Who Really Gets Higher Cost Home Loans

Who Really Gets Higher Cost Home Loans is CRC’s twelfth annual analysis of federal Home Mortgage Disclosure Act (HMDA) data. HMDA data are important for several reasons, including:

   * HMDA data reveal whether financial institutions are helping people
     obtain and maintain the largest asset most Americans may ever own
     – a home.
   * HMDA data represent one of the most detailed publicly available
     sources of data concerning lending and banking practices.
   * HMDA data assist the public and regulatory agencies in identifying
     possible discriminatory lending patterns.

Over the years, CRC’s analysis of the HMDA data has evolved as the home loan market and HMDA data have evolved. In the early years, the main concern was that lenders were actively discriminating against African American, Latino and other minority borrowers, and refusing to lend to, or redlining, the neighborhoods in which these borrowers lived.

While redlining remains a sad reality in our lending landscape, we have seen a shift from redlining to reverse redlining, where minority borrowers and neighborhoods are now targeted for higher-cost, or subprime, loans they can ill afford. Subprime lending refers to lending that is targeted to borrowers who have, or are perceived to have, blemishes on their credit reports. Subprime loans carry higher interest rates and fees and more onerous loan terms.

This year represents the first in which the public has access to loan pricing data. This year's report looks at which borrowers and which communities are most impacted by higher cost home loans, which lenders make these higher cost loans and which regulatory agencies are charged with ensuring that lending practices are fair.

See Right for CRC's most recent HMDA reports.

Community advocacy groups from across the country released a report March 8, 2007 at the Federal Reserve Bank Community Advisory Committee Meeting showing that the largest lenders making both prime and subprime mortgage loans have a disproportionate share of their higher cost loans going to minority borrowers across the nation.  The groups called on the Federal Reserve Bank to be proactive and investigate systemic and specific corporate fair lending violations.
Click here to read the press release
Click here to read the report