Photo: Scare Mortgages for Minorities
The report, Paying More for the American Dream V, examines the most recent home mortgage data available to the public, for New York City and six other metropolitan areas, including Chicago and Los Angeles. The report shows disparities in conventional refinance lending and denial rates, based on racial composition of neighborhoods. In all seven cities analyzed, lenders denied loan applications at significantly higher rates in communities of color than in predominantly white neighborhoods.
Access to conventional mortgage refinance lending is critical to homeowners and communities. Refinance loans are vital to homeowners seeking to benefit from lower interest rates improve their homes, finance small businesses, or pay for education. Refinance lending is especially crucial given the ongoing foreclosure crisis as homeowners struggle to stay in their homes. Access to sound refinance loans is critical to preserving community assets and neighborhood stability.
One of the key findings was that between 2008 and 2009, the number of conventional refinance loans made in predominantly white neighborhoods more than doubled in all seven cities examined. During this time, however, conventional refinance lending declined sharply in communities of color in all but one of the seven cities examined. Similarly large disparities were seen in denial rates. In 2009, lenders’ denial rates in communities of color
ranged from 29 percent to 60 percent, compared to 12 percent to 24 percent denial rates in predominantly
Conventional refinance loans to homeowners in predominantly white neighborhoods increased by an average of 129 percent. Conventional refinance loan originations in communities of color decreased by an average of 17 percent.
Lenders were roughly two and a half times as likely to deny a conventional refinance loan to homeowners in communities of color as they were to homeowners in predominantly white neighborhoods. On average, lenders denied 34 percent of conventional refinance loan applications from homeowners in communities of color in the seven cities studied, but denied only to 14 percent of applications from homeowners in predominantly white neighborhoods.