donate_join_now Donate Now Join Now

Connect with NCRC

 

 

 

NCRC is proud to be a member of the 2014 Combined Federal Campaign (CFC). Federal employees can donate to NCRC by designating their contribution to CFC # 12361.

New NCRC Study Shows Racial Disparities In High-Cost Lending Remain Entrenched

A new report by NCRC shows that minority consumers, regardless of income level, are most at risk of receiving high-cost home mortgage loans. High-cost loans represent the riskiest and most poorly underwritten home mortgages, millions of which have fallen into foreclosure in the last two years.

The study, Income Is No Shield Against Racial Differences in Lending II, examined subprime and near prime (“Alt-A”) loans from more than 219 metropolitan areas, as reported under the Home Mortgage Disclosure Act data from 2006, the most recent publicly available data.

 

FOR IMMEDIATE RELEASE                Contact:  Jesse Van Tol (202) 464-2709
July 31, 2008                                                               This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

New NCRC Study Shows Racial Disparities In High-Cost Lending Remain Entrenched; Foreclosure Prone Loans Made Disproportionately to Minorities
Income is No Shield II highlights racial differences in lending in dozens of metropolitan areas become more pronounced as borrower income increases
 

Washington, DC, July 31 – A new report by the National Community Reinvestment Coalition (NCRC) shows that minority consumers, regardless of income level, are most at risk of receiving high-cost home mortgage loans. High-cost loans represent the riskiest and most poorly underwritten home mortgages, millions of which have fallen into foreclosure in the last two years. The study, Income Is No Shield Against Racial Differences in Lending II, examined subprime and near prime (“Alt-A”) loans from more than 219 metropolitan areas, as reported under the Home Mortgage Disclosure Act data from 2006, the most recent publicly available data.

“The data reminds us that the current housing crisis was overwhelmingly the result of the explosion of bad loan products in financially vulnerable communities. It is not surprising that foreclosures have been concentrated among African-Americans and Latinos, because predatory and problematic loans are most prevalent in those communities,” said John Taylor, President & CEO of NCRC.

According to the report, minorities are paying more for mortgages, even as their income levels increase. Loan price disparities, as compared to white counterparts, were more common for middle to upper-income (MUI) African-American and Hispanic borrowers than pricing disparities were for low- and moderate-income minority borrowers.

Lending disparities for African-Americans and Hispanics also increased significantly as income levels increased. During 2006, middle- and upper-income (MUI) African- Americans were twice or more as likely to receive high-cost loans as MUI whites in 155 of the metro areas analyzed (71.4 percent). Furthermore, MUI Hispanics were twice or more as likely to receive high-cost loans as MUI whites in 45 of the metro areas analyzed (22.5 percent).

In comparison, while low- and moderate-income (LMI) minorities are more likely to receive high-cost loans than LMI whites, the disparity was less significant than disparities among MUI borrowers. LMI African-Americans were twice or more as likely to receive high-cost loans as LMI whites in 87 metro areas (47.3 percent). Furthermore, LMI Hispanics were twice or more as likely to receive high-cost loans as LMI whites in 8 metro areas (4.9 percent).
Significant levels of high-cost lending unnecessarily impede wealth building in minority communities. High-cost loans have significantly contributed to the current foreclosure crisis, wiping out hundreds of millions of dollars in mortgage equity. The overwhelming and unexplained prevalence of high-cost lending in minority communities suggests that some level of discriminatory behavior continues in the mortgage finance market, as has been shown by other studies, including those utilizing creditworthiness data conducted by NCRC, the Center for Responsible Lending and the Federal Reserve.

The top 20 areas where overall racial disparities were most pronounced include (in ranked order):

1.    Milwaukee-Waukesha-West Allis, WI
2.    Minneapolis-St. Paul-Bloomington, MN
3.    Huntsville, AL
4.    Ann Arbor, MI
5.    Hartford-West Hartford-East Hartford, CT
6.    Bridgeport-Stamford-Norwalk, CT
7.    Greenville, NC
8.    Philadelphia, PA
9.    Essex County, MA
10.    Durham, NC
11.    Raleigh-Cary, NC
12.    Dayton, OH
13.    Birmingham-Hoover, AL
14.    Fort Wayne, IN
15.    Cleveland-Elyria-Mentor, OH
16.    Roanoke, VA
17.    Rochester, NY
18.    Harrisburg-Carlisle, PA
19.    Lubbock, TX
20.    Warren-Troy-Farmington Hills, MI


The National Community Reinvestment Coalition is an association of more than 600 community-based organizations that promote access to basic banking services, including credit and savings, to create and sustain affordable housing, job development and vibrant communities for America's working families.
 
 
###

pdf Download the pdf

 

  • Advocates

    Advocates

  • Homeowners

    Homeowners

  • Entrepreneurs

    Entrepreneurs

  • Policymakers

    Policymakers

Advocates

Partnering for Vibrant Communities

couple in front of house picNCRC serves advocates around the country by providing training and technical assistance, research and policy analyses and other resources to more than 600 community-based member organizations, assisting them as they expand access to basic banking services including credit and savings, to create and sustain affordable housing, job development for low- and moderate-income communities.

programs-and-issues

We provide resources for community development corporations; local and state government agencies; faith-based institutions; community organizing and civil rights groups; minority and women-owned business associations as well as housing counselors and social service providers. To learn more about the resources NCRC has available for these organizations, click the links to the right.

Homeowners

Help for Homeowners

stock-help4ho-226x339NCRC offers free foreclosure prevention and first time homebuyer counseling services. Current or prospective homeowners receive assistance from our Housing Counseling Network, composed of Department of Housing and Urban Development certified housing counselors nationwide. Our counselors are loan workout experts, especially trained to negotiate equitable solutions on behalf of homeowners.

programs-and-issues

Facing foreclosure or think you might be the victim of a scam or predatory loan product? Contact our housing counselors today at 1-800-475-NCRC.

Entrepreneurs

Access Reinforced by Strategy

florist picNCRC operates a variety of business development initiatives that support business ownership and entrepreneurship among people of color and women. We provide resources for entrepreneurial initiatives in low and moderate-income communities, working with policymakers and financial institutions to increase small business lending to women, minorities and low- and-moderate-income communities. Our centers provide assistance to women and minority entrepreneurs in the Washington, DC and New York areas:

programs-and-issues

The DC Women’s Business Center provides training and consultation to assist in the growth of women-owned businesses, as well as technical assistance to women-owned businesses interested in federal and local government procurement opportunities.

The Washington, DC MBDA Business Center helps minority firms compete by knocking down the barriers to growth and helping them maintain a profitable bottom line. Through an extensive network, DCMBDA helps clients  to procure capital, and works side-by-side with them to streamline operations.

Policymakers

Policy Informed by Practice

John Taylor and Pres ObamaNCRC represents its 600 member organizations before Congress, federal regulatory agencies and the press. NCRC routinely testifies before the U.S. Congress, and meets with the leadership of banking and lending regulatory agencies.

programs-and-issues

In recent years, NCRC has led efforts to reform the financial system, respond to the foreclosure crisis, and expand the Community Reinvestment Act. We are experts on banking, business development, community reinvestment, community development, civil rights, housing, and workforce issues.

Previous
Next