Skip to main content
SpringerLink
Log in

How Do Mortgage Lenders Influence Neighbourhood Dynamics? Redlining and Predatory Lending

  • Chapter
  • First Online:
Understanding Neighbourhood Dynamics

Abstract

Manuel Aalbers argues that the actions of mortgage lenders can play an important role in understanding the trajectories of some of the most deprived neighbourhoods in Western cities. Mortgage lenders use the notion of the neighbourhood as a means to reduce their risk or to extract profit, and as such can exercise destructive powers over the neighbourhood. Through the practice of redlining, mortgage lenders may write of whole neighbourhoods as being too risky for investment. In some neighbourhoods, mortgage lenders are only willing to provide finance against higher interest rates and down-payments. Aalbers calls this yellowlining if these practices are based on place-based factors, and is an example of sub-prime predatory lending. He argues that redlining and place-based predatory sub-prime lending are not opposites as is sometimes argued, but are two adjacent positions on a continuum of exclusionary lending practices. The practices of redlining and predatory lending disproportionally hit the same socio-economic groups: low-income groups and ethnic minorities. Redlining is named explicitly as a form of an institutionalised discriminatory practice leading to segregation in both the US and the Netherlands. Although the key factor in redlining is place-based, it is suggested that the underlying cause, in some cases, may be race-based.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 84.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 109.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    This chapter builds on Aalbers (2006, 2009, 2011).

References

  • Aalbers, M. B. (2006). “When the banks withdraw, slum landlords take over”: The structuration of neighbourhood decline through redlining, drug dealing, speculation and immigrant exploitation. Urban Studies, 43(7), 1061–1086.

    Article  Google Scholar 

  • Aalbers, M. B. (2007). What types of neighbourhoods are redlined? Journal of Housing and the Built Environment, 22(2), 177–198.

    Article  Google Scholar 

  • Aalbers, M. B. (2009). Geographies of the financial crisis. Area, 41(1), 34–42.

    Article  Google Scholar 

  • Aalbers, M. B. (2010). Redlining: Terug van weggeweest. Rooilijn, 43(1), 28–33.

    Google Scholar 

  • Aalbers, M. B. (2011). Place, exclusion, and mortgage markets. Oxford: Wiley-Blackwell.

    Book  Google Scholar 

  • Ahlbrandt, R. S., & Brophy, P. (1975). Neighborhood revitalization: Theory and practice. Lexington: Lexington Books.

    Google Scholar 

  • Apgar, W., & Duda, M. (2005). Collateral damage: The municipal impact of today’s mortgage foreclosure boom. Washington, DC: Homeownership Preservation Foundation.

    Google Scholar 

  • Avery, R. B., Brevoort, K. P., & Canner, G. B. (2006). Higher-priced home lending and the 2005 HMDA data. Federal Reserve Bulletin, 92, 123–166.

    Google Scholar 

  • Avery, R. B., Brevoort, K. P., & Canner, G. B. (2007). The 2006 HMDA data. Federal Reserve Bulletin, 93, 73–109.

    Google Scholar 

  • Briggs, X.d.S. (1997). Moving up versus moving out: Neighborhood effects in housing mobility programs. Housing Policy Debate, 8(1), 195–234.

    Article  Google Scholar 

  • Brooks, R., & Simon, R. (2007, December 3). As housing boomed, industry pushed loans to a broader market. Wall Street Journal, A1.

    Google Scholar 

  • Cameron, S., & Field, A. (2000). Community, ethnicity and neighbourhood. Housing Studies, 15(6), 827–843.

    Article  Google Scholar 

  • Carr, J., & Schuetz, J. (2001). Financial services in distressed communities: Framing the issue, finding solutions. Washington, DC: Fannie Mae Foundation.

    Google Scholar 

  • Caskey, J. (1994). Fringe banking: Check-cashing outlets, pawnshops, and the poor. New York: Russell Sage.

    Google Scholar 

  • CGB. (2006). Risicoselectie op grond van postcode en verblijfsstatus. Een onderzoek uit eigen beweging naar onderscheid door hypothecair financiers. Utrecht: Commissie Gelijke Behandeling.

    Google Scholar 

  • Christie, L. (2007, 19 November). Crime scene: Foreclosure. CNN money. http://money.cnn.com/2007/11/16/real_estate/suprime_and_crime/index.htm?cnn=yes

  • Christie, L. (2010, 14 January). Rescuing nation’s foreclosure town. CNN money. http://money.cnn.com/video/news/2010/01/14/n_slavic_village_rescue.cnnmoney/

  • City Data. (2010). Cleveland, Ohio. Chicago: Advameg.

    Google Scholar 

  • Cohen, J. R. (2008). City of Cleveland v. Deutsche Bank National Trust, et al.. Cleveland: Cohen Rosenthal & Kramer LLP.

    Google Scholar 

  • Cohen, D. M. (2009). Illegal flipping and neighborhood inequality: A Slavic village case study. A senior honors thesis. Columbus: Ohio State University.

    Google Scholar 

  • COS. (2001). Several data sheets. Rotterdam: Rotterdam Centrum voor Onderzoek en Sastistiek.

    Google Scholar 

  • Coulton, C., Chan, T., Schramm, M., & Mikelbank, K. (2008). Pathways to foreclosure: A longitudinal study of mortgage loans, Cleveland and Cuyahoga County, 2005–2008. Cleveland: Center on Urban Poverty and Community Development.

    Google Scholar 

  • Coulton, C., Schramm, M., & Hirsh, A. (2010). REO and beyond: The aftermath of the foreclosure crisis in Cuyahoga County, Ohio. In E. Rosengren & S. Pianalto (Eds.), REO&vacant properties. Strategies for neighborhood stabilization (pp. 47–54). Boston/Cleveland: Federal Reserve Banks of Boston and Cleveland.

    Google Scholar 

  • Crossney, K. B., & Bartelt, D. W. (2005). The legacy of the home owners’ loan corporation. Housing Policy Debate, 16(3/4), 547–574.

    Article  Google Scholar 

  • Dennis, M. W., & Pinkowish, T. J. (2004). Residential mortgage lending: Principles and practices (5th ed.). Mason: Thomson South-Western.

    Google Scholar 

  • Dewar, M. (2006). Selling tax-reverted land: Lessons from Cleveland and Detroit. Journal of the American Planning Association, 72(2), 167–180.

    Article  Google Scholar 

  • Downs, A. (1973). Opening up the suburbs: An urban strategy for America. New Haven: Yale University Press.

    Google Scholar 

  • Dymski, G. A. (1999). The bank merger wave: The economic causes and social consequences of financial consolidation. Armonk: Sharpe.

    Google Scholar 

  • Ellen, I. G., & Turner, M. A. (1997). Does neighborhood matter? Assessing recent evidence. Housing Policy Debate, 8(4), 833–866.

    Article  Google Scholar 

  • Engel, K., & McCoy, P. (2002). A tale of three markets: The law and economics of predatory lending. Texas Law Review, 80(6), 1255–1381.

    Google Scholar 

  • Feagin, J., & Parker, R. (1990). Building American cities. The urban real estate game. Englewood Cliffs: Prentice-Hall.

    Google Scholar 

  • Ferguson, N. (2009). The ascent of money. A financial history of the world. New York: Penguin.

    Google Scholar 

  • Galster, G. C. (1992). Research on discrimination in housing and mortgage markets: Assessment and future directions. Proceedings, Fannie Mae Annual Housing Conference. Washington, DC.

    Google Scholar 

  • Goldstein, I. (2004). The economic consequences of predatory lending: A Philadelphia case study. In G. D. Squires (Ed.), Why the poor pay more. How to stop predatory lending (pp. 39–79). Westport: Praeger.

    Google Scholar 

  • Gotham, K. F. (2002a). Beyond invasion and succession: School segregation, real estate blockbusting, and the political economy of neighborhood racial transition. City and Community, 1(1), 83–111.

    Article  Google Scholar 

  • Gotham, K. F. (2002b). Race, real estate, and uneven development: The Kansas city experience, 1900–2000. Albany: State University of New York Press.

    Google Scholar 

  • Gottdiener, M. (1994). The social production of urban space (2nd ed.). Austin: University of Texas Press.

    Google Scholar 

  • Gough, J., Eisenschitz, A., & McCulloch, A. (2006). Spaces of social exclusion. Abingdon: Routledge.

    Google Scholar 

  • Grigsby, W., Baratz, M., Galster, G., & Maclennan, D. (1987). The dynamics of neighborhood change and decline. Progress in Planning, 28(1), 1–76.

    Article  Google Scholar 

  • Harvey, D. (1985). The urbanization of capital: Studies in the history and theory of capitalist urbanization. Oxford: Blackwell.

    Google Scholar 

  • Hernandez, J. (2009). Redlining revisited: Mortgage lending patterns in Sacramento 1930-2004. International Journal of Urban and Regional Research, 33(2), 291–313.

    Article  Google Scholar 

  • Hillier, A. E. (2003). Redlining and the home owners’ loan corporation. Journal of Urban History, 29(4), 394–420.

    Article  Google Scholar 

  • Holloway, S. R. (1998). Exploring the neighborhood contingency of race discrimination in mortgage lending in Columbus, Ohio. Annals of the Association of American Geographers, 88(2), 252–276.

    Article  Google Scholar 

  • Immergluck, D. (2004). Credit to the community: Community reinvestment and fair lending policy in the United States. Armonk: Sharpe.

    Google Scholar 

  • Immergluck, D. (2009). Foreclosed: High-risk lending, deregulation, and the undermining of America’s mortgage market. Ithaca: Cornell University Press.

    Google Scholar 

  • Immergluck, D., & Smith, G. (2006). The external costs of foreclosure: The impact of single-family mortgage foreclosures on property values. Housing Policy Debate, 17(1), 57–79.

    Article  Google Scholar 

  • Jackson, K. T. (1985). Crabgrass frontier: The suburbanization of the United States. New York: Oxford University Press.

    Google Scholar 

  • Jacobs, J. (1961). The death and life of great American cities. New York: Vintage.

    Google Scholar 

  • Kane, M. (2008, May 15). Redlining redux: New mortgage industry policy could charge borrowers higher fees by zip code. Washington Independent. http://washingtonindependent.com/view/reconsidering

  • Kesteloot, C., Murie, A., & Musterd, S. (2006). European cities: Neighbourhood matters. In S. Musterd, A. Murie, & C. Kesteloot (Eds.), Neighbourhoods of poverty: Urban social exclusion and integration in Europe (pp. 219–238). Basingstoke: Palgrave Macmillan.

    Google Scholar 

  • Kotlowitz, A. (2009, March 8). All boarded up. New York Times, 28. http://www.nytimes.com/2009/03/08/magazine/08Foreclosure-t.html.

  • Krumholz, N., Keating, W. D., Star, P. D., & Chupp, M. C. (2006). The long-term impact of CDCs on urban neighborhoods: Case studies of Cleveland’s Broadway-Slavic village and Tremont neighborhoods. Community Development: Journal of the Community Development Society, 37(4), 33–52.

    Article  Google Scholar 

  • Lardner, J. (2008). Beyond the mortgage meltdown: Addressing the current crisis, avoiding a future catastrophe. Washington, DC: Demos.

    Google Scholar 

  • Lefebvre, H. (1991). The production of space. Oxford: Blackwell.

    Google Scholar 

  • Leyshon, A., & Thrift, N. (1997). Money/space: Geographies of monetary transformation. London: Routledge.

    Google Scholar 

  • Mallach, A. (2009). Addressing Ohio’s foreclosure crisis: Taking the next steps. Washington, DC: Brookings.

    Google Scholar 

  • Markey, E. (2010, May 14). Banks redline minority communities again. City Limits. www.citylimits.org/news/articles/3996/banks-redline-minority-communities-again

  • Marsh, A., & Mullins, D. (1998). The social exclusion perspective and housing studies: Origins, applications and limitations. Housing Studies, 13(6), 749–759.

    Article  Google Scholar 

  • Massey, D. S., & Denton, N. A. (1993). American apartheid: Segregation and the making of the underclass. Cambridge, MA: Harvard University Press.

    Google Scholar 

  • Moreno, A. (1995). The cost-effectiveness of mortgage foreclosure prevention. Minneapolis: Family Housing Fund.

    Google Scholar 

  • Musterd, S., & Andersson, R. (2005). Housing mix, social mix and social opportunities. Urban Affairs Review, 40(6), 761–790.

    Article  Google Scholar 

  • Nassar, J. (2007). Foreclosure, predatory mortgage and payday lending in America’s cities. Washington, DC: Testimony before the U.S. House Committee on Oversight and Government Reform.

    Google Scholar 

  • NCRC. (2002). Anti-predatory lending toolkit. Washington, DC: National Community Reinvestment Coalition.

    Google Scholar 

  • Newman, K. (2009). Post-industrial widgets: Capital flows and the production of the urban. International Journal of Urban and Regional Research, 33(2), 314–331.

    Article  Google Scholar 

  • Painter, K. (1992). Different worlds: The spatial, temporal and social dimensions of female victimization. In D. J. Evans, N. R. Fyfe, & D. T. Herbert (Eds.), Crime, policing and place: Essays in environmental criminology (pp. 164–195). London: Routledge.

    Google Scholar 

  • Pennington-Cross, A. (2002). Subprime lending in the primary and secondary markets. Journal of Housing Research, 13(1), 31–50.

    Google Scholar 

  • Quercia, R. G., Stegman, M., & Davis, W. R. (2004). Assessing the impact of North Carolina’s anti-predatory lending law. Housing Policy Debate, 15(3), 573–602.

    Article  Google Scholar 

  • Reid, C. (2011). The neighborhood stabilization program: Strategically targeting public investments. Community Investments, 23(1), 23–33.

    Google Scholar 

  • Ross, S. L., & Yinger, J. (2002). The color of credit: Mortgage discrimination, research methodology, and fair-lending enforcement. Cambridge, MA: MIT Press.

    Google Scholar 

  • Schiller, Z., & Hirsh, A. (2008). Foreclosure growth in Ohio 2008. Cleveland: Policy Matters Ohio.

    Google Scholar 

  • Schloemer, E., Li, W., Ernst, K., & Keest, K. (2006). Losing ground: Foreclosures in the subprime market and their cost to homeowners. Washington, DC: Center for Responsible Lending.

    Google Scholar 

  • Schwartz, N. D. (2007, September 2). Can the mortgage crisis swallow a town? New York Times, 2. http://www.nytimes.com/2007/09/02/business/yourmoney/02village.html.

  • Sibley, D. (1998). The problematic nature of exclusion. Geoforum, 29(2), 119–121.

    Article  Google Scholar 

  • Smith, N. (1979). Toward a theory of gentrification: A back to the city movement by capital, not people. Journal of the American Planning Association, 45(4), 538–548.

    Article  Google Scholar 

  • Smith, N. (1996). The new urban frontier. Gentrification and the revanchist city. London: Routledge.

    Google Scholar 

  • Soja, E. (1980). The socio-spatial dialectic. Annals of the Association of American Geographers, 70(2), 207–225.

    Article  Google Scholar 

  • Spicker, P. (2001). Poor areas and the “ecological fallacy.” Radical Statistics, 76. www.radstats.org.uk/no076/index.htm

  • Squires, G. D. (Ed.). (2004). Why the poor pay more: How to stop predatory lending. Westport: Praeger.

    Google Scholar 

  • Squires, G. D., & Kubrin, C. E. (2005). Privileged places: Race, uneven development and the geography of opportunity in urban America. Urban Studies, 42(1), 47–68.

    Article  Google Scholar 

  • Stuart, G. (2003). Discriminating risk: The U.S. mortgage lending industry in the twentieth century. Ithaca: Cornell University Press.

    Google Scholar 

  • Taylor, J., Silver, J., & Berenbaum, D. (2004). The targets of predatory and discriminatory lending: Who are they and where do they live? In G. D. Squires (Ed.), Why the poor pay more: How to stop predatory lending (pp. 25–37). Westport: Praeger.

    Google Scholar 

  • Van den Eerenbeemt, M., & Rengers, M. (2009, June 24). Geen hypotheken meer in Vogelaarwijk. De Volkskrant, 3.

    Google Scholar 

  • Van Ham, M., & Manley, D. (2010). The effect of neighbourhood housing tenure mix on labour market outcomes: A longitudinal investigation of neighbourhood effects. Journal of Economic Geography, 10(2), 257–282.

    Article  Google Scholar 

  • Walker, R. (1981). A theory of suburbanization: Capitalism and the construction of urban space in the United States. In M. Dear & A. J. Scott (Eds.), Urbanization and urban planning in capitalist society (pp. 383–429). New York: Methuen.

    Google Scholar 

  • Weinstein, A. C. (2008). The subprime mortgage crisis and local government: Immediate and future challenges. Municipal Lawyer, 49(3), 259–275.

    Google Scholar 

  • Wilson, W. J. (1996). When work disappears: The world of the new urban poor. New York: Knopf.

    Google Scholar 

  • Wyly, E. K., Atia, M., Foxcroft, H., Hammel, D., & Philips-Watts, K. (2006). American home: Predatory mortgage capital and neighbourhood spaces of race and class exploitation in the United States. Geografiska Annaler B, 88(1), 105–132.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Geography, Planning and International Development Studies, University of Amsterdam, Plantage Muidergracht 14, 1018 TZ, Amsterdam, The Netherlands

    Manuel B. Aalbers

Authors
  1. Manuel B. Aalbers
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Manuel B. Aalbers .

Editor information

Editors and Affiliations

  1. , OTB Research Inst for the Built Environm, Delft University of Technology, Jaffalaan 9, Delft, 2628 BX, Netherlands

    Maarten van Ham

  2. , School of Geographical Sciences, University of Bristol, University Road, Clifton, Bristol, BS8 1SS, United Kingdom

    David Manley

  3. , Urban Studies, University of Glasgow, Glasgow, G12 8RS, United Kingdom

    Nick Bailey

  4. , The Cathie Marsh Centre for Census and S, University of Manchester, Manchester, M13 9PL, United Kingdom

    Ludi Simpson

  5. , Centre for Housing Research, University of St. Andrews, St. Andrews, KY16 9AL, Fife, United Kingdom

    Duncan Maclennan

Rights and permissions

Reprints and permissions

Copyright information

© 2012 Springer Science+Business Media Dordrecht.

About this chapter

Cite this chapter

Aalbers, M.B. (2012). How Do Mortgage Lenders Influence Neighbourhood Dynamics? Redlining and Predatory Lending. In: van Ham, M., Manley, D., Bailey, N., Simpson, L., Maclennan, D. (eds) Understanding Neighbourhood Dynamics. Springer, Dordrecht. https://doi.org/10.1007/978-94-007-4854-5_4

Download citation

Publish with us

Policies and ethics

Search

Navigation