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Press Release April 20, 2000 |
Contact: |
Austin's home loan denial ratio for
minorities
among highest in Texas
AUSTIN, Texas - Blacks and Hispanics in the Austin-San Marcos
corridor were denied home mortgage loans at twice the ratio of Whites
in 1998 and the disparity in denial patterns appears to be growing
for Black applicants, according to a study released today by
Consumers Union and the Austin Tenants Council.
Denial ratios, an indicator of the potential for discrimination,
were higher in Austin-San Marcos and Bryan-College Station than
anywhere else in Texas. The study -- "Access to the Dream 2000" --
analyzed data on Texas home mortgage loans for the years 1996 to
1998, the most recent data available. Both an Austin
study and a statewide companion
can be found at www.consumersunion.org.
The denial ratio for Blacks (based on a ratio of 1.00 for Whites)
in Austin-San Marcos increased from 1.81 in 1996 to 2.05 in 1998.
For Hispanics, it increased from 2.09 percent in 1996 to 2.11 in
1998.
The study found that in the Austin area and throughout the state,
higher cost subprime credit lenders like Mortgage Portfolio Services
and United Companies Lending are overepresented in low income and
minority communities. The same is true for manufactured home lenders
such as Green Tree Financial, Oakwood, The CIT Group Sales/Finance,
Bank of America FSB, and Associates Housing Finance.
While the top ten refinance lenders to White borrowers in
low income census tracts are prime mortgage lenders and bank lenders,
four of the top ten refinance lenders to Black borrowers in the
Austin-San Marcos market were subprime lenders that typically charge
higher interest.
"Subprime loans are designed for people with bad credit, and it is
abusive for lenders to use them indiscriminately to target citizens
with darker skin color or who live in the 'wrong' zip code," said
Mary Dulan, fair housing director with the Austin Tenants'
Council.
Other findings for the Austin area study:
· Both among Blacks and Hispanics, the higher the income the higher the higher the denial rate was compared to Whites. This was true for both home purchase loans and refinancing loans.
· Among the most equitable lenders in the Austin-San Marcos area were Nationsbank, Countrywide Home Loans and Irwin Mortgage.
· The largest bank lenders -- Norwest Mortgage (affiliate of Norwest Bank), Guaranty Federal FSB and Chase Manhattan Mortgage -- in the Austin-San Marcos MSA did not have the same level of lending in minority or low income areas that they had in other parts of the city.
· Lenders offer most borrowers conventional loans, but approve a disproportionate number of FHA loans for minority borrowers. While only 21.5 percent of borrowers obtained FHA loans, 41.1 percent of Hispanic borrowers and 36.8 percent of Black borrowers took FHA loans.
· Austin area banks generally received "Outstanding" or "Satisfactory" ratings for Texas under the Community Reinvestment Act, a federal law that governs financial investments in communities. However, few of the lenders showed strong investment performance in the Austin area.
"Austin, with its growing divide between rich and poor and its
rapidly escalating housing prices, should be a central focus for
community development by depository institutions in the coming
years," the report noted.
Consumers Union, publisher of
Consumer Reports, is an independent, nonprofit testing and
information organization serving only the consumer. We are a
comprehensive source of unbiased advice about products and services,
personal finance, health nutrition, and other consumer concerns.
Since 1936, our mission has been to test products, inform the public,
and protect consumers.
The Austin Tenants' Council (ATC)
is a nonprofit organization founded in 1973 which provides
counseling, mediation, advocacy and educational services related to
housing discrimination, landlord/tenant education and information,
housing repair are rehabilitation and affordable housing.
The Texas Community Reinvestment
Coalition is a coalition of nonprofit organizations
statewide cooperatively challenging lending discrimination in Texas.
TCRC works to remove the barriers for increased financial
independence which deprive low income consumers and communities of
color equal access to capital and financial services. In addition,
TCRC highlights successful partnership efforts to expand
homeownership and community development activity in all areas of the
state.
