Improving HMDA Data can be the Answer to Averting another Foreclosure Epidemic

Another major finding from today’s release is that the federal government is supporting the vast majority of home lending. Government-insured home loans, for example, account for 54 percent of all home purchase lending. Moreover, during 2009, home purchase loans purchased by government-sponsored enterprises or insured by the government ranged from 80 to 90 percent of all home purchase loans on a monthly basis. Congress and the regulatory agencies must strengthen the Community Reinvestment Act (CRA) in order to motivate private sector lenders to increase their safe and sound lending to communities and therefore contribute to recovery from this Great Recession.

Continued disparities in access to affordable loans by race need to be addressed. More than 80 percent, 73 percent, and 52 percent of the home purchase loans to African-Americans, Hispanics, and whites, respectively, were government-insured in 2009. Government-insured loans are not as prone to contain tricks and traps as subprime loans, but are nevertheless more expensive than conventional loans. In addition, after controlling for borrower and lender characteristics, the Federal Reserve finds that the denial rate for conventional (non-government insured) home purchase loans was 24 percent and 19 percent for African Americans and Hispanics, respectively. In contrast, the denial rate for whites was 13 percent.

“We desperately need stepped up fair lending enforcement to reduce disparities in access to affordable loans. During the last several years while our country was ravaged by the most abusive lending ever, fair lending enforcement by the regulatory agencies was abysmal. As newly appointed special adviser to the President, Elizabeth Warren, has stated, we need a new cop on the beat. We anticipate that the new Consumer Financial Protection Bureau will be that new cop, said Taylor.”

About the National Community Reinvestment Coalition:

The National Community Reinvestment Coalition is an association of more than 600 community-based organizations that promote access to basic banking services, including credit and savings, to create and sustain affordable housing, job development and vibrant communities for America’s working families. http://ncrc.org/

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

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