Economic Justice Project Publications

The Economic Justice Project (EJP) was active from 2003 through 2009. During that time, faculty and students affiliated with the EJP produced several publications dedicated to promoting economic development in communities traditionally underserved in the areas of bank lending, investment, and services.

HMDAnalysis: An Interactive Source of Mortgage Lending Data

The Economic Justice Project created HMDAnalysis, http://hmdanalysis.nyls.edu, as a free, interactive website for analyzing the data that lenders make public about their home mortgage lending pursuant to the Home Mortgage Disclosure Act. Using HMDAnalysis, a user can study a lender's lending record, including subprime lending, in predominantly minority neighborhoods, low-income neighborhods, and among minority borrowers. This can be useful for lending reports, informal advocacy with the lender, or formal advocacy under the Community Reinvestment Act or the fair housing laws.

Subprime Mortgage Reports

The Subprime Mortgage Market Collapse: Causes and Solutions

The subprime mortgage market collapse has proved so large and complex that three Center students completed a joint, three-part capstone project that attempts to piece together the major issues behind the subprime market failure from what is currently known about the loan products used and the process of securitization of those loans.
↓To download the complete, three-part report, click here.

Each section is outlined below for easier reference and is made available for individual download:

• Introduction
  ↓Click here to download a PDF of the introduction.
    
• Part I: Exotic Loan Products and the Collapse of the Subprime Mortgage Market
  ↓ Click here to download a PDF of this section.
  Report by Ruth S. Uselton, Justice Action Center Class of 2008
  The collapse of the subprime mortgage market has lead to much finger pointing, but the fundamental source behind the collapse is the development of exotic mortgage products that were specifically designed to leach equity from vulnerable borrowers. Compounding this problem is the fact that nothing was done to stop these products from wreaking havoc on borrowers—despite warnings from a small but vocal chorus of advocacy organizations. This first paper in a three-part series examines the exotic mortgage products and terms, such as adjustable rate mortgages, interest only loans, balloon payments, and computerized loan screening, that contributed to the foreclosure debacle; the paper goes on to offer solutions for preventing future losses.
    
• Part II: Securitization’s Role in the Collapse of the Subprime Mortgage Market
  ↓ Click here to download a PDF of this section.
  Report by Amy L. Festante, Justice Action Center Class of 2008
  The onset of the subprime mortgage crisis has led to a rise in unemployment, stagnation in job growth, and fears of inflation. This second paper in a three-part capstone project examines the role of securitization in the collapse of the subprime mortgage market and highlights the influence of Wall Street and how the eventual transformation of liquid assets, such as residential mortgages, into tradable securities contributed to the crisis. It defines some of the key players in the securitization process, explains their roles in the overall market schema, and concludes by offering a forecast for the future of the American economy.
    
• Part III: Solving the Subprime Mortgage Crisis
  ↓ Click here to download a PDF of this section.
  Report by Carlos L. Lopez, Justice Action Center Class of 2008
  This paper, the third in a three-part capstone project, proposes potential solutions to the subprime mortgage crisis. Investors have lost hundreds of billions of dollars in a few short months and millions of homeowners throughout the nation are facing foreclosure. As the country’s economy creeps toward recession, the author addresses two broad categories of potential solutions to the crisis. These solutions seek to mitigate the harm already incurred, using tactics including “bail outs,” and prevent the resurfacing of similar crises through federal and state efforts.

This three-part report was originally undertaken as a Justice Action Center capstone project. For more capstone projects sponsored by the Center, please click here.

Subprime Home Mortgage Lending in New York City and Westchester County, 2005–2006
↓ Click here to download a PDF of this report.
Report by Jane J. Yoo, Justice Action Center Class of 2008

This report examines whether there is evidence of discriminatory home mortgage lending practices in New York City and Westchester County from 2005 to 2006. The author finds that in New York City in 2006, half of all home purchase loans to African-Americans were subprime. African-Americans were nearly five times more likely than whites to receive subprime home purchase loans, Latinos were more than three times more likely than whites, and Asian-Americans were 1.4 times more likely. In Westchester in 2006, more than forty percent of all home purchase loans to African-Americans were subprime. African-Americans were six times more likely than whites to receive subprime home purchase loans, Latinos were nearly five times more likely, and Asian-Americans were 1.2 times more likely.

Ms. Yoo wrote this report as a capstone project. For more capstone projects sponsored by the Center, please click here.

The Higher Cost of Being African American or Latino:
Subprime Home Mortgage Lending in New York City, 2004–2005
↓ Click here to download a PDF of this report.
Report by Professor Richard Marsico, Director, Economic Justice Project

The Economic Justice Project has issued a report on subprime lending in New York City that shows that African-Americans, Latinos, and residents of predominantly minority neighborhoods received higher percentages of subprime loans than whites and residents of predominantly white neighborhoods.

Specifically, the report found that in 2005:

• Nearly half (45.9%) of all home mortgage loans to African-Americans were subprime, nearly three times higher than the percentage to whites (16.6%);
• Nearly forty percent (39%) of all home mortgage loans to Latinos were subprime, more than two times the percentage to whites; and
• More than forty percent (42.1%) of all home mortgage loans to residents of predominantly neighborhoods were subprime, nearly four times higher than the percentage to residents of predominantly white neighborhoods (11.7%).

The report identifies several large lenders whose percentages of subprime loans to African-Americans, Latinos, and residents of predominantly white neighborhoods were higher than average.

Professor Richard Marsico, author of the report, stated, “Although the data in the report do not contain sufficient information to conclude that the disparities are the result of discrimination, the disparities are high enough so that government agencies who have access to the information should take notice and take investigatge action and enforcement steps if necessary.”

The report concludes, “As government officials, lenders, and advocates contemplate the subprime home mortgage crisis and its fallout, they must develop solutions that address the impact of the crisis on borrowers and neighborhoods and the disproportionate impact on borrowers and neighborhoods by race. Only solutions that take this into account will be sufficient and complete.”

Publications on HMDA and Community Economic Development

Project Director's Article on the Thirty-Fifth Anniversary of HMDA

Project Director Richard Marsico's article, Looking Back and Looking Ahead as the Home Mortgage Disclosure Act Turns Thirty-Five: The Role of Public Disclosure of Lending Data in a Time of Financial Crisis, 29 Rev. of Bank. and Fin. L. 205 (2009), examines the history of the Home Mortgage Disclosure Act (HMDA) and makes proposals for improving it to help prevent another economic crisis. Passed in 1975, HMDA requires most lenders to disclose information about their home mortgage loans, including the number of home mortgage applications it received; the purpose of each application; the type of loan; the decision on the application; the race, gender, and income of the loan applicant/borrower; the location of the loan and the median income and racial composition of the neighborhood; and the interest rate on the loan. HMDA was originally conceived of as a tool to detect and prevent redlining. It was later expended to cover lending discrimination and reverse redlining. However, Congress and the Federal Reserve have not required lenders to disclose enough information to permit HMDA to do its job. The pending financial reform legislation would expand HMDA's mission to detect and prevent predatory lending, but once again, the legislation does not require lenders to disclose sufficient information to accomplish its goal. The article proposes several types of information that should be added to the legislation, including, most importantly, the applicant's housing debt/income ratio and overall debt/income ratio.

Project Director's Chapter in Community Economic Development Guide

The ABA’s Forum on Affordable Housing and Community Development Law has just published Building Healthy Communities: A Guide to Community Economic Development for Advocates, Lawyers, and Policymakers. The book, edited by Roger A. Clay, Jr. and Susan R. Jones, contains 28 chapters on topics including accessing government financial resources, responding to community interests, building human capital, creating individual and community assets, obtaining appropriate financial services, and embracing environmental opportunities and challenges. The book includes a chapter on the Community Reinvestment Act by Center Director Richard Marsico. For more information on the ABA Forum on Affordable Housing and Community Development Law or to purchase a copy of the book, visit the ABA website.

Thirty Years of the Community Reinvestment Act

The New York Law School Law Review’s symposium issue “The Community Reinvestment Act: Still Relevant at 30?” is now available. The Law Review issue collects the scholarly contributions written in conjunction with the October 12, 2008, live event, cosponsored by the Economic Justice Project. This issue examines the efficacy of the Community Reinvestment Act in helping to promote economic justice. Articles take a look back at the history of the CRA and its impact on new problems in predatory lending, with a special emphasis on the collapse of the subprime mortgage market. Click here to view a list of articles or to download individual papers. To visit the CRA Symposium page, go to www.nyls.edu/CRAat30.