There were patterns of racial disparities in mortgage originations in the St. Louis, Milwaukee and Minneapolis metropolitan statistical areas, according to the National Community Reinvestment Coalition.
The NCRC's report found extensive imbalances when comparing neighborhoods based on race and income across all three areas, with a higher concentration of loans in majority white, higher-income locales. Consequently, the organization called for an expansion of the Community Reinvestment Act and its enforcement and for stronger affordable housing goals in the secondary market.
In the Milwaukee metropolitan area, while African-Americans represent 16% of the population they only received 4% of mortgage loans. Similarly, African-Americans make up 18% of the population in the St. Louis metropolitan area but only had 4% of all home loans made there.
Both of these areas were also noted for high levels of segregation, with African-American families concentrating in neighborhoods where there was little, if any, lending activity.
NCRC researchers cited studies that showed it is difficult for any borrower, regardless of race, to secure a loan in "high poverty, highly segregated" neighborhoods. Moreover, the study's authors said that such disparities in lending can further entrench segregation and geographical divides by race.
For example in the Minneapolis metropolitan area, the researchers said it "has developed a vibrant economy while increasing its racial and ethnic diversity" and "is not hyper-segregated." Nevertheless, lending data suggested disparities based on race here as well, though the variable that best predicted home loan activity was median family income of the neighborhood.
African-Americans in the Minneapolis area represent 7% of the population, but only received 2% of all mortgage loans. And Hispanic borrowers only had 2% of all loans there, despite making up 5% of the population.
"This report clearly shows the lack of mortgage lending in low- and moderate-income neighborhoods and predominantly minority neighborhoods," NCRC President and Chief Executive John Taylor said in a news release. "Without access to responsible mortgage credit and the opportunity to become a homeowner, the ability for working people to build wealth is severely curtailed."
