Redlining 2.0: Mortgage Lending in African American Neighborhoods after the Financial Crisis
Carolina Reid Assistant Professor, University of Californa, Berkeley, College of Environmental Design
The recent foreclosure crisis had a disproportionate impact on communities of color, with more than one in four African Americans who bought during the subprime boom losing their home to default. This research asks what has happened in predominately African American neighborhoods post-crisis. Using a combination of quantitative and qualitative methods, the paper shows that the subprime boom and subsequent bust has had a profound effect on mortgage lending in communities of color, leading to deeply uneven patterns of where loans are being made and to whom. These lending patterns are serving as a catalyst for gentrification and the displacement of African American households in some neighborhoods, while deepening distress and disinvestment in others. The paper argues that the tightening of lending standards post-2009 needs to be viewed as a new form of redlining, with implications not only for the racial wealth gap but also for trends in racial and economic segregation.
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