods.
This raises concerns of widespread consumer fraud by predatory lenders. HUD and Treasury are now examining these issues and will report on this growing problem. But it is essential that credit be provided in a transparent and non-exploitative way. We should define by legislation what is a predatory loan and the terms and conditions. This should not be a matter of GSE discretion.