home subscribe advertise reprints e-mail help RSS about us LOG IN

Mortgage News

 

Mortgage News

HOT Topics

production

servicing

compliance

legal

fraud

secondary

jobs

appraisal

site map

www.loan-academy.com/
twitter linkedin
facebook google+
Search:

Mortgage News

News by Subject
Complete list of specialty news sections.

Purchase Subscription
Subscribe to MortgageDaily.com and get immediate access to all news, statistics and archives.

Mortgage Advertising
Reach mortgage executives, loan originators and other people tied to mortgage industry.

Consumer Mortgage News
Free mortgage news for prospective borrowers.

Mortgage Newsletter
Free e-mail newsletter with the latest headlines from MortgageDaily.com.

Mortgage News Reprints
Put entire MortgageDaily.com stories in your online or printed newsletter or publication.

Mortgage Feedget RSS code
Condensed MortgageDaily.com stories free on your Web site or for your RSS reader.

News Archives
Archive of MortgageDaily.com stories by month going back to 1999.

Press Releases
Reports and announcements from MortgageDaily.com.

Mortgage Statistics
Data and statistics for real estate finance.

Mortgage Directories
Directories of lenders, branch operators and mortgage service providers.

Mortgage Graphs
Directories of lenders, branch operators and mortgage service providers.

Predatory Lending News
FTC and HUD settlements. Class action lawsuits. Predatory lending prevention. Archives back to 2001.




Minorities May Represent More Risk

NCRC report analyzes HMDA data

March 28, 2005

By COCO SALAZAR


Women, minorities and lower-income borrowers continue to receive a disproportionate share of subprime loans, according to a recent study by a consumer advocate organization. But another group suggests risk, not social status, may be the reason these groups wind up in higher rate loans.

The National Community Reinvestment Coalition announced it analyzed lending activity in 331 U.S. metropolitan areas using 2003 home loan data and found that women were more likely to get subprime loans, than prime, in all of those areas.

Higher-cost loans were more predominant amongst African Americans in 98.5 percent of the metropolitan areas, while Hispanic and low- and moderate-income borrowers were more apt to have a subprime loan in 89.1 percent and 85.8 percent of the areas, respectively, the Home Mortgage Disclosure Act data reportedly showed.

"While responsible subprime lending serves credit needs, public policy concerns arise when certain groups in the population receive a disproportionate amount of subprime loans," the coalition said. "When subprime lending crowds out prime lending in traditionally undeserved communities, price discrimination and other predatory and deceptive practices become more likely as residents face fewer product choices."

Wright Andrews, executive director of the nonprime lending group Coalition for Fair and Affordable Lending, said he would be surprised if minorities as a group did not have higher percentages of nonprime loans, particularly because loans are underwritten and priced on the basis of risk.

"Much higher percentages of African-Americans and Hispanics are economically disadvantaged than Whites," he told MortgageDaily.com in an e-mailed statement. "Thus, when loans are fairly priced on the basis of risk, you must reasonably expect far fewer African-Americans and Hispanics will be able to meet the higher underwriting standards of the prime market."

"With respect to both women and many minorities, they may be economically disadvantaged due to past or present employment or other discrimination, but this is not discrimination by nonprime mortgage lenders," Andrews added.

The NCRC, which claims its mission is to increase fair and equal access to credit, capital, and banking services and products, said previous studies of fairness in lending have focused on large metropolitan areas, while its study showed that attention needs to directed to medium-sized areas as well, as these "tend to exhibit the worst fair lending disparities." Such was the case for medium-sized metro areas in the South where African-Americans have a large presence and in the West and Southwest where Hispanics are a large segment of the population.

Goldsboro, N.C., and Pine Bluff, Ark., tied as the areas reflecting the worst lending disparities to women. While 44.4 percent of the loans originated by subprime lenders were for women, prime lenders issued 22.3%, according to the announcement.

Andrews said he suspects higher percentages of women as a group are more economically disadvantaged than men and therefore also present higher risk profiles in many cases.

"Think, for example, of the huge number of women with kids struggling to make ends meet because deadbeat dads are not meeting their support obligations," Andrews said. "Unfortunate things like [that] put them at [an] economic disadvantage and make it harder for them to meet credit and other underwriting criteria."

In Macon, Ga., 59.3% of the loans issued to blacks were subprime, while 13.7 percent were made by prime lenders, NCRC highlighted.

In Salinas, Calif.