The Problem With Subprime Mortgages And Minorities

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The problem with Subprime Mortgages and Minorities

When it comes to buying a home there are a few things you need first. Of course you need money , but what if you don 't have the money but you want to get a home? Well you would apply for a loan, but there are two loans you could qualify for and those two are known as prime loans and subprime loans. There are far too many cases where there are well qualified people with the credentials to get a prime loan but were denied, forcing them to settle for worse forms of credit such as subprime loan. The problem is that it is unethical to even offer these subprime loans because of the debt that it puts subprime borrowers in. Through my research I have gathered I have determined that well-qualifying minorities, in particular blacks and Hispanics, have been denied prime mortgages based on race and prejudices, making them easier prey for less convenient loans such as subprime mortgages, which results in higher default and foreclosure rates amongst minority residences.

Subprime loans A subprime loan is a loan given to people who generally have bad to below average credit and are charged with higher interest rates because of past credit history. Subprime mortgages was designed to help those Americans who want to achieve the goal of homeownership for low-income minorities (Gorton 12). The unethical dilemma is that the lender has the choice to decide whether to refinance or not at the end of the first period without the borrower
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