Um, since one of the reasons people take out subprime loans is because of income that doesn't qualify for other loans - Any comment on how subprime loans correlate to income levels?

Or is that not a loaded enough question for you to ask?

Steve, perhaps you missed this paragraph:

This analysis does not prove racial discrimination, because it does not control for factors such as borrower credit scores and other measures of risk. Respected national studies, though, that have attempted to control for these sorts of factors have still found unexplained racial disparities in the cost of home loans.

If you follow the link provided above and read the original news release regarding the study, you'll see this:

At all income levels, Oregon's African American and Hispanic borrowers are more likely than whites to have received subprime loans, said OCPP.

So it was a question which was asked, and within the bounds of information available to the study, answered.

"Loaded" indeed.

"At all income levels, Oregon's African American and Hispanic borrowers are more likely than whites to have received subprime loans, said OCPP.

So it was a question which was asked, and within the bounds of information available to the study, answered."

I understand, but it is OCPP's lead:

The legislative and racial patterns of subprime loans

That is somewhat misleading since by his own admission, they did not examine credit risk or creditworthiness (a $100K income can have a lot more credit risk than a $40K income) which lends some bias to the story.

If he is saying that subprime loans were specifically targeted at minorities then state something of substance rather than drawing conclusions that may or may not be fact-based.

I also need explained what "legislative patterns of subprime loans" means.

Another question I'd have is what % of all of WaMu's subprime business was to which minorities once the data is normalized for credit risk factors. WaMU is in a ton of trouble now just for the sheer amount of subprime loans they originated and I can't imagine Long Beach is that big a share of their portfolio.

It's absolute numbers not adjusted for income. You can't quote one study and qualify the regression variables with another. Different parameters. If you want a variable that discriminates between people that took out subprime loans and those that did not, how about IQ?

The bankers are only trying to cash in on Wal-Mart's and 7-11 deciding to be the high fee, no account bank of the subprime crowd. Oregon finances its schools by taxing addicts and through the Ignorance Tax (lottery).

You can't act like the American dream is a great thing for minorities to pursue when it is no longer hoping your child does better than you, but hoping you can live large and complain when it screws you. You can't have a pure consumer mentality and live with respect and dignity anywhere in the 21st century. Be a producer or be consumed.

The problem with SB 1090 is that it would not stop what WaMu and Long Beach Mortgage are doing. WaMu and LBM are FEDRELY CHARTRED INSTATUIONS and therefore do not come under Oregon state laws and rules. SB 1090 just puts local mortgage brokers at a completive disadvantage with the national banks and their wholly owned subsidiaries; operations that, by the way, usually charge twice as much for a loan than your local mortgage broker. SB1090 is loaded with many more unintended consequences. If Democrats want to keep the majority, they have to do better than this. It’s SB 965 all over again.

Chuck, I don't need anyone to protect me from "predatory" lenders. I only sign off on loans that I can repay. How come other people find that such a difficult task?

In regards to special groups lending, SB 1090 is a major step back in time 30 years or more. It will roll back the progress the USA has made with the Fair Lending ACT, Equal Credit Oppurtunity ACT and more. The very nature of a "reasonable" text in statute for approving home loans in regards to "ability to pay" will require loan officers to make independent judgments on borrower's, we do not want. All the progress in loan approvals, has had at it's core, the need to make everyone approved to the same standards for the same personal situation, "color blind" if you will. Automated Underwriting Systems (AUS) such as FNMA's & FreddieMac's has made lending the fairest it has ever been. Computer software ignores race.

The "ability to pay" part is one of the worst parts of SB1090, as to a lay person, it seems a reasonable accomodation to ask of the mortgage lenders. "It makes sense" most would think. Add in state mandated income verifications and debt ratio limits and now the banks will loan the same to everyone by golly. The problem is in the nuances of how home loans truly work. Guidelines on a Federal Level drive most approvals. All loans have "guidelines" for "ability to pay". It is a core part of the three "c"s, capacity, collateral and credit. But, there is flexibility to let some factors out weigh others. The core is, the same situation, the same approval, every time like described above. Automated Underwriting Systems (AUS) such as FNMA's & FreddieMac's accomplish this well. Color Blind.

The loan programs, such as many of the Sub-Prime loans from '04-'06, that ignored these core principles, are gone. They will not return as the institutional investors lost money. Losers don't come back as no one will buy them. The thing everyone should worry about, is not how to fight the last war (bad sub-prime loans), but instead, how to fight the next war.

How about a better industry, held to higher standards with greater liability to the consumers?

How about consumer education to go to a reliable mortgage broker for a loan, instead of a direct lender that only offers one small slice of the parent company's loan products? Example, if the borrower goes to a national bank's consumer finance loan division, the employee of that division will do the "Sub-Prime" loan (only loan they offer there) even if the borrower qualifies for a "A" paper bank loan from the other division of the bank. If that same borrower goes to a good mortgage broker, the mortgage broker gets paid regardless of the loan type and ethical ones will put the borrower in to the best loan possible. You get more repeat and referral business this way. It is good for long term business.

Yes I know there are some crooks that will not do this from personal greed or others from incompetence, but you have to leave some responsibility for the consumer to shop aropund and get recommendations. You can't legislate away ignorance or insure ethics. You can make it harder to be a mortgage broker and enough insurance for a consumer that has been wronged, to go after.

SB1090 has many individual items in the bill which will close down state licensed mortgage lenders. In combination, they will devastate the industry and all Oregonian's home values, then economy, with them. If that is The Center for Responsible Lending's (the real author of this bill) goal, they should state it plainly.

If you want better home loans for Oregonians, we need something else. A better mortgage industry.

Does anyone have a link to an actual paper related to this? I see the OCPP's press release, but that contains very little information. Specifically I'd like to know how they defined "middle income", and what was the income distribution of each racial group in each income group.

Depending on the distributions, it seems like there might be plenty of room here for this to be primarily an income effect.

Chuck, how did you find that link to the subprime loan fact sheet? It's not listed on OCPP's "Reports & Publications" page.