Lending disparities persist in metro areas

March 18, 2003

ABN AMRO, Cendant rank 'worst' on minority, low-income mortgages

Inman News Features

ABN AMRO, Cendant Mortgage and Ohio Savings Bank ranked among the worst prime home mortgage lenders for the period 2000-2001, according to a study released this month by the National Community Reinvestment Coalition.

"America's Best and Worst Lenders: A Consumers' Guide to Lending in 25 Metropolitan Areas," ranks banks, thrifts, mortgage companies and credit unions based on the percentage of home purchase and refinance loans they made to minorities, women and low- and moderate-income borrowers and neighborhoods during 2000 and 2001.

The study found that the best prime institutions in home mortgage lending based on its criteria for 2000 and 2001 included Bank of America, Fleet National Bank and Irwin Mortgage, and the best prime institutions in refinance lending included Bank One and First Union.

In addition to ranking lending institutions, the study examined prime, subprime and manufactured home lending trends across the 25 metropolitan areas. The study found that non-prime lending increases faster than prime lending in minority and low- and moderate-income neighborhoods as the level of segregation increases and as housing becomes more affordable on a metropolitan level.

The metropolitan areas with the greatest disparities in prime and non-prime home purchase lending included Milwaukee, Chicago, Cleveland, St. Louis, Houston and Philadelphia, according to the study. The metropolitan areas with the least disparities in home purchase lending were Riverside/San Bernardino, Calif.; Los Angeles; Portland, Ore.; San Diego; and Miami. Most of these metropolitan areas also had the greatest or least disparities in refinance lending.

An example of disparities in refinance lending involves Milwaukee and Los Angeles. In Milwaukee, non-prime lenders made 28.4 percent of their refinance loans to African-Americans but prime lenders issued only 3.2 percent of their loans to African-Americans during 2001, according to the study. However, in Los Angeles, non-prime and prime lenders issued 13.8 percent and 5.1 percent of their refinance loans to African-Americans, respectively.

In home purchase lending, the study found that prime lenders in Washington, D.C., made 40 percent of their mortgage loans to low- and moderate-income (LMI) borrowers while non-prime lenders issued 34.6 percent of their mortgage loans to LMI borrowers during 2001. In sharp contrast, non-prime and prime lenders made 51.9 percent and 34.3 percent of their mortgage loans to LMI borrowers, respectively, in Cleveland during 2001.

NCRC was formed in 1990 by 16 national, regional and local community reinvestment organizations and aims to increase the flow of private capital into traditionally underserved communities.

Copyright: Inman News Service

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