Minorities Steered to B&C?

WASHINGTON -- Home Mortgage Disclosure Act data in 2006 analyzed by various customer advocate and mortgage industry entities show that the subprime mortgage meltdown has primarily affected minority buyers who received most of the risky loans and are about to disproportionately suffer the consequences.

After analyzing the HMDA data in its 2006 Peer Mortgage Data for lenders, Wolters Kluwer Financial Services, a risk management and compliance technology provider based in Minneapolis, reached the same conclusion.

The Peer report notes, "Minorities, particularly blacks and Hispanics, comprise significantly higher percentage of borrowers paying high-cost loans as compared to whites. This was found to be true even when comparing for the borrower related factors, such as loan amount and location, and lender-related factors, such as loan programs, present in the HMDA data."

Similarly, "The 2007 Annual Minority Lending Report," prepared by Compliance Technologies and Genworth Financial, released at the 3rd Annual Mortgage Lending Industry Emerging Markets and Diversity Conference found that in 2006 subprime lending "was most prevalent with African-American borrowers" who received 48% of all subprime loans, followed by Hispanics with 42% and Asian-Americans 17%.

"The momentum we've been seeing in minority homebuying unfortunately came to a halt in 2006," said Maurice Jourdain-Earl, managing director of Compliance, a Washington-based emerging markets and mortgage lending compliance consulting firm.

The executive called the findings on the level of subprime lending to minorities troubling, since in 2006 nearly four out of every 10 mortgages extended to all minorities were subprime.

Using newly released HMDA data, the Compliance-Genworth report analyzes national minority home purchase loans during the 2005-2006 period, compared to white borrowers, and examined what percentage of new ...