Home mortgage lending plummets in neighborhoods of color: National study exposes unequal access to credit and redlining

Access to mortgage refinance loans sharply declined in communities of color and increased substantially in predominantly white neighborhoods, according to a report released today by a multistate coalition of groups.
 
These trends underline growing concerns about the dramatically divergent fortunes of communities of color that have been hit hard by the foreclosure and economic crisis and white communities where the impact has been less severe.  These concerns are even more pronounced in light of recent proposed changes in mortgage financing that would likely make access to conventional refinance lending even more difficult and costly and likely disproportionately affect access to loans in communities of color.
 
The report, Paying More for the American Dream V: The Persistence and Evolution of the Dual Mortgage Market, examines changes in conventional refinance lending between 2008 and 2009 in seven metropolitan areas: Boston, Charlotte, Chicago, Cleveland, Los Angeles, New York City and Rochester, NY. It also compares 2009 loan denial rates across neighborhoods. In all seven cities analyzed, lenders denied loan applications at significantly higher rates in communities of color than in predominantly white neighborhoods.
 
 
Key findings in the report include:
 
• From 2008 to 2009 in the seven cities examined, applications for conventional refinance loans increased 76 percent in predominantly white neighborhoods, while the number of loans made in these neighborhoods increased 125 percent.
 
• Over this same period in communities of color, conventional refinance applications declined by 36 percent and originations declined by 17 percent.
 
• For example, in Chicago, conventional refinance originations in predominantly white neighborhoods increased by 102 percent from 2008 to 2009, but over the same period declined by 41 percent in communities of color.
 
• In the seven cities, lenders were more than twice as likely to deny conventional refinance loans to homeowners in communities of color as they were to homeowners in majority white neighborhoods in 2009.
 
• Denial rates in communities of color ranged from 28.9 percent in Los Angeles to 60 percent in Cleveland, whereas in predominantly white communities, denial rates ranged from a low of 11.7 percent in Boston to a high of 24.4 percent in New York.
 
Read the press release
 
Read the report