Senior citizens, working-class people and African-American families across
"What we saw was wealth stripped from people who had built it in their homes," said
"We didn't have the property appreciation, but we did have the availability of mortgage capital, and a lot of that was subprime."
In the years since the national housing market collapsed in 2008, PCRG found that the distribution of mortgage capital flowing into
Majority white and affluent neighborhoods have captured the lion's share of new mortgage money, while neighborhoods that are mostly minority or with low- or moderate-income residents have been left behind.
For instance, half of the total
At the other end of the spectrum, the 46 neighborhoods that received the least amount of money captured only 10 percent of all residential mortgage dollars in 2012. Homewood West and Chateau received no mortgage loans at all.
Other neighborhoods that ranked near the bottom in terms of total mortgage loan dollars captured and in the number and dollar amount of loans per unit of housing included
To put things in perspective, all of
Interestingly enough, while the number of mortgages have declined in all census tracts, the total dollar amounts of the loans have increased.
The mortgage lending study covers eight years from 2005 to 2012 and looks at all residential mortgage lending data for
The PCRG is a watchdog organization that holds the banking industry accountable for its lending practices, especially in low-income communities. The organization has examined mortgage lending trends annually for 20 years looking at a respective year that's gone by, but this year the researchers wanted to compare data for the years prior to the mortgage meltdown to see what the lending trends in
"The recovery for majority-white and affluent neighborhoods started in 2009," said
Another trend the PCRG found, which could be related to the fact that the economic crisis hit much harder in nonwhite and lower-income communities, is that mortgage loan denial rates for mortgages originating in minority and low- and moderate-income neighborhoods were twice as high or more than those originated in white and higher income census tracts.
The mortgage denial rate for all of
Ms. Rue said the disparities in denial rates actually got worse during the recovery from the mortgage crisis.
"As we started to recover and the mortgage lending numbers started coming up, the difference in denial rates got bigger," Ms. Rue said. "So in 2012, that disparity in denial rates was as high as it's ever been since the study started."
Some reasons for the growing gap could be that the economic situation for a lot of people living in low- and moderate-income and minority communities is worse. Credit is harder to secure, and debt-to-income requirements are higher.
Howard "Hoddy" Hanna, president and CEO of
He said the difficulty many working-class borrowers face now stems from the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which requires lenders to more closely scrutinize borrowers' financial information to make sure they can afford a mortgage.
One of the provisions prohibits banks from approving mortgages for anyone whose debt-to-income ratio is higher than 43 percent. Banks used to be able to approve borrowers with a ratio of around 50 percent or even higher. Credit score requirements also have gone from around 570-580 to around 640-650.
"The provisions in the Act makes it very difficult for lenders to lend money to low- and moderate-income borrowers,"
"It hurts moderate-income borrowers because credit scores are not there and down payments are not there,"
"With most folks, at the end of the day their largest asset is the equity in their house. We are taking a whole generation of qualified people and holding them back now and discounting them from the American Dream and the opportunity to build equity in a house for the future."
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