Pinklining: The Financial Threat More Women of Color Are Facing

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The Great Recession is over. The economy is back on its feet. That’s the popular narrative Americans see and hear every day, but the impact of the financial crisis is still being felt across the country, especially by women of color. A new report (pdf) highlights how “pinklining,” a term most people have probably never heard, is hurting women and especially women of color.

The term is inspired by redlining, the phenomenon that governments, banks and other lenders used for much of the 20th century to deny African Americans access to mortgages and credit. Those in charge of public policy and lending practices would literally draw a red line around certain neighborhoods with high concentrations of minorities and deny them home loans and other forms of credit if they lived within those red lines. This pervasive practice reinforced de facto ghettoization by not allowing minorities the chance to buy homes in other neighborhoods. Nor could whites get loans for homes inside those red lines.


In the 21st century those practices are banned, but the pinklining report highlights the way that predatory-lending practices, including in home and student loans as well as payday loans, target women in general and women of color in particular, saddling them with debt and sometimes forcing them out of their homes.

“The same communities denied access to loans [under redlining] were targeted by lenders for subprime loans,” Suparna Bhaskaran, the independent researcher who wrote the pinklining report, told The Root in a telephone interview. These subprime loans seemed to offer attractive interest rates and low, and sometimes no, mortgage payments for a set time. But once that initial period expired, loan payments would balloon. When the subprime bubble collapsed in 2008, borrowers found themselves unable to renegotiate the suddenly onerous terms of their loans.

“A lot of black women were targeted based on their neighborhoods,” Bhaskaran said. The lenders “opened up access to credit, but not to fair credit. It’s reverse redlining: Those once who were denied were suddenly sought after for predatory lending.”

Lorian S., a 63-year-old New Jersey resident who asked that her last name not be used, is one of the nearly 800 women surveyed for the report. She told The Root about how her dream of owning a home after working for nearly 40 years as a health care professional turned into a nightmare. She bought her first home in 2002 at a high interest rate that was set to go even higher in 10 years. When she was offered a chance to refinance at a lower rate in 2007, at the height of the subprime bubble, she took it, thinking that the lower payments would make life easier.


But then the bubble burst, one of her jobs laid her off and the other offered to let her stay, if she took a $20,000 cut in salary. At the same time, her interest rate rose, and other details of her agreement that she wasn’t aware of came back to haunt her.

“I didn’t understand all the requirements; there was a lot of fine print even my lawyer didn’t understand,” Lorian said. She fell into arrears and foreclosure proceedings began. “It has a really traumatic impact,” she said of the experience of almost losing her home. “You leave the house and come back wondering if the sheriff will be there” ready to throw you out.


Lorian was able to save her home with the help of New Jersey Communities United, one of the nonprofits involved in the study. Together they fought the lender who had purchased Lorian’s loan and were able to renegotiate the terms so that she could afford her payments. “I would not have been able to save my home without help,” Lorian said.

Millions of Americans faced a similar crisis, but the pinklining report points out that during the subprime bubble, women were 30 to 40 percent more likely to receive such a loan, and black women were an astronomical 256 percent more likely to get a subprime loan. The Center for Responsible Lending (pdf) estimated that 44 percent of families who lost their homes were people of color. Among borrowers, 8 percent of black and Latina women were forced out of their homes, while just 4.5 percent of whites faced the same situation.


“There is an intergenerational gap in wealth” that particularly affects women of color, the study’s author said. “This is the result of structural racism and sexism.”

While many Americans felt the subprime crisis, the pinklining report also highlighted other lending practices, including payday loans and offers from for-profit colleges, as being especially destructive for women of color.


Payday loans—in which borrowers who usually have limited or no access to other forms of credit get small loans based on the idea that they will pay that loan back with their next paycheck—can carry annualized interest rates of up to 400 percent. If that loan is not paid off in a timely manner, hundreds of dollars in debt can balloon into thousands in no time flat. The practice is now so reviled that internet giant Google recently said that it would ban payday lenders from advertising on its search site. But the practice continues, and women of color are among the most likely to take out a payday loan because they are paid less than any other group, and when they experience a financial emergency, they have few other places to turn.

Fighting these predatory-lending practices takes the full strength of communities of color. Lorian, who felt that she couldn’t turn to anyone she knew for help but eventually found it through a local organization, said it’s important for women to seek help when they need it, no matter what.


“Stop hiding behind your pride and let people know what you’re going through,” she advised. “Get involved with an association that can help you.”

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