Minority mortgages hit 13-year low

by Rachel.Norvell25 Sep 2014
The share of mortgages made to African-American and Hispanic borrowers to buy homes has hit a 13-year low, according to recently released federal data collected from mortgage lenders under the Home Mortgage Disclosure Act.

Although African-American borrowers increased from 6% in 2001 to 8% in 2005; by 2013, their share dropped to 4.8%. Hispanic borrowers followed similar pattern: increasing from 9% in 2001 to 13% in 2005, before dropping to 7.3% in 2013.

The mortgage data could indicate that minorities may not be trying to borrow as much as they once did, said Bing Bai, a research associate at the Urban Institute’s Housing Finance Policy Center in Washington.

Meanwhile, home purchase loans to low- and moderate-income borrowers declined from nearly 31% in 2012 to 26% in 2013. However, the share of refinancings to the same group increased slightly from 19% in 2012 to 20% in 2013.

“This troubling trend shows the dire need for action on several fronts. Financial institutions clearly need to do a much better job serving underserved communities,” said John Taylor, president and CEO of the National Community Reinvestment Coalition in response to HMDA’s new data. “Government leaders need to embrace federal housing policies that are going to promote homeownership opportunities for all creditworthy borrowers and encourage responsible investment in all communities.”

Department of Housing and Urban Development Secretary Julián Castro announced earlier in September his plans to help more people gain access to home financing. Castro said that bad loans and risky secondary market products from a few years ago were responsible for the housing crisis. 

While it might have been too easy to obtain approval for a home loan during that period, he adds it has now become too hard.
The Urban Institute reported that today’s tight credit environment has constrained mortgage lending and is disproportionately affecting African-American and Hispanic households, who tend to have less savings and lower credit scores than whites.  

African-Americans experienced a denial rate of 29% for conventional home purchase lending compared to a denial rate of 11% for whites. Meanwhile, upper-income African-Americans and Hispanics were 2.3 times and 1.8 times more likely than whites to be denied conventional mortgage loans, respectively, according to the National Community Reinvestment Coalition.

“A new America is being created where homeownership is being replaced with higher cost rentals,” said Taylor. “Our housing industry suffers from this model and working-class Americans are stopped from building wealth.” 

COMMENTS

  • by Gordon Schlicke. | 9/25/2014 12:36:19 PM

    Let's look at what really happened: Barney Frank and his ilk insisted FHA, Fanny and Freddie should do more to shovel money to low income buyers. They make it law, with an assurance that "This doesn't mean grant credit to the undeserving, don't worry." Lenders went slow, suspecting poor results would mean another blame-game. But soon an army of government auditors began a new crusade. We were charging minorities more than any others. The risk-reward formula is ignored. I suggest that it isn't minorities who are discriminated against, it is mortgage lenders. We don't set the minimum credit scores or publish vaguely worded guidelines. Can we find just one person inside the Beltway that agrees with us? Some families simply will not qualify to own a home. We will gladly help fulfill housing goals when reasonableness is practiced in Washington. Right now it isn't.

  • by Bolieve?!! | 9/25/2014 1:14:47 PM

    Amen,.....what a roller coaster! The same laws that targeted low income families/minorities to obtain housing in the 80's on,......were retracted. The continuous blame game from the "left" and big gov. do NOT have any answers,....only a strong index finger. They have gutted anything that resembles the mortgage industry of the past. Perhaps less gov. and BS regulations will allow lenders to lend, borrowers to qualify, minorities to once own again,...and bankers(such as myself) to have a living we were proud of. People,....do the right thing. Vote all of the "progressives" out of office and allow free enterprise to exist again. As I see it the middle class, as big O keeps referring to, is no longer the "middle class" and the 1%ers are killing it!! God Bless socialism.....fascism...."trickle DOWN economics!!

Poll

Is TILA-RESPA a good or bad thing long term?