Subprime loans were disproportionately offered in minority areas prior to the subprime crisis, even after controlling for other determinants of loan costs. There are two potential explanations for this phenomenon. Lenders could have charged subprime rates in minority areas to compensate for...

The current mortgage foreclosure crisis is presumably related to lax lending policies pursued by financial institutions that extended mortgages to borrowers with questionable credit. These so-called subprime mortgage loans were disproportionately offered in minority communities. Accordingly,...