Facts on mortgages and race
Wednesday, August 30th, 2006
By Chris Fitzsimon
Findings of Center for Responsible Lending based on rigorous analysis
From Michael Calhoun, president of the Center for Responsible Lending, in response to "Playing the race card" (Aug. 9 For The Record) by Daren Bakst of the John Locke Foundation:
I head a nonprofit in Durham that goes after predatory lenders. One of the most important things the center does is invest in good researchers and data. We are not sloppy; we do not make wild accusations; we do not rely on theories. We go where the numbers take us. Everything we say is backed by rigorous empirical analysis.
When the numbers from the Home Mortgage Disclosure Act (HMDA), which home lenders are required to submit every year to the federal government, were released last fall, they showed that African Americans and Latinos got more expensive loans, but they didn’t explain why.
The mortgage lenders said the explanation was simple: These groups tend to be less wealthy than whites and thus bigger risks.
That seemed a reasonable explanation. But this is important, and we decided to take a closer look. Using statistical techniques that adjust for differences in risk between borrowers, we found blacks and Latinos were about 30 percent more likely to get an expensive loan than whites.
That means that, even after a half century of civil rights laws, the subprime mortgage market is not treating all groups fairly. (more…)
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