Saturday
Apr092005
CA Minorities pay more for home loans than whites
Saturday, April 9, 2005 at 05:45PM
By Jon Ortiz
African Americans and Latinos in California routinely pay more for home loans with some lenders, according to a report released Wednesday.
African Americans and Latinos in five of the state's largest cities were two to three times as likely as whites to get a loan from a higher-cost subprime lender than from a lower-cost lender such as a bank, according to the study by the San Francisco-based California Reinvestment Coalition.
Using 2003 data collected under the federal Home Mortgage Disclosure Act, the nonprofit coalition's report distills lending patterns from seven financial corporations in Sacramento, Fresno, Los Angeles, Oakland and San Diego. Today is the deadline for lenders to release 2004 data.
The report also concludes that Citigroup Inc., HSBC Bank USA and Wells Fargo Bank made mortgage loans to African Americans and Latinos that cost more than 2 1/2 times as much as those made to most other bank customers.
In Sacramento, for example, subprime lenders Household Financial Corp. of California and Beneficial California Inc. made 98 loans to African Americans. Their lower-cost affiliate, New York-based HSBC, made two mortgage loans to African Americans. Wells Fargo officials said Wednesday that they had not yet reviewed the findings, but "based on the allegations made in the group's press release, Wells Fargo believes that the report is flawed," said company spokeswoman Julie Campbell.
"The data upon which the report appears to be based does not appear to factor in a borrower's relative credit risk and key loan factors," she added, "which is how lending decisions are made."
The coalition's study she said, fails to consider a borrower's financial situation, whether the interest rate is fixed or adjustable, the value of the property and other factors that determine loan costs.
Both Wells Fargo and Citigroup said they are committed to equal credit access for all people.
HSBC did not return a request for comment by The Bee's deadline.
African Americans and Latinos in California routinely pay more for home loans with some lenders, according to a report released Wednesday.
African Americans and Latinos in five of the state's largest cities were two to three times as likely as whites to get a loan from a higher-cost subprime lender than from a lower-cost lender such as a bank, according to the study by the San Francisco-based California Reinvestment Coalition.
Using 2003 data collected under the federal Home Mortgage Disclosure Act, the nonprofit coalition's report distills lending patterns from seven financial corporations in Sacramento, Fresno, Los Angeles, Oakland and San Diego. Today is the deadline for lenders to release 2004 data.
The report also concludes that Citigroup Inc., HSBC Bank USA and Wells Fargo Bank made mortgage loans to African Americans and Latinos that cost more than 2 1/2 times as much as those made to most other bank customers.
In Sacramento, for example, subprime lenders Household Financial Corp. of California and Beneficial California Inc. made 98 loans to African Americans. Their lower-cost affiliate, New York-based HSBC, made two mortgage loans to African Americans. Wells Fargo officials said Wednesday that they had not yet reviewed the findings, but "based on the allegations made in the group's press release, Wells Fargo believes that the report is flawed," said company spokeswoman Julie Campbell.
"The data upon which the report appears to be based does not appear to factor in a borrower's relative credit risk and key loan factors," she added, "which is how lending decisions are made."
The coalition's study she said, fails to consider a borrower's financial situation, whether the interest rate is fixed or adjustable, the value of the property and other factors that determine loan costs.
Both Wells Fargo and Citigroup said they are committed to equal credit access for all people.
HSBC did not return a request for comment by The Bee's deadline.