Discriminating Risk: The U.S. Mortgage Lending Industry in the Twentieth Century

Guy Stuart

1 Discriminating Risk Deserves a Closer Look
Guy Stuart has presented in a very cogent and readable way some of the reasons why discrimination and segregation persist in U.S. housing markets and it may not be for the reasons most assume. Stuart illustrates how conceptions of "value", particularly in the process of property appraisals, risk estimation in underwriting, and lender-broker-realtor networks characterized by racial homogeneity all contribute to disparities in lending to minorities, particularly African Americans. Stuart illustrates how all of the participants in the process play a role, though none may be directly intending to encourage the negative consequences.

To break the cycle, Stuart correctly suggests that we need to hold GSEs, lenders, regulators, appraisers, and others responsible for correcting disparite EFFECTS, with or without assigning intent to discriminate to any specific actor or group. Whether or not such accountability can or will occur will depend on whether there is political will and a solid understanding of the issues. At least on the latter point, the public is well-served by this book.

The book is well-written in clear and direct prose. Stuart succeeds in avoiding confusing and jargon-laden descriptions. Given the subject matter, this is a real victory for the reader. The book also provides a very useful history of the mortgage lending industry and is recommended for students and activist alike trying to get their heads around a confusing and poorly understood field that has profound impacts on the persistence of racial segregation in the U.S.