Lenders sharply cut prime mortgage lending in minority communities in recent years—for both home purchases and refinancing of existing mortgages. Although mortgage lending has decreased across the board since the financial meltdown, prime lending in "communities of color" has dropped more than twice as much as in predominantly white neighborhoods. According to the report, "Paying More for the American Dream IV: The Decline of Prime Mortgage Lending in Communities of Color," released by Neighborhood Economic Development Advocacy Project (NEDAP) and six other groups across the country, systematic redlining of communities of color has worsened since the onset of the financial crisis.
The report examines overall mortgage lending patterns between 2006 and 2008, in seven metropolitan areas in the United States, with separate analysis for the nation’s four largest financial institutions--Bank of America, Citi, JPMorgan Chase and Wells Fargo. The four banks, all recipients of funds from the Troubled Asset Relief Program (TARP), significantly decreased access to prime refinance loans in communities of color, at the same time they increased prime refinance lending in predominantly white communities.
“The largest banks, which took billions in bailout dollars, continue to harm communities of color through ongoing discriminatory practices,” said Alexis Iwanisziw of NEDAP, who co-authored the report. “To address these glaring disparities, Congress must enact meaningful financial reform and regulators must start to hold banks accountable.”
Key findings of the NEDAP study include:
►Lenders decreased prime home purchase and refinance lending by 60.3 percent in neighborhoods of color, compared to 28.4 percent in predominantly white neighborhoods.
►Bank of America, Citi, JPMorgan Chase and Wells Fargo collectively increased their prime refinance lending in predominantly white communities by 32 percent, but decreased it in communities of color by 33 percent.
►Lenders overall decreased their prime refinance lending by 66.4 percent in communities of color, compared to 13.9 percent in predominantly white communities. In New York City, overall prime refinance lending declined by 68.8 percent in neighborhoods of color, compared to 39.5 percent in predominantly white areas.
The full report, "Paying More for the American Dream IV: The Decline of Prime Mortgage Lending in Communities of Color," may be found by clicking here.
For more information, visit www.nedap.org.