A study by the National Community Reinvestment Coalition released today suggests that blacks and Hispanics are much more likely to have risky and poorly-underwritten loans. But interestingly, the disparity is pretty significant even among more wealthy borrowers.
During 2006, middle- and upper-income (MUI) African-Americans were twice or more as likely to receive high-cost loans as MUI whites in 155 of the metro areas analyzed (71.4 percent). Furthermore, MUI Hispanics were twice or more as likely to receive high-cost loans as MUI whites in 45 of the metro areas analyzed (22.5 percent).
In comparison, while low- and moderate-income (LMI) minorities are more likely to receive high-cost loans than LMI whites, the disparity was less significant than disparities among MUI borrowers.
The report goes on to rank the cities with the biggest disparities. They are as follows:
1. Milwaukee-Waukesha-West Allis, WI
2. Minneapolis-St. Paul-Bloomington, MN
3. Huntsville, AL
4. Ann Arbor, MI
5. Hartford-West Hartford-East Hartford, CT
6. Bridgeport-Stamford-Norwalk, CT
7. Greenville, NC
8. Philadelphia, PA
9. Essex County, MA
10. Durham, NC
11. Raleigh-Cary, NC
12. Dayton, OH
13. Birmingham-Hoover, AL
14. Fort Wayne, IN
15. Cleveland-Elyria-Mentor, OH
16. Roanoke, VA
17. Rochester, NY
18. Harrisburg-Carlisle, PA
19. Lubbock, TX
20. Warren-Troy-Farmington Hills, MI
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.