Resending; for some reason, this did not go through the first time. apologies for the duplication.
anuj
From: Anuj Jain
Sent: Tuesday, February 18, 2014 11:48 AM
To: MicrofinancePractice@yahoogroups.com
Subject: RE: [MFP] RE: The Equal Credit Opportunity Act / USA
Great piece of information and analysis! Thanks Daniel.
And thanks Bill for your firsthand account of your engagement on this issue.
There is still a bit of un-clarity in my mind, and maybe you (Daniel) will have ready information on this as well. While your analysis clearly points out that for Fannie-Mae's portfolio, poor were not any more delinquent, and that their net effect on overall portfolio delinquency was relatively small (am I right in saying so?); was this also true for other players/ actors and in overall analysis?
And to you Bill, it will be great if you have any data that capture loss of asset value among the poor (by the way, what income levels were considered as poor?) due to either fore-closure or loss of housing values in the market or both? I don't think you are suggesting that marginalized groups should not rely on credit and should be happy only with their savings-up; but your note inadvertently may be suggesting so. But I hope I am not reading it wrong.
From these inputs ( also yours Del), can we say that the Equal Credit Opportunity Act, while great in intention; have had limited impact on more equitable and fair lending practices in US; and the lending institutions perhaps continue to profile their clients in different risk categories, without supporting evidence? On the other hand, is there an easy way to get to the data of how many low-income housing loans were indeed successfully given out and recovered – perhaps contributing to greater access to housing overall, over 1970-90s?
While I was aware of ECOA earlier, I had not fully realized potential positive impact of such a legislation; which despite its limitations in execution, can be a basis for limiting prejudice. Or is that a wishful deduction?
Thanks, it has been very educational!
anuj
From: MicrofinancePractice@yahoogroups.com [mailto:MicrofinancePractice@yahoogroups.com] On Behalf Of danrozas@yahoo.com
Sent: Tuesday, February 18, 2014 10:55 AM
To: MicrofinancePractice@yahoogroups.com
Subject: [MFP] RE: The Equal Credit Opportunity Act / USA
Thanks Dick -- indeed, there's much to explain. The article provides some background -- I'd post the text here, but it's really dependent on referencing the graphs in the blog...
Anyway, briefly, Alt-A loans are best described as loans to people with reasonably high credit scores (i.e. good credit history), but the loans had other risky characteristics -- lower requirements for income documentation, for example, higher leverage, interest-only repayment periods, etc. Before the crisis, the repayment rates on these loans were only slightly lower than prime loans (i.e. highest quality loans), but they really tanked once the mortgage market collapsed. Take a look at the blog, which goes into more detail:
Daniel
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