Thursday, November 17, 2011

Read CRL on Disparities in Mortgage Lending

The Center for Responsible Lending's research team of Carolina Reid (who has been working tirelessly at developing data on subprime mortgages for some time now), Roberto Quercia, We Li and Debbie Grunstein Bocian has produced Lost Ground, 2011: Disparities in Mortgage Lending and Foreclosures. They argue
1) The nation is not even halfway through the foreclosure
crisis. Among mortgages made between
2004 and 2008, 6.4 percent have
ended in foreclosure, and an additional 8.3 percent are
at immediate, serious risk.

(2) Foreclosure patterns are strongly
linked with patterns of risky
lending.
The foreclosure rates are consistently
worse for borrowers who received high-risk loan products
that were aggressively marketed
before the housing crash, such as
loans with prepayment penalties,
hybrid adjustable-rate mortgages
(ARMs), and option
ARMs.
Foreclosure rates are highest in
neighborhoods where these
loanswere concentrated.

(3)The majority of people affected
by foreclosures have been
white families. However, borrowers of
color are more than twice as
likely to lose their home as
white households. These higher
rates reflect the fact that African
Americans and Latinos were
consistently more likely to receive
high-risk loan products, even
after accounting for income and
credit status.
It is really striking how African-Americans and Hispanics were steered into crappy loans, even controlling for income and credit history. Beyond all this, the web site accompanying the report has really nicely organized data on severely delinquent loans and loans in foreclosure by state, race, ethnicity and MSA.

9 comments:

David Barker said...

Is the fact that African-Americans and Hispanics were disproportionately represented in the group of shaky borrowers consistent with the claim that CRA and fair lending pressure had nothing to do with the housing crash?

Dave Velasco said...

Probably yes. That's what I have been seeing it as well for some period of time.

Minnesota Real Estate CE

james said...

Let me tell you something about the post that outlines the disparities between whites blacks other racial groups when it comes to home lending and the high failer rate on their loans. This does not suprise me that their would be favoritism here. Not at all. Look at who works at a bank its mostly white as far as junior or senior employees go. And in the higher incomes areas that is outer suburbs. Its always a freaked face kid about 28 or so that your dealing with if your a minority trying to get a mortgage in a affluent area in the suburbs somewhere. Does not suprise me that someone of a different class would look upon minorities as suspect borrowers maybe not always on purpose but it certainly happens. They would almost certainly favor someone of their own race simply because their not exposed to members of minorities if they live in a heavily white area out in the suburbs somewhere. Im sure If someone in the real estate business reads this they will most likly dismiss everything Im saying here. But the fact of the matter is if you are a member of a minority as opposed to a non minority adjusted for employment history education and all other factors. You will have a harder time otaining a mortgage than a non minority that is not any better qualified every single study thats been done on this issue has shown that is a fact it has been clearly proven time and time and time again. Minority borrowers were disproportionately targeted by subprime predatory lenders during the housing boom and bust that is pathetic.

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