Crisis cut U.S. minority mortgage access: study
By Nick Carey
CHICAGO (Reuters) - America's financial crisis disproportionately cut access to conventional mortgage loans for minority communities compared to predominantly white neighborhoods, according to a study released on Thursday.
Reckless subprime mortgage lending during the recent economic boom sparked the worst housing crisis and downturn since the 1930s, wiping out trillions of dollars of home equity and retirement savings.
Borrowers in minority neighborhoods received many of the most reckless, unaffordable subprime loans that caused the subprime crisis. Prior to the housing bubble, banks did little lending in low-income minority neighborhoods but stepped up lending during the real estate boom with encouragement from the U.S. government and Congress.
"Paying More for the American Dream IV" was compiled by seven non-profit groups including the California Reinvestment Coalition, the New York-based Neighborhood Economic Development Advocacy Project and the Chicago-based Woodstock Institute using data for 2006 to 2008 provided by lenders under the Home Mortgage Disclosure Act.
The report covers seven cities: Boston, New York, Chicago, Los Angeles, Charlotte, North Carolina, Cleveland, Ohio and Rochester, New York.
According to the study, prime lending in communities of color from 2006 when the foreclosure crisis began to 2008 -- the most recent year for which data are available -- decreased 60.3 percent compared to 28.4 percent in largely white areas.
"The financial crisis has led to significantly reduced access to mortgage credit for all borrowers and communities," the report states. "In neighborhoods of color, however, where the foreclosure crisis has taken an especially severe toll, access to prime, conventional mortgage loans has declined precipitously -- to a much greater degree than in predominantly white neighborhoods."
The report also examines the lending patterns of America's four top banks: Bank of America Corp, Citigroup Inc, JPMorgan Chase & Co, and Wells Fargo. Continued...