Racial Disparities Persist In Mortgage Costs

A new study from the Center for Community Change finds that AfricanAmericans and Hispanics are disproportionately represented in the subprimehome refinance mortgage market. According to the executive summary of thereport, "Risk or Race? Racial Disparities and the Subprime RefinanceMarket," researchers were surprised to find that the disparity betweenwhites and African Americans and other minorities actually grows atupper-income levels and is greater for higher-income African Americanhomeowners than for lower-income white homeowners. High levels of subprimemortgage lending represent markets where borrowers pay unusually high costsfor credit. The subprime market provides loans to borrowers who do not meetthe credit standards for borrowers in the prime market. Most subprimeborrowers use the collateral in their homes for debt consolidation or otherconsumer credit purposes. According to the report, these patterns exist inall regions and cities of all sizes, raising concerns about the absence ofprime conventional mortgage loans in these geographic areas. The study used2000 data provided by the Federal Home Mortgage Disclosure Act.

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