Studies: US minorities in big cities pay more for mortgages
March 16, 2007
Two different reports, one from the Woodcock Institute, based in Chicago, and the other from the University of Massachusetts Boston have found that minorities in the United States are more likely to get home loans at higher interest rates in large cities around the country.
The Woodcock Institute study, carried out in cooperation with four other groups, looked at lending practices in Boston, Charlotte, Chicago, Los Angeles, New York City, and Rochester, New York. It focused on lending institutions Citigroup (NYSE: C), Countrywide (NYSE: CFC), GMAC, HSBC (LSE: HBSA; NYSE: HBC; Euronext: HSBC; SEHK: 005), JPMorgan Chase (NYSE: JPN; TYO: 8634), Washington Mutual (NYSE: WM), and Wells Fargo (NYSE: WFC). In the six cities studied, the study found that African American borrowers were 3.8 times more likely to get a higher-cost loan and Latinos were 3.6 more likely to get a higher-cost loan than were white borrowers in those cities.
The University of Massachusetts Boston study, carried out by economics professor Jim Campen, was more narrowly focused on Boston, found that high-income minorities were between six and seven times more likely than high-income whites to have a high-interest mortgage. Specifically, Professor Campen found that 70 percent of African American and Latino borrowers in Boston who had incomes between $92,000 and $152,000 had high-interest mortgages. Professor Campen attributed some of the disparity to suspicion of the banking system among minorities and to aggressive recruiting tactics from subprime lenders.