Access to fair credit

From Inman News:

Fed chief backs more study of subprime lending

The “democratization” of credit has created more opportunities for home ownership, but questions remain whether uninformed consumers pay too much for home loans and whether lenders are competing in historically underserved communities.
…
Lenders have gotten better at pricing risk, and are able to loan money to borrowers who might have previously been turned down for loans, all the while reducing costs through economy of scale, Bernanke said.

Expanded access to mortgage credit “has helped fuel substantial growth in home ownership,” Bernanke acknowledged, with the national rate of home ownership reaching nearly 69 percent this year.

Minority households have made the greatest gains, but the home-ownership rate for blacks and Hispanics remains about two-thirds the rate for whites, Bernanke said. The home-ownership rate in lower-income areas in 2004 was roughly 47 percent, compared with 72 percent in middle-income areas, the Fed chair noted.

The growth in subprime lending — from less than 5 percent of purchase mortgage loans in 1994 to 20 percent in 2005 — raises “some concerns and questions, which are magnified in the case of lower-income borrowers,” Bernanke said.
…
The Fed is “an agency committed to the rigorous enforcement of the fair lending laws,” Bernanke said. To determine if the law has been broken, regulators look at lenders’ business practices. Lenders that offer loan officers incentives to charge some applicants higher interest rates or steer them toward higher-priced loan products are targeted for review, he said.