Who received high-cost mortgage loans in 2007?
A Chicago Reporter analysis of new mortgage lending data shows familiar racial and gender disparities among the individuals who received high-cost mortgage loans in 2007.
By volume, white men received more high-cost loans than any other race-gender group. However, African Americans and Latinos were more likely to receive high-cost loans than their white and Asian counterparts, according to a Reporter analysis of more than 10 million mortgage loans granted in 2007. Even the wealthiest black borrowers were more likely to get a high-cost loan than the poorest Asian, Latino and white borrowers. And women, particularly those earning $60,000 or more, were more likely than men at the same income levels to get high-cost mortgages.
Fewer mortgages were high-cost loans in 2007 than in 2006. But wide racial disparities persisted in most American metropolitan areas.
As required by the Home Mortgage Disclosure Act, lending institutions provide information from millions of mortgage loan applications to the federal government each year including details about the loan and the borrower. High-cost mortgages are first-lien loans carrying interest rates at least three percentage points above the rate of comparable-maturity U.S. Treasury securities at the time the loan application was made. For second-lien loans, high-cost loans are those at least five percentage points above the U.S. Treasury standard.
According to the Reporter’s analysis of 2007 mortgage lending data [download an Excel data file]:
–¢ More than 34 percent of African American borrowers received high-cost loans, the highest percentage of any racial group. At more than 11 percent, Asian borrowers were the least likely to get high-cost loans. [See “Race” tab in an Excel file]
–¢ African Americans earning more than $300,000 were more likely to get high-cost loans than Asian, Latino and white borrowers earning less than $40,000. [See “RaceIncome” tab in an Excel file]
–¢ By volume, middle-class white borrowers received more high-cost mortgages than all black and Latino borrowers combined. White borrowers earning at least $60,000 annually accounted for nearly 574,000 high-cost loans compared with the nearly 558,000 combined total received by all black and Latino borrowers. [See “RaceIncome” tab in an Excel file]
–¢ Men and women received high-cost loans at similar rates among borrowers earning less than $60,000 annually. But wealthier women were more likely than their male counterparts to receive high-cost loans. [See “GenderIncome” tab in an Excel file]
–¢ About 16.7 percent of women earning at least $300,000 received a high-cost loan compared with 15.8 percent of men earning between $80,000 and $99,999. [See “GenderIncome” tab in an Excel file]
–¢ More than 35 percent of mortgages to black women were high-cost loans, the highest percentage of any race-gender category. [See “RacGenInc” tab in an Excel file]
–¢ Among big city lending markets, the Detroit metro area had the highest rates of high-cost loans. More than 32 percent of residential home mortgages there were high-cost loans. [See “MSApct” tab in an Excel file]
–¢ For the fourth year in a row, the Chicago metro area led the nation in high-cost loans by volume with 60,568. [See “MSAvolume” tab in an Excel file]
–¢ The widest gap in percentages of high-cost loans to African American and white borrowers occurred in the Milwaukee metropolitan area where black borrowers were nearly four times more likely to get high-cost mortgages than their white counterparts. [See “BlacktoWhite” tab in an Excel file]
–¢ The Milwaukee metro area also had the widest gap in percentages of high-cost loans between men and women among big city lending markets. About 23 percent of women in the Milwaukee metro area received high-cost mortgages compared with 15 percent of men. [See “WomentoMen” tab in an Excel file]
–¢ The Boulder, Colo. metro area was home to the widest gap in percentages of high-cost loans to Latino and white borrowers. In Boulder, Latino borrowers were three-and-a-half times more likely to get high-cost mortgages than white borrowers. [See “LatinotoWhite” tab in an Excel file]