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Minorities Targeted for Subprime Loans

[Feb 3, 2008.]

 

The National Community Reinvestment Coalition recently studied mortgage information from 100 metropolitan areas in the U.S. Some observers say the results have been quite shocking.

For instance, the study shows that, in Hartford, Connecticut, minorities were much more likely to own a high-cost mortgage than Caucasian homeowners. This was the case no matter what the income of the people being studied. Interestingly enough, the difference was actually greater for middle-income blacks than for low-income blacks.

According to the study, middle-income blacks in Hartford were 2.9 times more likely to have a high-cost loan than a middle-income Caucasian borrower. Meanwhile, poor blacks in Hartford were 2.1 times more likely to have a high-cost loan than poor white borrowers.

Hartford ranked 11th worst in the nation for racial differences in high-cost loans. Since blacks and Hispanics comprise 80% of Hartford's population, it's not surprising that there have been so many foreclosures in minority communities.

Using race as a basis for lending decisions was outlawed in the late '60s as a result of the Fair Housing Act. That Act, which was part of the Civil Rights Act, was signed a week after the assassination of civil rights pioneer Dr. Martin Luther King, Jr.

The impact of the subprime mortgage crisis on minorities has been largely an untold story. While numerous news accounts speak of the collapse of the subprime market, very few talk about the fact that minorities are more likely to feel the brunt of the subprime mortgage mess.

A recent analysis by a consumer watchdog group indicated that the Treasury Department's plan to freeze rates for some adjustable-rate mortgages would only impact a limited number of homeowners. Observers are then left to wonder how many minorities will be able to take advantage of the program.
The nation is now experiencing its worst housing crisis in 16 years.

Julie Ann Amos
Febraury 3rd 2008

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