Real Estate Central

Income Is No Shield II highlights racial differences in lending in
dozens of metropolitan areas become more pronounced as borrower income
increases

WASHINGTON, July 31 /PRNewswire-USNewswire/ — 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 full report, titled Income Is No Shield Against Racial Difference
in Lending II, can be found at http://www.ncrc.org. The report is a follow-up to
NCRC’s 2006 study by the same name.

CONTACT: Jesse Van Tol

(202) 464-2709

jvantol@ncrc.org

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[Via Real Estate Newswire]