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.”
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