ARLINGTON, Va. – A study released today documents a significant decrease in home mortgages to African Americans and Latinos in comparison to non-Hispanic whites since the onset of the housing downturn.
ComplianceTech, a provider of technology and mortgage data analysis for government agencies, nonprofit organizations and financial institutions, conducted the analysis of data collected under the Home Mortgage Disclosure Act (HMDA). The analysis disclosed that African Americans and Latinos borrowed 62 percent less to buy or refinance homes in 2009 than they borrowed in 2004, which was before the housing market collapsed. Mortgages to whites declined only 17 percent, while Asians obtained nearly an equal amount in mortgages.
“This is the first comprehensive research on the distribution of prime, subprime and Federal Housing Administration (FHA) loans by race leading up to and after the housing market collapse,” said Maurice Jourdain-Earl, co-founder and managing director of ComplianceTech, which is based in Arlington, Va. “The purpose of the report is to shine a bright light on the facts regarding the distribution of loan types by race, the impact of loan types on the cost of credit, loan performance and the disparities in access to credit for home mortgages.”
The study, which used HMDA data collected from 2004 to 2009, shows that disparities exist for the three types of loans—prime, subprime and those insured by FHA. Specifically, the study found that:
“I was also motivated by the demographic shift in FHA lending and the false accusations that Fannie Mae and Freddie Mac contributed to the housing crisis by purchasing loans from borrowers of color to meet their affordable housing goals,” he said. “Many political leaders don’t realize, or don’t want to recognize, that it was mainly the volume of defaulted loans from white Americans that impacted the housing crisis. Minorities simply did not generate enough loans to have that kind of universal impact. ”
Mr. Jourdain-Earl said unfortunately there are no public data available to ascertain the racial distribution of defaults and foreclosures. “There is a dire need for foreclosure data to be collected by race and other demographic criteria, such as borrower income and income of census tracts,” he said. “It would be easier to address the foreclosure issue if this type of information were available.”