Race, Gender, Power, and the US Subprime Mortgage and Foreclosure Crisis: A Meso Analysis

Abstract

This study addresses two largely unanswered questions about the United States subprime crisis: why were minority applicants, who had been excluded from equal access to mortgage credit prior to the spread of subprime loans, superincluded in subprime mortgage lending? And why didn't the flood of mortgage credit in the 2000s housing boom – an oversupply of credit suggesting supercompetition – reduce the proportion of minority and women borrowers burdened with unpayable subprime mortgages? This contribution develops a meso analysis showing how banking strategies were shaped by and reinforced patterns of racial and gender inequality, permitting lenders in evolving financial markets to offer new loan instruments to previously excluded loan applicants, and to exercise social power over – and thus extract rent from – these borrowers.