Report: Wealth-Building Impeded Due to High Cost Lending “Homeownership and Wealth Building Impeded: Continuing Lending Disparities for Minorities and Emerging Obstacles for Middle-Income and Female Borrowers of all Races”—a joint study conducted by the National Community Reinvestment Coalition (NCRC), The Opportunity Agenda and the Poverty & Race Research Action Council (PRRAC)—reveals that home loan lending inequities transcend not only, racial and gender lines, but the ethnic make-up of neighborhoods as well.
“This report is the first to show the home lending cross-sections between race, gender and income and to specifically examine lending practices in immigrant neighborhoods,” says John Taylor, president and CEO of NCRC. “It clearly outlines that regardless of how much money you make, if you are part of the traditionally underserved, then odds are you are receiving a high cost loan. That makes it difficult to keep your home, manage your bills and to build inheritable wealth in this country.”
Based on the new 2004 Home Mortgage Disclosure Act (HMDA) data, NCRC found that minorities and immigrants receive strikingly high numbers of high cost—or subprime—loans despite their economic status.
In addition, middle- and upper-income borrowers in white neighborhoods received just 8.3% of subprime home purchase loans, while the same income group in immigrant neighborhoods received over 13.6% of high cost loans.
Markedly, women—regardless of ethnic or racial make-up—received over 32.1% of subprime loans made to all Americans even though females compose only 29% of the nation’s households. In contrast, women received only 24% of the prime home purchase loans.
“Homeownership is an important element of opportunity in America,” says Brian D. Smedley, research director for The Opportunity Agenda. “This report shows that the security of homeownership remains out of reach for many because of differences in home lending markets across communities. These lending disparities compound the multiple barriers to opportunity that many groups face.”
The abilities of a broad segment of the American population to build wealth through homeownership are impeded by the prevalence of high-cost lending that drains homeowner equity, he says.
Indeed, building wealth through homeownership has been the American dream and the path to opportunity for Americans for generations, Smedley says. Stakeholders need to come together to make sure that wealth-building opportunities are preserved by increasing equal access and fairness in the lending marketplace. |
