Fed Confirms Florida Mortgage Discrimination
After analyzing Home Mortgage Disclosure Act data this week, the Federal Reserve has released findings pertaining to the discrimination of mortgage lenders on racial grounds - an issue numerous sources have brought attention to in recent months. The Fed states that last year, American Indian and Alaska Native borrowers were nearly twice as likely to be overcharged for home purchases, but only half as likely as African-Americans.
According to the Fed’s data, 16.9 percent of American Indians & Alaska Natives received higher-priced, or “unadjusted” lending on home purchases in 2004, compared to just 9.4 percent of whites but a shocking 38.6 percent of blacks. The amounts by which whites and each minority group were overcharged were all roughly the same, however. The study reported that overcharged borrowers averaged mortgage rates 4 to 7.2 percent higher (unadjusted) on their loans than comparable Treasury securities (the instruments used to by the Federal Reserve to price mortgages). The Fed also said that when it factored in borrower-related and borrower-plus-lender-related adjustments, the figures were less drastic.
Compounding the issue is the overall increase in loans to minority groups. Lenders reported $24.9 billion in loans to Native Americans last year, for example, compared to just $14 billion in 2003. Countrywide Home Loans - the nation’s largest lender to American Indians - reported that it boosted Native lending by 50 percent last year, from $2.7 billion to $4.1 billion. The second largest source of loans to Native Americans was Wells Fargo Bank, at $1.3 billion, followed by Bank of America at $1.1 billion and Lehman Brothers Bank at $988 million.
Since the overall mortgage market decreased by a quarter: from $3.9 trillion in 2003 to $2.8 trillion in 2004, this increase is attributed largely to sub-prime lending. Since some sub-prime lenders have been connected to abusive lending, this is a development minority groups may welcome. The alleged discriminatory lending practices of mortgage companies have been criticized by civil rights & consumer advocacy groups, as well as law enforcement officials, in recent months. New York State Attorney General Eliot Spitzer has been suing to continue his investigation of many of the nation’s largest banks, which he claims are in violation of his state’s fair lending laws.
