Predatory lending moved into neighborhoods that redlining had starved of fair credit. In the years before the 2008 financial crisis, lenders and brokers steered many Black and Latino borrowers into high-cost subprime mortgages with rising rates and prepayment penalties.
Federal settlements documented the pattern. In 2011, Bank of America agreed to pay $335 million after the Justice Department alleged its Countrywide unit charged more than 200,000 Black and Hispanic borrowers higher fees and rates than similar white borrowers. In 2012, Wells Fargo agreed to pay $175 million over claims it steered qualified Black and Hispanic borrowers into subprime loans and charged them more between 2004 and 2009.
Predatory lending is not limited to mortgages. Payday loans, auto title loans and rent-to-own deals often carry triple-digit annual interest rates. These businesses cluster in Black and Latino neighborhoods where bank branches are scarce. The result drains wealth from communities that already have the least and keeps families cycling through debt.