As I drove through the city of Los Angeles on a lovely day, I listened to an interview on National Public Radio. I heard something disturbing. The NPR host interviewed a lawyer with the NAACP who said that he had filed a lawsuit against several banks.
Studies show, said the lawyer, that mortgage lenders charge black home loan borrowers higher rates of interest when compared with white borrowers. Even where whites and blacks have identical financial profiles, according to the lawyer, banks still charge blacks higher rates of interest.
Suddenly, though I continued to enjoy this beautiful, balmy day, I learned -- at least according to this lawyer -- that my lender likely victimized me by unjustifiably charging a higher rate of interest! But before I decided to return home, crawl into bed and hide under the blanket, I waited -- in vain -- for the interview to ask the lawyer a few questions:
Don't banks lend money based upon one's race- and gender-neutral FICO score, or other similar credit report, which seeks to determine the likelihood of default?
In today's online information age, don't many borrowers apply for and obtain loans either online or via telephone, with the loan officer completely unaware of one's race? If so, how did the studies' researchers determine the race of the borrower? When I last applied for a home loan, I saw a box on the application where I could, at my option, indicate my race. I refused. If many others also refused, how did the researchers determine the race of the applicants?
Don't at least some white borrowers pay interest rates as high, if not higher, than those paid by blacks? Are such borrowers simply stupid, as opposed to victims of some sort of conspiracy?
Asians, I learned long ago, are more likely than even whites to have their loans approved. Do Asians, similarly, also pay lower rates of interest? If so, does this mean there's a conspiracy against white borrowers?
What about the race of the lending officer? Do black lending officers, for example, charge black borrowers the same, lower or higher rates than charged by white lending officers?
How many of the applicants are first-time applicants for home loans? Do those borrowers with more experience ask more questions and seek more accommodations? Do black borrowers put in the same amount of time in pursuing this loan as do their white counterparts?