Obtaining a mortgage in a U.S. city nowadays is far more difficult for ethnic minority races to achieve, reports a new study released last Thursday.
The authors of the study, “Paying More for the American Dream V”, called for mortgage lenders to increase their investments in poorer communities, as well as an improvement in disclosure requirements in order to protect borrowers.
Of the seven cities covered in the study – New York City, Rochester, Chicago, Los Angeles, Boston, Charlotte and Cleveland – researchers found that 2009 saw a decrease of 17% in mortgage refinancing within ethnic minority communities when compared with the year before.
However, neighborhoods which are predominantly white saw the number of mortgage refinancing loans leap by a huge 129% on the previous year.
Produced by a coalition of non-profit organizations in the U.S., which includes the Woodstock Institute in Chicago and California Reinvestment, the 5th edition of the annual report also showed that refinancing applications from minority persons were “more than twice as likely as whites” to be denied.
“The results build on previous reports,” said Adam Rust of the Community Reinvestment Association of North Carolina. “There are clear racial disparities when it comes to mortgage lending.”
Earlier reports made during the housing boom last decade showed that high-risk subprime loans were more likely to be obtained by minorities than whites, regardless of their credit situation.
“It looks as though lenders are prepared to loosen up credit restrictions in areas that are predominantly white, while minority communities are being denied the refinancing needed to sustain their economic recovery,” Rust explained.
“It’s clearly a situation which needs to be looked at, and if at all possible, rectified.”