Mortgages In reverse redlining, lenders and insurers target minority consumers by charging them more than a similarly situated white consumer would be charged, specifically marketing the most expensive and onerous loan products. In the 2000s, some financial institutions considered black communities as suitable for subprime mortgages. Wells Fargo partnered with churches in black communities, where pastors would deliver "wealth building" sermons encouraging new mortgage applications. The bank would then make a donation to the church in return for every new application. Many working-class blacks wanted to be included in the nation's home-owning trend. Instead of empowering them to contribute to homeownership and community progress, predatory lending practices through reverse redlining stripped the equity homeowners sought and drained the wealth of those communities for the enrichment of financial firms. The growth of subprime lending, higher cost loans to borrowers with flaws on their credit records, prior to the 2008 financial crisis, coupled with growing law enforcement activity in those areas, clearly showed a surge in manipulative practices. Not all subprime loans were predatory, but virtually all predatory loans were subprime. Predatory loans are dangerous because they charge unreasonably higher rates and fees compared to the risk, trapping homeowners in unaffordable debt and often costing them their homes and life savings.
Mortgages In reverse redlining, lenders and insurers target minority consumers by charging them more than a similarly situated white consumer would be charged, specifically marketing the most expensive and onerous loan products. In the 2000s, some financial institutions considered black communities as suitable for subprime mortgages. Wells Fargo partnered with churches in black communities, where pastors would deliver "wealth building" sermons encouraging new mortgage applications. The bank would then make a donation to the church in return for every new application. Many working-class blacks want!ed to be included in the nation's home-o.wning trend. Instead of empowering them to contribute to homeownership and community progress, predatory lending practices through reverse redlining stripped the equity homeowners sought and drained the wealth of those communities for the enrichment of financial firms. The growth of subprime lending, higher cost loans to borrowers with flaws on their credit records, prior to the 2008 financial crisis, coupled with growing law enforcement activity in those areas, clearly showed a surge in manipulative practices. Not all subprime loans were predatory, but virtually all predatory loans were subprime. Predatory loans are dangerous because they charge u!nreasonably higher rates and fees compared to the risk, trapping homeowners in unaffordable debt and often costing them their homes and life savings.