A new report, "Paying More for The American Dream V," by a group of nonprofit housing advocacy organizations, finds evidence that banks may be engaging in redlining on refinance loans in communities of color.
The report studied seven cities across the country and found that in 2009, conventional refinance loans to homeowners in predominantly white neighborhoods increased by an average of 129%, while those in communities of color decreased by an average of 17%.
The housing advocacy groups that authored the report say that their findings may point to possible violations of the Community Reinvestment Act and consumer protection laws. "We cannot say what percentage of people who got denied really should have gotten loans," said Kevin Stein, associate director of the California Reinvestment Coalition. "But we know that the numbers are such that it raises a red flag that it should be looked into as to whether banks are doing all that they can do."
One of the major challenges to finding answers as to why people of color are being denied credit is that there is not enough data available, and the report calls on the federal government to implement the provision of the Dodd-Frank Act that would lead to an examination of loan level data.
