Study finds bias in Twin Cities mortgages

Image via Wikipedia

StarTribune.com

Minority members who live in highly segregated neighborhoods in the Twin Cities area are caught coming and going.
Regardless of their income, they're more likely to be denied a mortgage. And if they can get a mortgage, they're more likely to pay a higher interest rate. Those issues contribute to much higher defaults and foreclosures in their neighborhoods.
Those are the conclusions of a study released today by the Institute on Race and Poverty at the University of Minnesota's Law School, which analyzed data provided by mortgage lenders under a federal mandate called the Home Mortgage Disclosure Act (HMDA).
Myron Orfield, an associate law professor and co-author of the study, said that although it was no surprise that minority members in the Twin Cities area were treated differently by mortgage lenders, he was shocked at how pervasive the problem is even among high-income residents.
"It's a piece of a really deep problem of racial segregation we've never come to terms with," Orfield said.
According to the report, blacks are five times more likely to receive a subprime home purchase loan than whites, while Hispanics were four times more likely and Asians were twice as likely. In addition, the report said that high-income black, Hispanic and Asian applicants have a higher denial rate for purchases and refinances than even low-income whites.
Paul Schuster, vice president of Marketplace Home Mortgage and president of the Minnesota Mortgage Association, said there's no denying that some borrowers have been overcharged. But he cautioned that HMDA doesn't collect enough information to draw the conclusions cited in the report.
'Many factors' in loans
"There are many factors that go into a loan and a loan decision," Schuster said. "And the HMDA doesn't tell the whole story."

Related articles by Zemanta

• U Of Minnesota Institute On Race And Poverty Reports Dismal Results For Charter Schools (medicalnewstoday.com)
• The new rules of mortgage lending (money.cnn.com)