A new report by the National Community Reinvestment Coalition reveals high-cost, foreclosure-prone mortgage loans are disproportionately made to minority borrowers, regardless of their income level. The NCRC study, “Income Is No Shield Against Racial Difference in Lending II,” examined subprime and near-prime (Alt-A) loans from more than 219 metropolitan areas in 2006, the most recent public data available.
According to NCRC, foreclosures have been concentrated in African-American and Latino communities where predatory and problematic loans are most prevalent. John Taylor, NCRC’s president and CEO, said, “The data reminds us that the current housing crisis was overwhelmingly the result of the explosion of bad loan products in financially vulnerable communities.”

NCRC said minority homeowners are paying more for their mortgages, even as their income levels increase. Based on 2006 data, middle- and upper-income (MUI) African-Americans were twice as likely to receive high-cost loans as MUI whites in 155, or 71.4 percent, of the metropolitan areas evaluated. Compared to their white counterparts, MUI Hispanics were twice as likely to fall victim to subprime-rate loans in 45 of the 219 metro areas in the study.
The metropolitan regions with the highest overall racial disparities included (in ranked order):
1. Milwaukee-Waukesha-West Allis, Wisconsin
2. Minneapolis-St. Paul-Bloomington, Minnesota
3. Huntsville, Alabama
4. Ann Arbor, Michigan
5. Hartford-West Hartford-East Hartford, Connecticut
NCRC said that the prevalence of subprime lending in minority communities suggests that some level of discriminatory behavior continues in the mortgage finance market. The organization said that evidence of such behavior has been put forth by other studies conducted by the NCRC, the Center for Responsible Lending, and the Federal Reserve.
As DSNews.com reported in July, a recent study released by ComplianceTech corroborates the idea that upper-income borrowers had the highest share of subprime loans in 2006. ComplianceTech contends, however, that the majority of subprime loans were made to non-Hispanic whites in areas with a minority population of less than 30 percent.
The full report, “Income Is No Shield Against Racial Difference in Lending II”, can be found at www.ncrc.org.