Blacks Pay More for Mortgages September 14, 2005 Jill At every income level, blacks take out more expensive mortgages. So blacks end up paying more for their homes than whites in similar economic circumstances. Hmmm, I wonder why that could be?
Besides discrimination, at every income level, on average blacks have less wealth than whites. Since availability of loans also depends on wealth, not just income, they are at a disadvantage. Also, the ability to get a loan could depend on the willingness of family members with higher income or wealth to co-sign. The effects of apartheid in America still reverberate.
Besides discrimination, at every income level, on average blacks have less wealth than whites. Since availability of loans also depends on wealth, not just income, they are at a disadvantage. Also, the ability to get a loan could depend on the willingness of family members with higher income or wealth to co-sign. The effects of apartheid in America still reverberate.
Redlining. Illegal, but that doesn’t mean it doesn’t happen. And predatory lenders hunting poor neighborhoods. Back when I was doing low income mortgage/real estate/credit counseling, we saw a lot of people come in with “pre-approved” loans at 12 and 13% interest who were convinced that there was no way they’d be able to get their credit clean enough in their lifetimes to qualify for a lower interest loan. Never mind the horror stories about people living in a house that they’d paid off, and having loan sharks come to the door asking if they’d like to take out a loan at 13% interest to pay for repairs to whatever seemed to need repair at first glance… and then rolling any other credit, repairs, etc, into the loan without a by your leave. Oh, and shall we go into the number of people who came in trying to buy a home at 19 or 20 who had credit stains dating back to when they were 4 and 5? There were people going around for a while offering “seminars” where the advice they gave was to “clean up” your credit by getting all of your credit in your kids’ names and waiting the seven years for the bad credit on your name to go away….. needless to say, it didn’t work, and we still don’t have the resources to educate everyone adequately in financial and credit matters.
Fleet got caught redlining on a massive scale a dozen years ago. They also had a number of other predatory lending practices. It’s all in the yield spread premium.
At every income level, blacks take out more expensive mortgages. So blacks end up paying more for their homes than whites in similar economic circumstances. Hmmm, I wonder why that could be? Clearly, it’s because America is racist. On a related note, men of all income levels pay more for risk-based insurance. This is, of course, prima facie evidence of a nation-wide anti-male conspiracy.
I have been a loan officer for more than 20 years. The articles that were in the NY Times and Washington Post both stated that the statistics quoted did NOT take into account the borrowers credit history. I assure you that generally speaking, people who can get current rates (say 5.75% 30 year fixed with 0 points) get them. Those that have “issue’s” need to go with alternate lenders. “Wealth” has little to do with what your final rate is when applying for a loan. The things that lenders look at are income vs. debt, credit history (credit scores) and employment history. If historically more minorities fall into a category that only allows them to get a higher risk loan then that is the price that must be paid for purchasing. It has everything to do with their credit profile as opposed to their gender, skin color or age. They do have an alternative and that is to fix their credit and other issues and delay purchasing (and thereby not benefit from one of the largest jumps in real estate values) or take the jump, pay their bills on time and be able to refinance in a few years with a current market rate. Any other mortgage professionals want to take me on??
“Wealth” has little to do with what your final rate is when applying for a loan. The things that lenders look at are income vs. debt, credit history (credit scores) and employment history. credit history- Wealth, and the wealth of someone’s family does have a lot to do with your credit history. Imagine a young person who loses a job and is not able to pay bills for a couple months. If you are wealthy or have a strong family financial support system, the bills will not be paid late. If you do not… bad credit. Income vs. debt- What is debt other than negative wealth? If lenders look at debt, they look at wealth. It appears you shot down your own argument. Now let us imagine two young people just finishing their undergraduate education. One has $40k in loans, the other received a good deal of help from family and only has $10k in loans. I am not a mortgage professional, so please enlighten me Eileen.