HispanicBusiness

CHICAGO, Sept. 17 /PRNewswire/ -- Chicago and Los Angeles followed by Riverside County metro areas lead the nation in high-cost loans, which have become a troubling and persisting trend in communities around the country. These loans often affect people across race and community lines and have a disproportionate impact on African Americans and Latinos.

The Chicago-Naperville-Joliet metro area ranked highest in the country in total high-cost loans in 2006. Two California metro areas -- Los Angeles-Long Beach-Glendale and Riverside-San Bernardino-Ontario -- ranked second and third are followed in ranking order by Phoenix, Washington D.C., Atlanta, Houston, New York, Miami, and Tampa metro areas.

New data on high-cost loans was released Wednesday by the Federal Financial Institutions Examination Council, which promotes uniformity and consistency in the supervision of financial institutions. Chicago data for 2005 and 2006 has been analyzed by The Chicago Reporter, an award-winning bimonthly print and online newsmagazine that focuses on race and poverty issues and serves as a watchdog of government and other institutions.

"High-cost loans have become a national problem, and if you want to understand more about high-cost loans, the first place you should look is Chicago," said Alden Loury, senior editor of The Chicago Reporter. "For three years running, Chicago has led the nation in high-cost loans."

"High-cost" loans are identified in federal mortgage lending data as first-lien loans with interest rates at least three percentage points above the U.S. Treasury standard, which stood at 5.19 percent in mid-July for a 30-year mortgage. In the Chicago area, three out of every five loans to African Americans in 2006 were "high-cost" loans; two out of every five mortgages to Latinos were "high-cost" loans.

"The Chicago Reporter's detailed analysis of this data raises huge questions about the fairness of lending practices in the Chicago region. Over the coming months, my office will continue to take a hard look at this data and investigate whether the number of high cost loans, which generally equate to subprime loans, is attributable to questionable lending practices and whether these practices violate any Illinois fair lending or civil rights laws," said Illinois Attorney General Lisa Madigan.

The Reporter story reveals that the crisis of high-cost loans is having an enormous -- and unnecessary -- impact. According to Fannie Mae, the nation's largest source of financing for home mortgages, about half of the people who get high-cost loans could have qualified for prime-rate loans.

"The High Price of Home Ownership," a story in the current online edition of The Chicago Reporter, details the scope of a problem that is hitting residents of the Chicago area -- and hitting them hard. For this story, The Reporter analyzed 2006 mortgage lending totals for 50 of the nation's largest housing markets. This research was based on federal data released Wednesday for first-lien, conventional home purchase, home improvement and refinance loans on owner-occupied, one-to-four family properties. In addition, The Reporter analyzed more than 342,000 of these loans granted in the Chicago metro area during 2005. This research was based on a comprehensive set of 2005 federal data supplied by Investigative Reporters and Editors, Inc., a grassroots nonprofit organization dedicated to improving the quality of investigative reporting.