Study finds huge disparity in loans to blacks, whites

Mortgages in Baltimore

May 17, 2000|By Robert Nusgart | Robert Nusgart,SUN STAFF

A study based on government statistics will show that the number of mortgage loans made in Baltimore's white communities is up to four times higher than it is in African-American neighborhoods.

The findings, to be released today, indicate just one of several lending practices questioned by the Public Justice Center, a nonprofit legal services organization in Baltimore. The 248-page study, primarily financed by a research grant from the Abell Foundation and in part by the U.S. Department of Housing and Urban Development, uses data furnished through the Home Mortgage Disclosure Act between 1995 and 1997.

"Not only did we look at the market of who got loans and who didn't ... we also looked at what neighborhoods loans were being made in, and [we] very alarmingly found that African-American neighborhoods are simply deprived of the capital to buy homes," said Jonathan Smith, director of the center.

The study found that:

The denial rate for conventional loans was 40 percent for blacks, while for whites it was 24 percent.

African-Americans, spanning all income levels, are steered more toward federally insured Federal Housing Administration loans.

Federal agencies have been lax at enforcing fair-lending laws against area lending institutions that have failed to make significant numbers of loans to African-Americans.

Fannie Mae and Freddie Mac, the two federally chartered companies that purchase mortgages from lenders and repackage them to investors, fail to purchase conventional loans from African-American neighborhoods at the same rate as white areas, prompting lenders to offer FHA mortgages.

Calvin Bradford, an expert on fair lending and author of the study, placed most of the blame for the discriminatory practices on the lack of oversight by the federal government.

"Lenders aren't doing the job they are supposed to do. The regulatory agencies aren't monitoring them the way they are supposed to do, and HUD certainly isn't even monitoring its own programs," Bradford said. "You need HUD to pay attention to the racial impacts of its own programs ... they have actively contributed to the destruction of these minority neighborhoods, and they're supposed to be charged with the enforcement of fair housing and the elimination of programs with discriminatory effects."

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