Next City: Banks have ‘Almost Completely’ abandoned low-income borrowers
Next City, May 9, 2018: Banks have ‘Almost Completely’ abandoned low-income borrowers
Banks are moving away from lending to low- to moderate-income borrowers and borrowers of color, the National Community Reinvestment Coalition reported in an analysis of new data on mortgage lending from the Consumer Financial Protection Bureau.
In a trend the NCRC calls troubling, banks have “almost completely” abandoned the kind of mortgage loans favored by working-class borrowers. In 2017, less than 10 percent of Bank of America and Wells Fargo home loans used the government-insured Federal Housing Administration, VA and Rural Housing Service loans; at JPMorgan Chase, fewer than 4 percent of loans were FHA or VA. These loan programs, which tend to cost more to the buyer and are more work for a bank to originate, are often the only channel into homeownership for low- to moderate-income borrowers. About half of these borrowers used FHA, VA or RHS mortgages in 2017, the NCRC said. The figures are even higher among minority applicants: 65 percent of black applicants and 56 percent of Hispanic applicants used FHA/VA and RHS mortgages.
“Buying a home is increasingly difficult, more expensive, or impossible, for the nation’s working class,” the NCRC wrote. “This is reflected in the nation’s homeownership rate, which is near a 50-year low.”