Redlining

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Redlining

• And Other Real-Estate Discrimination

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Definition

• Redlining lenders treating loan applicants
  differently on the basis of the location of the
  property
• Also dealing with discrimination on basis of race
  of buyer

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History

• Redlining became illegal in 1968
• Race no longer allowed to be used as a factor in
  giving loans in 1974
• All loan agencies required to report all of their
  loans to the government in 1975

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First Study

• Conventional versus FHA loans
• Individuals and neighborhoods
• Empirical Model and Regression Analysis
• Findings
• Racial make-up of neighborhood more significant
  than buyer

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Probability of Obtaining Conventional Loan
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Second Study Quality

• Measured quality be complaints
• Total number of complaints
• Valid complaints
• By zip code
• By type of complaint
• Excluded controversial types
• Regression Analysis

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Third Study Audits

• 25 cities, 2100 audits
• Trained pairs one White, one Black or Hispanic
• Looked at behavior of broker

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