Author Archive for Waldo Jaquith

Brian McNeill writes in the Progress today about the alarming new study that black Charlottesville-area homeowners are substantially more likely to have a high-cost mortgage than whites. Unfortunately, what McNeill found is mostly stonewalling. The Mortgage Bankers Association says that this is “oversimplifying a complex issue,” which may well be true, but they fail to provide a more complex description that would explain things. Charlottesville-area lenders wouldn’t talk to McNeill. And the Virginia Mortgage Lenders Association both says she doesn’t know and guesses the problem comes from out-of-state firms, which just sounds like wishful thinking. The only particularly useful answer comes from the Virginia Poverty Law Center, which points out that subprime lenders “market themselves to black communities by advertising on hip-hop radio stations and urban-focused television stations,” though even that falls short without knowing whether that’s taking place in Charlottesville and, if so, if it’s happening at a rate greater than anywhere else in the country.

It’s not McNeill’s fault that mortgage brokers aren’t eager to talk about racial disparity in their lending, of course, but it remains that a symptom has been identified, but we just can’t locate its cause.

Local mortgage broker Michael Martin provided a useful comment on the topic, writing in part:

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.

All of which, I have to say, reminds me very much of the “We Buy Houses” scams.

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.