Study Reveals Discrepancies in Florida Home Mortgage Refinancing
Is racism, sadly, alive and kicking within the Florida home loan refinancing world?
A nationwide study released this week by the Consumer Federation of America says black and Hispanic homeowners were more likely to receive Florida home mortgage refinancing loans aimed at borrowers with low credit ratings than their white counterparts.
In a survey of nearly 5 million refinanced mortgages made by 30 lenders nationwide, the consumer advocacy group found that about half of black mortgage seekers, and one third of Hispanics, got subprime loans with higher interest rates, compared to less than a quarter of white borrowers.
Interest rates on subprime, adjustable-rate refinanced mortgages rise sharply as market rates increase, generally making it harder for borrowers to repay. But it obviously shouldn’t make a difference what skin color the borrower portrays.
“Some of the differences in lending we saw are undoubtedly due to risk-based pricing, but the variation is too great to be explained by risk factors alone,” said Patrick Woodhall, senior researcher with Consumer Federation of America.
The 300-city study also looked at regional differences in lending practices. More than 36 percent of mortgage refinancings were made at subprime rates in the Southwest and Great Plains states, versus more than 18 percent in the Pacific and Northwest states.
However, banking industry representatives warn that comparing mortgage rates from different regions of the country can overstate differences.
It’s not surprising, for instance, to find higher rates of subprime Florida home loans in remote areas because there tend to be fewer competing lenders in such areas to help drive rates lower, said James Ballentine, director of housing and community development for the American Bankers Association.
“It’s important, when you look at a particular market, to compare it to similar areas and not drastically different ones,” Ballentine said. “Comparing Jackson, Mississippi, to Los Angeles doesn’t tell you much because it’s not even comparing apples and oranges; it’s more like apples and grapefruits.”
More research is sure to come on this issue and we’ll keep you informed. Submit our FREE Florida home mortgage application now to see what sort of rates you’d qualify for. It’s important to stay informed at all times.
