Study: Subprime mortgages hit Lorain hardest
Steve Fogarty | The Chronicle-Telegram
A study done by a Cleveland-based fair housing group has found that blacks in Lorain County obtained costly subprime housing loans more than twice as often as whites and were denied mortgage loans far more often than whites or Hispanics.
The study also found that the greatest concentration of expensive subprime lending (42.6 percent of all loans) occurred in Lorain, followed by Sheffield Township (38.3 percent of all loans) and Sheffield Lake (37 percent of all loans).
These facts are just some of those contained in the “Lorain County Community Lending Factbook,” a report compiled from a study by The Housing Research & Advocacy Center, a Cleveland-based nonprofit fair housing organization that works to eliminate housing discrimination and provide choice for Northeast Ohioans. Based on 2006 mortgage lending data, the study was funded by grants from the U.S. Department of Housing and Urban Development.
African Americans in the county obtained more costly subprime loans 57.2 percent of the time, compared with 25.3 percent for whites and 36.4 percent for Hispanics. When they were turned down for mortgage loans, blacks were rejected most often, followed by Hispanics, whites and Asians.
Asians seeking mortgage loans were denied most often in Lorain, North Ridgeville and Elyria.
Data for the study were made available under the federal Home Mortgage Disclosure Act, which requires all mortgage lenders to make public certain home-loan application data including race, income, ethnicity and gender.
“These numbers by themselves do not prove racial discrimination,” said Jeffrey D. Dillman, executive director of the Housing Research & Advocacy Center in Cleveland. “A number of factors (including household income) go into determining whether loans are approved or denied and what interest rates are. The figures do not say anything bad about these cities, townships or the county itself. They say something really bad about mortgage lending in our region.”
The study raises serious questions about the number of mortgage lenders that are not complying with federal law in providing access to credit on a fair basis, added Dillman, who said the scenario for low-income and minority loan-seekers is made worse by the fact that a significant degree of regulation is done by people who either came from the mortgage lending business or plan to return to it. “In the last 10 years the regulation just hasn’t been there. It’s like the fox guarding the chicken coop.”
Fred Wright, president and CEO of the Lorain County Urban League, said the study’s findings come as no real surprise. “They validate the type of things we’ve been seeing and dealing with every day, and they validate the work we do. There’s still an overtone of racism that exists in this country.”
As one of the county’s only HUD-certified foreclosure counseling organizations, the Urban League helps people grappling with personal financial issues including mortgages.
“Because of predatory lending practices we get people who may not be as educated or well-versed in loans,” said Wright. “They see an opportunity to buy a home — and for many that’s their first opportunity to start to gain any wealth.
“But they may not know what a contract is saying,” Wright said. “They may miss the fine print. Lenders know who they are targeting.”
Ironically, the “chicken has come home to roost,” said Wright, referring to the current mortgage loan-foreclosure crisis. “Because the lending industry used these practices, it now finds itself in this situation with a tremendous amount of foreclosures. Nobody is going to win. They reaped the initial benefit, and now they’re seeing the bottom fall out.”
Lorain Mayor Tony Krasienko said that he is looking forward to improving the health of the city’s housing market with funds provided by the Foreclosure Act of 2008, which was spearheaded with the help of U.S. Sen. Sherrod Brown and U.S. Rep. Betty Sutton D-Copley Twp. “This act is going to bring substantial Community Development Block Grant money to Lorain to attack the problem of foreclosures and help the city with blighted housing,” Krasienko said.
The mayor spoke of targeting some of the hardest-hit areas of the city, where bank-owned houses are the end product of unscrupulous investors who put minimal money into them for sub prime loan buyers unable to qualify for conventional financing. “Then you have someone who is least likely to be able to make the substantial repairs hidden under a good coat of paint.”
The new federal legislation will help give the city time to develop a “well-thought-out revitalization plan” to acquire and demolish blighted homes and bank properties to be eventually replaced with a solid mix of housing for lower as well as upper income families.
The study’s findings point to the need for much more investigation by the federal government, banking regulators, the state of Ohio, and U.S. Justice Department, which is responsible for enforcement of fair lending laws, according to Dillman.
The entire study is available at the Housing Research & Advocacy Center Web site, www.thehousingcenter.org, or by calling (216) 361-9240.
Anyone who believes he or she may be encountering mortgage loan problems may call the center or the Lorain County Urban League’s director of housing, Mindy Wright, at (440) 323-3364, ext. 22.
Contact Steve Fogarty at 329-7146 or sfogarty@chroniclet.com.
| |
|
Filed by Steve Fogarty | The Chronicle-Telegram August 28th, 2008 in Top Stories. Popularity: 7% |
 Email this story
 Print this story
Read comments and discuss this story
Report an innappropriate comment
|
In order to comment, you must agree to our user agreement
and discussion guidelines.
You must be registered and logged in to post a comment. If you aren't already registered, click here. If you are registered, click here to log in.
Write a Comment