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About Subprime Loans Mortgages |
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Low income borrowers depend on subprime lenders, firms that specialize in higher-cost loans to people with blemished credit records.
A new study of the 331 U.S. metropolitan areas using 2003 federal data showed women were more likely to get subprime, rather than prime, loans in every one. Subprime loans were more prevalent among blacks in 98.5% of the metropolitan areas, while Hispanics were more apt to hold a subprime mortgage or refinance loan in nearly 89.1%, according to the National Community Reinvestment Coalition (NCRC), a non-profit focused on lending and community- development issues. In recent years the subprime mortgage industry has expanded faster than the prime sector, while home ownership rates for minorities have risen. Government and banking officials say that shows that subprime lenders have filled a legitimate need. But there has been a rise in predatory lending -- unaffordable loans borrowers have no realistic way to repay -- with dozens of states passing laws to curb it.
The NCRC study comes as Congress prepares for a possible debate on a bill to set national predatory lending standards. The subprime industry is also bracing for 2004 housing data including loan pricing.
The NCRC report generally found that as white/black segregation rose in neighborhoods, so did disparities. Of the 331 metropolitan areas, 22% had a 15-percentage- point or greater difference in subprime vs. prime lending to blacks. In Florence, S.C., prime lenders made 10.3% of their loans to blacks, subprime firms 54.5%. In St. Cloud, Minn., prime lenders made 0.3% of loans to blacks, subprime 1.1%.
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