Study: C’ville Has #1 Race-Based Mortgage Gap

A study of mortgage rates throughout the country has revealed that Charlottesville has the nation’s biggest disparity between rates for blacks and whites, North Carolina’s News & Observer reports. The study (250k PDF) uses 2005 data available under the Home Mortgage Disclosure Act for metropolitan areas to compare mortgage rates for African American homeowners to those for white homeowners and found that 43% of all loans to blacks in the area were high cost, while only 11% of those to whites were. That makes blacks 388% more likely to have high cost loans than whites, and that’s using data across all income levels. We’re tied with Durham, N.C. The National Community Reinvestment Coalition writes in the study:

The Charlottesville, VA MSA also ranked the worst in home lending to low- to moderate-income (LMI) African-American borrowers. Of all loans to LMI African-American borrowers, 48.0% were high-cost, while only 15.2% of the loans received by LMI whites were high-cost. This means that LMI African-American borrowers were 3.16 times more likely to receive a high-cost loan than LMI white borrowers.

The report was presented today at the NAACP conference in Detroit.

42 thoughts on “Study: C’ville Has #1 Race-Based Mortgage Gap”

  1. You think maybe it has something to do with credit ratings? Typically loan rates are higher for those who have low scores. JC

  2. Well now THIS gives us something to be proud of. There are deep racist and classist problems here. I’m glad someone came out and just said it. I don’t know what to say or what a solution is.

  3. I don’t think this is a race issue. I mean Ch’ville has a 30% poverty level. That’s a fact. Trust me lenders don’t care if you are black or white. As long as the ratings are good, they’ll sign anybody up. They find reasons to lend money. JC

  4. I thought it might have been a difference in credit rating till I read ” the coalition found that the lending disparities did not disappear even among different races with similar creditworthiness.’

    That makes the problem even more disturbing.

  5. Data table three, in the study’s appendix, reports that middle to upper income (MUI) blacks are 397% to get a high cost loan in Charlottesville than MUI whites. We’re the third worst in the nation on this front, with Raleigh-Cary, NC at 413% and Durham at 450%. So even controlling for income level, we can see that the severe effect of race remains.

    I’m no financier. There may well be an explanation for this, other than racism, though I imagine that the NCRC would have offered it.

  6. Ouch!

    I’d been telling people for a while that Charlottesville tend to be really classist, but not really all that racist. My impression has been that we’re a town that treats people very differently once they have money. I’d thought this because of the large number of middle and upper class people of other races I’ve met. To make my point, I usually contrast us with coastal North Carolina, but now it appears we have them beat…

    Of course, this statistic is really a bit hard to explain, even in that light. Maybe we do indeed have a severe race problem here after all? Do they have any stats on what the economic status was of the people getting the loans? Regardless of the reasons, we should really commit to work on this issue as a community. No amount of racism (or classism) is ever acceptable, and this is yet another #1 rating I wish we didn’t have.

  7. “I don’t think this is a race issue. I mean Ch’ville has a 30% poverty level. That’s a fact.”

    Yes this is true and even that has racial implications. Do you think it is a coincidence that the poorest, least healthy, and least educated race just happens to be the one that was enslaved and had laws directed against them up until forty years ago.

    “Trust me lenders don’t care if you are black or white. As long as the ratings are good, they’ll sign anybody up. They find reasons to lend money. JC”

    This just isn’t true and this study is further proof of that. They may give you money but the question is at what cost (in terms of interest rates). You should also check out some of Douglas Massey’s writings on residential discrimination.

    I certainly don’t think every aspect of our lives are racially intertwined but I think we do ourselves a disservice when we act like these issues went away when we passed a few laws in the 1960s(many of which have been and are being eroded by conservatives on the Supreme Court).

  8. Looks like Cville is able to hide what is very visible in other areas.

    But tied with Durham, NC??

    For anyone who knows Durham that is frightening and should be a huge wake up call.

  9. Yea, it’s too big a story not to write/report. I’m sure you’ll see reports trickling out tommorrow, maybe a snarky Hook blog post today.
    Hopefully it will get more than a cursory treatment.

  10. If a delay of media acknowledgment takes a day or two because they’re doing original research on this story, that’s great. I’ve parroted the story here, as I generally do, but I think we’re all just left feeling sort of mystified as to what the impact of this is, how this problem has come to be, and how the decision is made to give people higher interest mortgages. Are high interest loans a well-known fact of life for blacks in the Charlottesville area? Are any loan officers willing to speak, under their name or anonymously, about how the decision-making process results in higher rates for blacks? Why is this particularly bad in Charlottesville, of all places? Has this gotten worse since 2005, given the slump in the housing market since then, or better?

    What we know now is just scratching the surface. Hopefully the local media can enlighten us.

  11. Yeah, I do know the Durham area (my Grandparents live not so far from there) so the comparison is indeed frightening. After all, the divisions there are very sharp. You have big beautiful southern style homes with big porches and columns, but which generally only white people live in, then you have these shanti towns which are just about exclusively black. Growing up, it was a while before I even saw the “other side” of coastal NC. It wasn’t until I went with my grandfather to bring some food to a sick worker from one of his farms that I realized that this other world existed. It was as I got older that my father told me stories from growing up about how his friend, who was black, had to wait outside of the restaurant while they brought him food. I’m still very conscious when I visit this area of how many older restaurants still have two entrances, one of which is now often used for pickups (but not for excluding from the restaurant anymore).

    There are many things that I am proud of regarding southern culture, but our treatment of blacks (and other cultures)isn’t one of them. I love our landscape, architecture, music, food, accent, and attitude. In fact, much of that same culture owes a debt of gratitude towards blacks who made so many of those contributions from mustard greens to Muddy Waters. I don’t believe I have to feel guilty about what was done (no more than people of Northern ancestry need feel guilty about child labor and the horrible treatment of workers in Northern factories); however, I do acknowledge this history and culture as my own, and that comes with a responsibility to do whatever I can to set things right for those still impacted by this tragic and horrific part of our history. Luckily, there’s also a parallel history of a small but vocal liberal minority in the South who’ve always worked to extend southern hospitality to all people, and I gladly cast my lot with them.

  12. Maybe the next police Task Force(tm) could be sending undercover cops with identical credit scores into mortgage companies to ask for loans. It worked in Chicago, IIRC. Chville is like a lot of old college towns, beach towns are like it too, small-town business people making bucks off “other people” without much oversight. The economic incentive is all to charge higher rates, despite what the JC Clark says above, as long as they can get away with it, as a group. We’re like a lot of old college towns and beach towns, except apparently worse.

    One disturbing thing about the Scottie Griffin situation was that C.H.S. for years, and maybe now, I don’t know, allowed low performing students to graduate almost literally illiterate, according to someone I know who substitute taught there. So Griffin comes and contracts with her friends for expensive educational materials to improve performance at the bottom. Well, Chville set itself up for the ripoff by years of discrimination.

    When I was a teenager the statistic we heard was that Chville had the highest rate of houses without indoor plumbing in the state. Maybe it was some left over calumny from the era of Vinegar Hill’s destruction. I wasn’t around for that.

    The housing segregation speaks for itself. But with all our zillions of restaurants and bars, you also won’t find a nightclub that’s mainly African American. I don’t know of any right now; maybe there are one or two, but nothing close to matching the 10,000 or so Af-Am’s in the city, not to mention the counties, and is not visibly offset by the black patronage of other clubs. Many small cities shut down black clubs and meeting places (ask Kevin Everson, UVa film prof., about Ohio), but it is pretty extreme here. It’s a vicious cycle to some extent, but I’ve also seen verbally vicious police activity directed against a rich/student-looking minority couple downtown.

    The most integrated neighborhoods are low-income traditionally white areas. Not Rugby Road, in other words.

  13. Look, I think it has been obvious that Cville has a huge race problem . . . and hypocritical to boot . . . I mean are we not supposed to be the People’s Republic of Charlottesville!?

    I mean come on, look at the Down Town Mall, look at all that white affluence, all the trust fund kids, and right next door is friendship court. What do you expect, no tension? No out bursts?

  14. Although I seriously doubt these random attacks by thuggish teenagers are the result of “tension” and are mere “outbursts,” assuming for a moment they are, where should society draw the line? Somewhere between a broken nose and Reginald Denny?

  15. All anyone has to do is take a ride down Main Street and check out who’s cleaning, sweeping, mowing, serving, cooking. It’s 1860 again.

  16. Jan, with all due respect, I’m not sure Charlottesville would have City Council members or a previous mayor who was black if this were 1860. Give us some credit.

  17. Falstaf,

    The kids sucker punching and throwing rocks are punks, plan and simple. But they are kids, kids do stupid things with their anger and aggression. Some more stupid than others, and they should be punished accordingly.

    But because a few of these kids do reckless violent things, does it mean that we shouldn’t try to alleviate the things that made them so angry in the first place . . . or even try to alleviate the social situations that give them such poor social integration skills?

  18. Wow, this is really disturbing and embarrasing. I hope the local lenders are truely horrified, embarrassed, and do something to address this. Well, I can always hope can’t I? And of course this doesn’t bode well for race issues in general. Man, and I’ve been deluding myself that things weren’t that bad here. Definitely a wake up call.

    As for the teen punks from the other story. I wouldn’t read any more into it than they’re just punks bullying people. Don’t make them any more important and blow things out of proportion. Of course there is a relashionship in general because there are big race issues in this town, but I think you don’t try to solve the bigger issue when fixing this one crime problem. THe police should do their job and catch these kids.

    Separately the city and other organizations need to take a serious look at this situation, look at themselves, look at the local banks, etc., and make some moves to try to address this. I would hope they’d be embarassed into action. And take note of those not embarasssed and you’ve spotted one of the problems right there. :-)

  19. Jan,

    Do you think all of the people on Main Street doing all of the cleaning, sweeping, mowing, serving, cooking are being forced to do it, or are they just trying to earn a living the best way they can? Only YOU control your own destiny and your state of mind and attitude are big keys to your success. No one can stop the wind, but you can always adjust your sails….JC

  20. Actually, aren’t most of the low-end service jobs latino now?

    FYI I just read the DP article which seems to say most of the preditory lending is coming from outside the community. Which I of course want to believe.

  21. I am sorry, that is true to some extent. But poverty is generational, that has been proven over and over again.

    Some winds are harder to adjust to than others . . . generational poverty being more like a Katrina Hurricane wind, than a nice light Atlantic light wind with a flat sea.

    We ignore generational poverty at our peril. Violent crime, disease, and decay are its consequence . . . yes, it affects rich people, where do think pandemics get started?

  22. And did you miss the point of the study? Certain groups have the cards REALLY stacked against them. I thought we existed in a meritocracy were everyone had a fare shot!?!

    Obviously some have their sail boats tied to an anchor while others have diesel engines.

  23. I conducted a recent City survey in Charlottesville and asked the following questions to the “impoverished” people in this town. Here is how the majority ansswered:

    Do you have running water? YES
    Do you have AC & Heat? YES
    Do You have cable tv? YES
    Do You have a roof over your head? YES
    Do You goes days on end without food or water? NO
    Are your refused emergency medical treatment? NO
    Are your children refused access to eductaion? NO

    Now, go ask people in places like India where there is one city with over 3 million people living outdoors with open sewers. How about Africa? Russia? When is the last time anyone in Charlottesville stood in line for 8 hours for a dry loaf of bread? If people from the worlds truly poor nations had the opportunity to live in some of our government funded housing here, they would kiss the ground. To them it would be a palace and they would think we were insane for complaining. JC

  24. Waldo,
    Regarding the Hook griping about the DP “stealing” this story from you and not crediting the blog. What are your thoughts?
    I don’t doubt the Progress got wind of the story when you wrote about it, but I also think it would be odd and unnecessary for the author to note, “which was first reported on a local blog…”
    Your take?

  25. I am a mortgage broker. I co-own a mortgage company. I have worked with 2 other mortgage companies in the past 5 years. I can tell you that I never heard of the sale of a mortgage rate that was racially motivated.

    It’s all driven by credit scores and income situations. And just because someone has great income does not mean that they will have the best credit scores. I’ve done many subprime deals for people of means who just had crappy credit. Medical professionals and prominent investment brokers with six figure incomes (all white by the way) came to me with really bad scores.

    That said, I know there are the scoundrels in the mortgage business. The worst one I know of was a non-white who preyed on anyone, regardless of color. He would get massive phone lists of local people with bad credit, call them and arm twist them into the most outrageous refinances. He made up to forty grand a month this way, mostly to finance a prodigious crack addiction. He would even make deals while in prison, calling from the yard with a cell phone, having his mother show up at closing to make sure the suckers signed the loan docs.

    He didn’t care about race. Im his own twisted way, he actually thought he was helping his clients. There were only two things that his victims shared: gullibility and naiveté.

  26. The Hook’s sniping that the Progress “stole” the story is mighty childish. What’s the paper supposed to do? NOT report the fact that Cville ranks last in this survey? Not doing so would be the real “crime.”

  27. Regarding the Hook griping about the DP “stealing” this story from you and not crediting the blog. What are your thoughts?

    I don’t doubt the Progress got wind of the story when you wrote about it, but I also think it would be odd and unnecessary for the author to note, “which was first reported on a local blog…”

    I think it is a good and necessary thing for media outlets to credit the source of their stories, and I encourage it. Both The Hook and C-Ville have become really good about crediting The Progress for breaking a story, while five years ago they might have just described it as “a daily newspaper.”

    That said, I don’t personally care at all if I’m credited for a story that I “discovered” that was already written up in another newspaper. If I’d performed oodles of original research and broke the story myself, that’d be one thing, but just linking to a newspaper article in another market? That’s not particularly stunning detective work on my part. :)

    I’ve long had three goals for 1. to provide a source of traffic to local media outlets websites so that they’ll put and keep their news online (this goal long ago having been made irrelevant) 2. to provide a forum for discussing the news of the day and 3. to provide a source of interview subjects and story ideas for local reporters. That third goal popped up at the time that it became clear that the first one had become unnecessary.

    Anyhow, I appreciate the spirit of what The Hook is writing, because I think the instinct to credit is an excellent one. But I don’t mind.

  28. Hmmm… The Daily Progress article definitely sheds a new light on this topic. It might be summarized this way:

    Predatory Lending to minorities Massive home sales = #1 racial disparity in rates

    In other words, it isn’t racism that got us this rating, but a large amount of homes sales and new residents. Since predatory lending to minorities is a national, not local, phenomena then I’m not sure it necessarily says anything useful concerning attitudes towards race locally. That Even so, that doensn’t mean we can’t do something about it locally, by discouraging these subprime predatory lenders, and better educating local minorities.

  29. JC Clark,

    You labor an obvious point. And, you know what else; an American homeless person has a higher standard of living than a first century Chinese Emperor! Man, it’s like they are kings of their own box, or underpass or something.

    Yes, the poor in this country would be rich in most of the countries in the world . . . and yes maybe that should get us thinking about where our foreign policy focus should really be.

    But besides that point. This is America, this is the land of meritocracy and the Bill of Rights, and this is the country that was founded in opposition Aristocracy! And we should do everything in our power to make sure that EVERYONE has at least an equal opportunity to try at success or to fail.

    Unfortunately large percentages of our population are at such a competitive disadvantage before they are even born, they don’t even know about owning the shoes, much less running the race. While a lot of us are born at the finish line, I included.

  30. Once you figure out that everything in life is one big hustle, you are ok with things. Anytime someone even says hello to me including family, I assume they are trying to get my money some way some how. Bottom line don’t buy stuff you can’t afford, wait and decide if you really need it first before you buy it, plan for rainy days, and realize everyone is trying to get over on you.

    I live by these rules, make a modest income, but I am debt free besides my mortgage. I drive used cars, I paid cash for,don’t have cable or high speed internet, and don’t use credit cards and we live pretty well in one of Charlottesvilles “nice neighborhoods” , because I ain’t competing with the Joneses…..and don’t give a damn what people think of my fifteen year old toyota parked in front.

    Bottom line if you get taken advantage of it is your own fault, whether you are black or white. Nobody holds a gun to anybodys head to buy a mortgage, car, or anything else.

  31. Once you figure out that everything in life is one big hustle, you are ok with things. Anytime someone even says hello to me including family, I assume they are trying to get my money some way some how.

    Wow, Chris, that’s so sad. What a terrible way to go through life.

  32. The bottom line is this: If people took advantage of the FREE education provided to them, they would know not to get screwed by predatory lendors who prey not on “minorities” but on UNEDUCATED people who have limited their own choices by their own actions.

    The reason that this is allowed to happen at all is because federal banking laws REQUIRE mortgage brokers to lend money to these people in the first place. It is affirmative action for a home purchase.

    They didn’t get in default because of the loan, they got in default because they thought they DESERVED a house on a low income. Too bad. Thats darwin at work to all you christian right haters out there.

    Those houses will be auctioned and someone who took advantage of the free education will hopefully have saved enough to buy one cheap.

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