Report: Minorities a Prime Target of High-Risk Mortgages
Blacks and Hispanics with credit scores higher than 660 received subprime and option adjustable-rate mortgages three times as often as white borrowers in similar financial standing between 2004 and 2008, according to a new study from the Center for Responsible Lending.
The center studied the loan quality, borrower characteristics and performance of 27 million mortgages made over that five-year period. Lenders foreclosed on 6.4 percent of those loans with another 8.3 percent at "immediate, serious risk" as of February, researchers said.
The study showed foreclosures on 12.8 percent of loans with a hybrid or option-ARM feature -- defined as those that reset within five years, negative amortization or had interest-only payments - compared to 3.3 percent of standard or fixed-rate loans.
Lenders targeted these products to minority communities, according to the research. Roughly 25 percent of all black and Hispanic borrowers who took out a loan between 2004 and 2008 lost their home to foreclosure, compared to 12 percent of white borrowers.
The disparity exists even in the higher-income brackets.
Roughly 10 percent of blacks and 15 percent of Hispanics in higher-income brackets went through foreclosure, compared to 4.6 percent of whites who earned the same amount.
Read the full story at HousingWire.
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