Disparities in home-loan rates persist
Federal Reserve data showed that racial disparities in home-loan rates are not narrowing.
By CRAIG TORRES AND ALISON VEKSHIN
Bloomberg News
Minority borrowers more frequently received higher-cost mortgages than non-Hispanic whites when they refinanced their homes last year, continuing a trend of racial disparities in home-loan rates, the Federal Reserve said.
Blacks received high-cost loans 52.8 percent of the time when they refinanced home loans last year, versus 49.3 percent in 2005, the Fed said in a report released Wednesday. Hispanic borrowers received high-cost refinancings 37.7 percent of the time, up from 33.8 percent in 2005. The rate for non-Hispanic white borrowers was 25.7 percent last year, compared with 21 percent in 2005.
`NOTABLY GREATER’
”The incidence of higher-priced lending for blacks and Hispanic white borrowers is notably greater than for non-Hispanic whites,” the Fed said in the report. “Similar patterns are shown in racial and ethnic differences in denial rates.”
The report’s release coincides with increased scrutiny in Congress of lending practices that contributed to the collapse of the subprime-mortgage market and prompted credit-market volatility in recent weeks. Black homeownership fell nearly 2 percentage points in the first six months of this year to 46.3 percent, compared with a half-percentage point drop for whites, to 75.4 percent.
The report indicated little change in the percentage of minority homeowners who rely on expensive mortgage credit. Black borrowers had high-cost loans 53.7 percent of the time last year, versus 54.7 percent in 2005. For Hispanic borrowers, it was 46.6 percent last year versus 46.1 percent in 2005. Those figures weren’t adjusted for loan size, borrower’s income or geographic location.
”Differences by race and ethnicity remain stubborn, persistent, and significant,” said Josh Silver, a vice president of research and policy at the National Community Reinvestment Coalition in Washington. “The differences are not narrowing. With all the increased attention, why isn’t it?”
SEEKING JUSTICE
The Fed findings follow a July report that the central bank would refer five lending-discrimination cases to the Justice Department for investigation during the first half of 2007, up from two cases in all of 2006.
All U.S. bank regulators have independent enforcement authority to censure banks for unfair lending.
Since the data on race and high-cost loans became available in 2004, the Fed hasn’t brought a case against any of the 901 banks it supervises. Fed officials say independent action could jeopardize the Justice Department’s investigations.
