From the APP:
Loan rates high for minorities despite incomes
Higher income does not protect blacks and Hispanics from receiving mortgage loans with above-market rates, a new study by a group pushing for reforms to lending laws says.
The report, released Tuesday by the Washington-based National Community Reinvestment Coalition, concludes that in 2005, blacks in 171 metropolitan areas were at least twice as likely as whites to receive expensive loans.
The study was based on an analysis of nationwide mortgage data collected by the Federal Reserve for the most recent year available.
The report, which analyzed 2.3 million high-cost loans in 380 metro areas, also concluded that while the disparity among blacks and whites existed at all income levels, it was more severe at higher income levels, rather than lower ones.
The study found that middle-class and upper-income blacks in 167 metropolitan areas were at least twice as likely as whites with similar incomes to receive loans with high rates. By comparison, there were 70 metropolitan areas where low-income blacks faced a similar likelihood of receiving above-market rates.
Low-income blacks in all areas were more likely to have pricier loans than whites with similar incomes.
The report uses the Federal Reserve’s definition of high-cost loans: mortgages whose rates are at least 3 percentage points above Treasury securities. That definition includes most subprime loans given to people with weak credit records.
The study points to the persistence of discrimination against minorities, said John Taylor, chief executive of the Washington-based group, which has been pushing hard this year for legislation to restrict what it says are widespread abusive lending practices.
The Mortgage Bankers Association criticized the report, saying it focuses on race instead of factors that lenders consider when deciding whether to make loans, such as borrowers’ debt levels and the amount of money they can provide as a down payment.
“This study ignores these other important credit variables in order to make a broad generalization and seeks to identify an overly simplistic answer to a much more complex issue,” Jay Brinkmann, the trade group’s vice president of research and economics, said in an e-mailed statement.