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Solving the crisis
Among the solutions, he suggested adjusting the lending criteria and raising the cap on debt-to-income ratio from 43% to 50% for a mortgage, pointing out that even the GSEs Fannie Mae and Freddie Mac were starting to allow exceptions.
He also argued for more direct involvement from the Federal government.
He said: “Federal financial regulators have made a very big deal the last few months about special purpose credit programs, which permit lenders who identify a disadvantaged group to underwrite them with slightly different criteria. We’ve also seen some innovation in loan offer structures, like no down payment, or mortgages that are buffered by down payment assistance programs.”
Redlining ultimately formed part of the wider problem of poverty, affecting a bigger cross section of society.
“When the poverty bias is in part driven by state behaviors intended to exclude a particular race, it’s unfortunately very hard to draw a bright line, but there’s certainly the case that the poverty bias is a factor here, and it is experienced not only by Black and Native Americans, it is arguably also experienced by poor White Americans who have not seen incomes meaningfully increase over the course of the last 20 years,” he said.
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