The Federal Reserve has just released its annual Home Mortgage Disclosure Act report, and you won’t be shocked by its conclusion: It has become very, very hard for people with iffy credit to get mortgage loans, including many blacks and Hispanics.
I just got a statement about the Fed report from the National Community Reinvestment Coalition:
“New data released by the Federal Reserve Board suggests that risky lending practices and a lax regulatory environment contributed to an unsafe and unsound marketplace and a decrease in credit availability in 2007. The data indicates that credit has been significantly reduced, as the total number of loans fell by 3.5 million from 2006 to 2007. Minorities experienced the decline in access to credit most acutely.”
The irony, of course, is that not long ago mortgages were TOO easy to get, especially for subprime borrowers. Losses on those ill-advised mortgages are now forcing lenders to shut down or drastically scale back new lending.
By the way, check out the XBroker blog analyzing the quality of the HMDA data a few months ago.
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.