Blacks, Latinos Pay More for Mortgages

“This report makes it clear that minority communities continue to be the target of predatory lenders who are effectively stealing their equity,” said Oakland Congresswoman Barbara Lee. “You should not pay more for a loan because of the color of your skin, yet that is exactly what is happening. This is an example of institutional racism in its most glaring form,” said Lee, who joined other members of the Congressional Black Caucus, the Congressional Hispanic Caucus and the Center for Responsible Lending at a press conference Thursday to discuss the report.

The study, the most extensive of its kind, examined 50,000 subprime loans. A House subcommittee is now discussing whether to pass a weak bill favored by industry or strong protections that would stop predatory lending practices.

The Center for Responsible Lending found that, even after accounting for factors such as credit scores and other risk factors, Latinos are 2.3 times more likely and African Americans are 3.7 times more likely to receive a high cost subprime loan than their white counterparts. The report is based on an analysis of information collected under the Home Mortgage Disclosure Act (HMDA) and is available online at http://www.responsiblelending.org/reports/HMDA2006.cfm

NCRC files discrimination complaint based on audit of mortgage brokers

Another new study, the National Community Reinvestment Coalition’s Broker Fair Lending Audit, the first of its kind, revealed pervasive discriminatory and predatory practices by mortgage brokers in six metropolitan areas across the country. Between February 2005 and June 2006, NCRC conducted over 100 tests in Atlanta, Baltimore, Chicago, Los Angeles, St. Louis and Washington, D.C.

As a result, NCRC filed a civil rights complaint with the U.S. Department of Housing and Urban Development against Allied Home Mortgage Capital Corp., the nation’s largest privately held mortgage broker-banker. Allied is based in Houston, Texas.

“The NAACP is very troubled by the findings,” commented Hilary Shelton, director of the NAACP Washington Bureau. “Mortgage brokers originate over 70 percent of residential mortgages, and have been the subject of increasing scrutiny by regulators and advocates alike due to allegations of predatory and unfair lending practices.” She called on HUD “to do its best to ensure the future compliance by all lenders with our nation’s civil rights laws.”

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