Daily Record Staff
"Risk or Race," the first comprehensive report to rank all 331 metropolitan areas based on differences in subprime lending between whites, blacks and other minorities, uncovered widespread racial disparities nationwide.
For example, the Buffalo metro area has the highest concentration in the nation of subprime home refinance loans in black neighborhoods. Nearly 76 percent of all refinance loans made to black neighborhoods are subprime. Nationally, the norm for the percentage of subprime home refinance lending to African-American neighborhoods is about 57 percent.
New York metro areas also have concentration levels exceeding the national average. The percentage of refinance loans that are subprime made to homeowners in black neighborhoods in Nassau-Suffolk was 64 percent (ranks 17th nationally), followed by 60 percent for New York (ranks 28th nationally).
The percentage of subprime loans made to African- American borrowers was over 45 percent in four New York metro areas: Buffalo (75 percent compared to 30 percent for white borrowers), Nassau-Suffolk (55 percent compared to 26 for white borrowers), New York (52 percent compared to 22 percent for white borrowers), and Rochester (45 percent compared to 19 percent for white borrowers).
"This is a big problem in Rochester," stated Ruhi Maker, senior attorney with the Public Interest Law Office of Rochester. "We are contacted by victims of high cost loans every week. Many of them have limited or no remedies under existing law."
The study, prepared by the non-profit Center for Community Change, surprisingly finds that the gap increases as the income level of African-Americans rises. There is a greater disparity between upper income African-Americans and their white counterparts than there is for lower-income African-Americans.
According to Maker, the subprime refinance market provides high cost loans mostly to borrowers not served by the mainstream prime markets and is fertile ground for abusive lending practices known as predatory lending. Predatory lenders typically target borrowers with a lot of equity in their homes. High foreclosure rates for subprime loans are evidence that many borrowers are entering into loans they cannot afford. It also means that concentrations of this form of lending in a community can lead to vacant buildings and devastated neighborhoods.
Municipal efforts to restrict predatory lending have pitted some cities against their state legislatures, which have overridden local statutes as a result of intense industry opposition. Philadelphia's anti-predatory lending legislation was overturned by the state legislature last year as was Dayton, Ohio's.
Cleveland is defying a state ban by passing an anti-predatory lending law that has landed Cleveland in court against mortgage industry groups. City mayors are among the most ardent advocates for federal legislation.
"Risk or Race" uncovers racial concentrations and disparities in every region of the country, large and small cities alike. Subprime loans are concentrated in minority communities at levels as high as four times greater than in white neighborhoods. For more information, specific rates for other metropolitan areas and access to victims of predatory lending, contact Leila McDowell at (202) 339-9329.
Copyright 2002 Dolan Media Newswires
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