Race Gap on Conventional Loans

Lisa Prevost, New York Times, January 30, 2014

African-American and Hispanic borrowers have been largely shut out of the conventional mortgage market, according to a new report from Zillow and the National Urban League. Citing 2012 loan data reported under the Home Mortgage Disclosure Act, along with results from a Zillow poll of 700 mortgage applicants in December, the analysis found that whites accounted for about 69 percent of all conventional mortgage applications. The share of applications filed by blacks was under 3 percent; Hispanics represented only 5 percent.

Black and Hispanic borrowers are far more likely to apply for low-down-payment loans insured by the Federal Housing Administration. About 57 percent of black applicants and 60 percent of Hispanic applicants applied for F.H.A. loans, compared with 30 percent of white applicants.

Access to financing that requires as little as 3.5 percent down is key for minority applicants, who on average have lower incomes and credit scores than whites, said Stan Humphries, Zillow’s chief economist. {snip}

And their conventional mortgage applications are more likely to be denied. One in four black applicants were turned down, compared with one in 10 white applicants, the report said.

{snip}

And the F.H.A. path can be costly. Although F.H.A.-backed loans offer the initial advantage of less money down, their mortgage insurance premiums are considerably higher than premiums on conventional loans.

Julia Gordon, the director of housing finance and policy at the Center for American Progress, a liberal research group, has concerns about what she calls “the dual housing market,” and says she believes the conventional market ought to be making lower-down-payment loans more widely available. “Like all the other separate-but-equal arrangements,” she said, “this is not good for consumers or the market or for taxpayers. We are seeing creditworthy people who should be able to get loans in the conventional market but can’t.”

Ongoing discussions in Washington about how to wind down Fannie Mae and Freddie Mac should include a commitment to ensure that lenders make credit available equitably, she added.

{snip}

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  • When the saying, “people who are ignorant of history are doomed to repeat it” was coined, it was thought the history that people needed to understand was relatively ancient.

    I did not know the previous two calendar decades were ancient history.

    Because…party like it’s 1992.

    • Alexandra1973

      Spot on. Deja vu here.

  • Mortgage insurance is that last thing anyone in their right mind wants to pay. Without a conventional (at least 20% down) mortgage, one must pay for mortgage insurance. Unlike mortgage interest, however, money spent on mortgage insurance is not tax-deductible. It also doesn’t benefit the borrower, but only covers the lender in case of default. In short, the borrower is paying the lender extra because without a 20% down-payment commitment, he or she doesn’t have as much skin in the game. It’s basically money down the toilet.

    • NeanderthalDNA

      Solution: Force lenders to lend to shady minorities. Worked with the housing bubble, eh?

      • It actually helped CAUSE the housing bubble. The availability of all those extra home loans resulted in more money chasing a relatively fixed amount of real-estate. The initial result of course was price inflation, and that developed into a full-blown speculative boom.

        • Jim Barlow

          You’re absolutely right. I know of individuals who bought houses for $600k (from inflation), and now cannot sell them for even $300k (due to deflation). So they owe the bank >$200k for nothing. They are saddled with that debt indefinitely.

          • JDInSanD

            A deal is a deal. They signed their name to the loan so they owe the full amount. Just about everything you buy is worth less as soon as you buy it. Buy the house you want to live in, not the one you want to sell.

          • AndrewInterrupted

            That used to be the culture of home buying. A house was a place that you lived. Now it’s a pork belly.

          • I remember one white dingbat on the news who was crying because she cashed out her retirement savings and sank everything into the housing bubble in the Phoenix area. She was going to “flip” the property and make a fortune. Instead she lost her shirt.

            This may have been intended to reduce the viewers to paroxysms of pity, but I laughed like a demented hyena on nitrous oxide. That was one of the funniest things I’d seen on TV in years.

          • AndrewInterrupted

            Plenty of wealthy people got their upside-down bail-outs.

            They exploited the short-sale fine print to get out from under those conditions.

            Of which the taxpayer got the final bill.

  • E_Pluribus_Pluribus

    “We are seeing creditworthy [minority] people who should be able to get loans in the conventional market but can’t.”

    ===

    There have been half-dozen or so studies investing the charge of discrimination in mortgage lending. The 1999 conclusion of two finance professors, one from the University of Illinois and at Wichita State University, is representative of the consensus of investigators:

    “[E]verything else being the same, minority applicants are probably less creditworthy, on average, than whites. Therefore, in the absence of fair lending laws, it is likely that minorities would be denied loans more frequently than whites and would pay higher interest rates and fees on approved loans . . . [F]air-lending laws have the perverse effect of forcing lenders to cross-subsidize minority borrowers from the higher profits they earn on white borrowers. Such cross-subsidization is inherently ‘unfair’ because it works as a tax on one group that is used as a subsidy for another.”

    SOURCE: “Why Is Mortgage Discrimination Illegal? A Fresh Look at the Mortgage Discrimination Debate,” Regulation [academic journal], December, 1999, Vol. 22 Issue 4, p28, by Stanley D. Longhofer Stanley D.; Stephen R. Peters.

    • And how will the crazy left react to that?

      Cast aspersions on the mechanisms that determines one’s credit worthiness and credit scores. Or even going so far as to say that there is no such thing as credit worthiness.

      Because…either concept has a disparate impact on NAMs.

  • Herman

    A question:
    Does anyone know the percentage of blacks with bad credit ratings?
    I have never seen the figure but I would imagine it is quite high.

    • It isn’t just necessarily “bad” credit, with things like court judgments and credit card defaults, but other debts enter into the picture. If you just sold your old, owned-outright Hyundai and financed a Lexus, the lender is going to take a close look at that, because you may well be over-extending yourself getting into a mortgage at that time. Other prior commitments on one’s income also enter into the picture, like child-support or servicing student loan debt. In other words, the loan officer at the bank wants to see how much of your monthly after-tax income is really disposable.

      • Katherine McChesney

        There have been internet articles in the past that hinted that minorities could use their ebt, SS disability and welfare as collateral for home loans. I believe obama suggested this a couple of years ago. This administration will eventually force banks to give unsecured loans to blacks and latinos.

        • Of course when the Afritards squander their Social Security in advance on crazy home loans, they’ll run to the feds screaming “Poor little black me! Hep me, Massa! Hep me!” The feds of course will immediately put the nation (us) farther into debt borrowing money from China to help insulate them from the consequences of their own greed and stupidity.

          • AndrewInterrupted

            The Chinese are such honorable people, when we finish collapsing–I’m sure they will bail us out.

          • I imagine they’ll be demanding higher and higher yields on T-bills.

    • JohnEngelman

      When blacks and whites earn the same incomes whites are more likely to save money. Blacks are more likely to go into debt.

      I think this is due to the different number of generations that separate each race from the paleolithic era. Farmers need to defer gratification. No matter how hungry they get, they cannot eat their seed corn, or butcher all of their farm animals.

      Stone age hunters had no incentive to discipline themselves this way. What they did not eat from a hunt decayed.

      • Jim Barlow

        Your “hunter vs farmer” is a great hypothesis to explain how different evolutionary pressures shaped the behavior of our different races.

        • ShermanTMcCoy

          It is a good analogy. I was wondering where “hunter” vs “farmer” vs “loafer” come in.

        • JohnEngelman

          The innate differences between blacks and whites can be explained by different population pressures lasting for at least the past ten thousand years.

          Civilization civilizes, but it cannot happen in one or two generations. The process takes at least a thousand years of evolution, usually longer.

          That is why the results of the civil rights legislation passed during the 1960’s have been disappointing.

          Under an urban civilization those with criminal inclinations are removed from the gene pool by capital punishment and long prison sentences that prevent them from procreating. Intelligent men are more prosperous than unintelligent men, so they have more descendants.

      • Alexandra1973

        Yep, they have to get those rims for their car…and when it comes time to pay for their mortgage…”Whaddya mean I gotta pay! That’s rayciss!” Ad nauseum.

  • MekongDelta69

    You see?! You see?!

    Even green cash is ‘racist’…

    • Erasmus

      End the institutional racism of money. Start printing black and brown Obama dollars.

      • MekongDelta69

        NoBama Bucks gives rise to the new phrase in the ghetto:
        “Holla 4 ur Dolla”

      • I printed some brown Obama dollars this morning after a nice, long “sit-down” on the john.

    • WR_the_realist

      Your dollars bills have the portrait of an evil slaveholder on them.

  • Druid

    Race Gap on Conventional Loans
    _______________________
    Interestig that no one wants to loan money to people who have no money, no colateral and no job and no prospects of getting any of them. Yep, a clear case of racism.

    • 48224

      One of the reasons blacks have no money is because they have not equity in a home. The family home is generally a very good investment….unless you are black. Having grown up in Detroit and seeing every white neighborhood turn black, be destroyed, of course watching property values crash, blacks can never build any equity in a home. They move to a mostly white neighborhood, pay top dollar, say 100k for example. Ten years later the neighborhood would be nearly all black and the house they paid 100k for is now worth 20k….and they still likely owe 80-90k after 10 years of payments because all the interest is front loaded. So, they lose money on the deal. I saw this happen time and again in Detroit. Someone from AmRe should write a piece on this. I have never seen this issue written about but a race realist.

      • AndrewInterrupted

        You almost wrote a piece on it yourself…..<;-) Well said. Looking forward to your next chapter.

        You described a self-destructing ‘perpetual-motion-machine’. In the fuel cell development industry, such systems are called ‘self-poisoning’.

        It’s a verifiable example of why groups should be allowed to protect themselves and their property from diversity and multiculturalism, the way the residents of NYC did.

  • Spartacus

    This is obviously caused by racism. People wouldn’t even see race if they wouldn’t be indoctrinated into it…

    • NeanderthalDNA

      “What that hell?!?!?!?”

      Our ancestors understood the obvious far better than the libtard…

      • IstvanIN

        Our ancestors understood what should be studied and what should be married off to our daughters.

        • And what should simply be ridiculed.

        • Alexandra1973

          Of course the wisdom of that bygone era is just considered to be “ignorance” by those who THINK they are “enlightened.”

          I have news for that bunch: Truth does not change, and I don’t care WHAT century it is!

  • bigone4u

    Bankers have a moral and legal obligation to keep their depositors’ money safe by making only sound loans. It looks like they’re doing their job, so what’s the problem? Only a fool or an idiot sees racism in sound banking practices, but we have our share of fools and idiots in America, right?

    • Libtards regard all money as theirs to employ in their social engineering projects: your money, my money, bank deposits, corporate capital investment, tax money, money the feds borrow from China, etc. To their way of thinking, all of it is THEIR money to waste feeding their moral smugness, and money that any of us are accidentally permitted to keep for our own purposes is “unfair”.

      • bigone4u

        I’ve made exactly the same point with a friend of mine, an older white male who foolishly cannot understand what is going on in America. He is the only white in a Mexican/black neighborhood and I’ve told him that he’s going to be killed or maimed unless he moves. No reaction. I’ve told him that the government is going to reduce his SS and confiscate part of his 401(b). No reaction. I’ve told him that the local Mexicans see him as someone wealthy (maybe $300K in his pension accounts), someone to be looted and then kicked to the curb. No reaction. He keeps living his life as if it’s 1950s America and the rule of law still applies. Geez, even Obama admits openly that he wants to spread the wealth around, by my friend doesn’t get it. He keeps saying he lived responsibly, deprived himself and saved, and now the government owes him his SS and Medicare and his pension money. When his awakening comes, it will be too late.

        • Jim Barlow

          Your friend sounds like too much of an idealist.

          • ShermanTMcCoy

            Well, it starts with “id” and ends with a “t” but idealist isn’t the word of which I was thinking.

        • MBlanc46

          Poor guy, living in the America that used to be. I remember it and thought I’d live out my days in it, but I didn’t die young. I hope your friend lucks out and dies in bed of old age.

        • AndrewInterrupted

          There are a large number of white males in their 60s in this country with their heads in the sand like that. They are living on another planet.

          I think they see it more as a glide slope proposition–that they will die of old age before it happens.

          • silviosilver

            Memories are very powerful and have great influence on what we “see” (notice). Also, among people in that age group whites greatly predominate, so it’s easier for older whites to not notice the monumental demographic change that has occurred among younger generations.

          • AndrewInterrupted

            Yes, and unfortunately, they are in a better position to help: more free time, more disposable income, etc. Yet they sit-and-spin.

      • AndrewInterrupted

        Yes, once both sides, the Demo-rats and the Repugs, realize that any bad behavior will get a bail-out in the end, there is no depth they won’t sink to.

    • WR_the_realist

      Most of our fools and idiots seem to be in an elected office.

    • MBlanc46

      Sound policies no longer matters. Racial outcomes are what count.

  • De Doc

    Un-friggin’-believable! We just went through a terrible economic downturn in no small part due to mortgages tossed at minorities who had little means to pay them back. And now they want to repeat history? Beyond ludicrous!

    • It has been said before that the height of insanity is repeating a behavior while expecting a different result.

  • WR_the_realist

    So less than six years after the Great Mortgage Crisis we must make it even easier for blacks and Hispanics to buy houses they can’t afford, many of whom will then wind up in foreclosure, which will be blamed on whitey.

    Needless to say, credit is available equitably. It’s not whitey’s fault that blacks and Hispanics have such lousy credit scores.

    • Jim Barlow

      We also need to lower down payments for them?

      It’s not our fault they spend their money on air jordans, malt liquor, and kool cigarettes instead of saving for a home.

      • WR_the_realist

        I remember when everybody had to put 20% down on a mortgage, period. That made a lot more sense. Prices had to drop 20% before banks were at risk from inadequately collateralized loans. So massive bank failures from a down turn in the real estate market were much less likely then. Also, the unavailability of low down payment loans means that there aren’t a lot of people bidding prices up to silly high levels. So houses actually aren’t any less affordable overall. You didn’t have middle class people thinking they could afford $800,000 houses.

        • “You didn’t have middle class people thinking they could $800,000 houses.”

          I never did understand the “McMansion” phenomenon. Just what is the point of a couple getting into a mortgage like that, just so they have to work 100 hours a week between them and pay a Greaserita maid to clean the place because it’s too large and they’re too tired out from the office at the end of each week?

  • Luca

    When banks exercise common sense in lending practices Libs call that Discrimination.

    When banks go out of their way to loan to minorities Libs call that Predatory Lending.

    It’s better to keep your money and be called names since you can’t win either way.

    • itdoesnotmatter

      It’s better to keep your money and be called names since you can’t win either way.

      Exactly. Damned it you do, damned if you don’t. The classic double bind, dynamically typical of dealings with schizophrenia, a condition our government seems to have evolved to an art form.
      Luca, your comments seem to cut to the chase with resonant lucidity. Thank you.

  • negrolocaust

    Published on Feb 3, 2014

    In Austin, Texas over the weekend a
    video was taken of a group of black thugs attacking three basically
    defenseless white hippies. The attack occurred yards from the Austin
    Police station. The police, of course, did not intervene. But, as we
    know from experience, the police are not here to protect us from vicious
    street thugs. As a rash of attacks aimed at random white people
    continues, the powers that be continue to manipulate the media to cover
    the truth.

    • negrolocaust

      watch the vid on alex jones channel youtube

      • Juan Outtamany

        Sometimes a hippie needs a ‘wake up’. Bet they don’t believe in rainbow utopia anymore.

  • MBlanc46

    Being qualified for anything will no longer count. The entire society will operate on racial quotas.

    • FransSusan

      Seems like it already does.

      • MBlanc46

        Getting closer every day.

  • J.P.

    Hmmm, no comments allowed on the New York Times site. Even libs can see the truth on this one.

  • WR_the_realist

    There have long been mandates on towns that they provide a certain amount of low income housing. The smart, savvy towns, usually occupied by the well to do, build apartments for the elderly. The working class towns get stuck with the low income diversity.

    • itdoesnotmatter

      Housing for “the elderly” is a downright lie.
      It’s for redistribution of sec8 housing lowlifes from the inner cities. What elderly couple would want to live among those people?

      • AndrewInterrupted

        Another Obama/Holder HUD scam. The HUD scams are going to be the main theme for O’Bummer and his Executive Order pen.

  • Garrett Brown

    I would stop loaning to people who never pay me back as well. But I guess…

    “DAS RACIS!”

  • LIBERTYSINCURSION

    I guess one world wide financial disaster due to the black racist, White guilt filled liberals and even conservative inc’s insistence, that loans be given to black and hispanic people. Simply due to the color of their skin, is apparently not enough for these people. This is another example of what I call black privilege, and no worthless incapable black “person” dares leave home with out it. I can’t put into words just how much I truly despise these nation killing parasites. On second thought, maybe I can, but probably shouldn’t, given the fact that I respect this website and Jared Taylor too much to go there. The nerve they have to speak about so called White privilege. While constantly demanding and receiving special exceptions. That they, not be held to the same standards of everyone else for no other reason than the color of their flesh. That Is Black Privilege! The Only Real Racial Privilege In The Entire United States Of America!

    • FransSusan

      Well said!

  • itdoesnotmatter

    Reading over the policy of new “mixed use, affordable housing” being built here, one comes across this menacing concept: HUD/govt claims the right to seize single family dwellings on large lots, label them “blight,” and construct high density housing on the lot.
    Single family units will be outlawed if this govt has its way.

  • Who Me?

    The “racial gap on conventional loans” wouldn’t have anything to do with the differences in the total way of life between the races, would it? Whites start in childhood, going to school and getting an education. They use that education to secure a job and then they save for a home. When they have enough, they put normally 20% down and buy an appropriate-sized home for their family and lifestyle. Then they STAY employed and PAY their mortgage. Moving upward in housing as income allows and need dictates. Blacks, in general, do none of these things. When both families apply for a conventional loan, guess who the bank takes a chance on–left to their own judgement.
    Now, of course, none of that applies anymore. If you are a minority, you get the loan with no money down, and no demonstrable ability to even make the monthly mortgage payments.
    Banks have no real choice in this matter, They HAVE to make these unsecured loans. Then when these loans are naturally defaulted on they have to raise the prices on their regular home loans, pricing some Whites out of traditional housing loans, and causing other whites to default on their loans as well. Then the bank gets a bailout, raising taxes, leaving even more Whites with less disposable income, and so the bubble grows.
    As usual, this impacts the White working class far more than anyone else. This same White middle class can’t get the low-to-no down payment loans that minorities can. Naturally, reality has nothing to do with what the minorities claim, Racism is the sole and eternal cause of their inability to secure home ownership and it all YT’s fault.

  • Massif1

    Do blacks and hispanics actually care about their credit ratings? I would love to see the average credit ratings based on race, but that will probably won’t happen. Racists.

  • She might have missed that, but the 1990s high-tech stock bubble should have been fresh in her memory.

  • 3jwells

    Isn’t this what created the “housing bubble’ in the beginning? Lending people money with no creditworthiness?

  • frances

    You have to understand, that this,
    a continuance of Freddie/fannie insanity,
    is just one of the myriad of ways,
    that the regime is robbing taxpayers and destroying the country.

    they are probably amazed every day that they have succeeded so grandly and easily

    what a soft, white culture our forefathers would think of us