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(Not So) Thin Red Line?
Report: Minority borrowers discriminated against by area lenders
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Business New Haven
10/27/2003
By: Michael C. Bingham
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(Not So) Thin Red Line?
Report: Minority borrowers discriminated against by area lenders
African-American borrowers - including even relatively well-to-do one - are nearly three times as likely as their white counterparts to be turned down for a home mortgage.
That's the conclusion of a new report by the Association of Community Organizations for Reform Now (ACORN), released to the public October 15.
Titled "The Great Divide," the report is a 53-page analysis of racial and economic disparities in the lending market in 115 metropolitan areas during 2002. It also compares that data to trends in 2001 and five years ago, in 1997.
According to ACORN, greater New Haven ranks seventh-worst in the nation for rejecting upper-income minorities applying for conventional home mortgages.
African Americans in the New Haven-Meriden metropolitan area were 2.85 times more likely to be rejected for conventional mortgage loans than white applicants. Latinos were rejected 2.31 times more often, the study concluded.
According to ACORN President Maude Hurd: "It is an outrage that minority borrowers continue to be denied loans so much more frequently" than white borrowers. "Lenders need to do better, and regulators and legislators need to demand more."
In 2001, the New Haven market ranked eighth in the nation in denying mortgages to minorities.
"Obviously the jump [to seventh] is a little one, but it's in the wrong direction," said David Lagstein, Hartford head organizer for Connecticut ACORN, in published reports.
Lagstein pointed out that minorities with higher incomes still are rejected more often than both upper- and even moderate-income whites. Compared to wealthy whites, wealthy blacks were 2.83 times more likely to be turned down and wealthy Latinos were 2.13 times more likely to be rejected, according to the ACORN study.
"It's hard to interpret that as being anything other than racial discrimination," Lagstein said. He added that borrowers who might otherwise be deemed credit-worthy for lower-interest, 'A' loans get forced into the sub-prime market, where they borrow at higher interest rates and often get subjected to hidden fees.
Nationally, home-ownership is up: In 2002, rates rose slightly to 68.1 percent of all U.S. households. Among blacks, 48.2 percent owned their own homes, as well as 47.5 percent of Latinos. Of white families, 74.7 percent owned homes.
Jim Heckman, director of legislation for the state's Department of Banking, said his office would be reviewing the ACORN report for possible action. However, the banking department has not fined any bank for discriminatory lending in recent years.
Applicants with checkered credit histories often are steered to sub-prime lenders, but ACORN found that minority applicants were disproportionately resorting to sub-prime lenders after being turned away by banks and mortgage brokers for conventional purchase and refinance loans.
The ACORN report also recommended steps for correcting disparities, including strengthening two federal anti-discrimination laws: the Community Reinvestment Act and the Fair Credit Reporting Act.
ACORN is a national coalition of community organizations and low- and moderate-income families that campaign for quality housing, living wages, better schools and more community investment by banks and government.
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