Recently, Memphis has attempted to fight against the practice of predatory lending. Predatory lending is when banks focus on giving mortgages to low income individuals or families. These mortgages are high risk, high cost mortgages that usually result in foreclosure. The city of Memphis is trying to hold banks responsible for disproportionally targeting African Americans. The lawsuit states that 51 percent of loans make to black households were subprime, whereas only 17 of loans make to white households were subprime (here is the full article). Is this a form of discrimination against African Americans?
While there is no specific right in the Universal Declaration of Human Rights about this specific type of lending, Article 2 does state that everyone is entitled to their rights regardless of race or color. Given the statistics, it seems like a disproportionate number of these subprime mortgages were given to African Americans. Does this necessarily mean that the banks giving these subprime mortgages are privileging white people over black people? The banks argue that it isn’t, saying that the city is accurately appropriating blame.
More fundamentally, are these subprime mortgages and predatory lending practices a violation of human rights regardless of race? It seems like this type of lending practice is taking advantage of people who do not know much about mortgages or borrowing money in general. If the bank tells them that there won’t be a problem, they tend to believe it. To what extent does the bank have a responsibility to inform the people it is giving loans to about what the loan entails? Obviously the bank shouldn’t be able to lie to its customers, but if the homeowners looking to get a loan are ignorant of banking practices, is it the bank’s responsibility to inform them of the ramifications of taking out a high risk loan? Someone who is trying to own a house should probably be at least familiar with the process of taking out a loan and should know the benefits and risks of having each kind of loan.
To what extent are the potential homeowners responsible for these types of predatory lending? To what extent are the banks responsible? Do white and black homeowners have equal opportunities to invest in homeownership? The statistics seem offer evidence against this idea of equal opportunity.