(2) Mortgages, Fannie Mae
Racial profiling in Home Mortgages.

(2) Mortgages, Fannie Mae
News Stories and Background

Mortgages (National):  Mortgage Lenders to Step Up Pursuit of Minorities (10/13/99)
          BOSTON, Oct. 13, 1999 (Reuters) - "The mortgage industry intends to pursue minorities with greater intensity as federal regulators turn up the heat to increase home ownership in underserved groups.

          "'We need to push into these underserved markets as much as we can,' said David Glenn, president and chief operating officer of Freddie Mac.  Glenn made his remarks at the annual convention of the U.S. Mortgage Banker Association of America (MBA) this week.

          "Freddie Mac, like its sister agency Fannie Mae, is a government-chartered corporation that buys mortgages from banks and packages them into securities for investors.

          "In September, Freddie Mac launched a new lending program, based on research done in collaboration with five black colleges, to bring more African-Americans into the market.

          "The call for greater efforts to broaden minority home ownership comes at a time when interest rates are pinching mortgages. A record $1.5 trillion mortgages were granted in 1998 in a refinancing boom fueled by the lowest interest rates in nearly three decades.

          "The federal government in the meantime has increased pressure on lenders to seek out minorities, as well as low-income groups and borrowers with poor credit histories.

          "Fannie Mae recently reached an agreement with the U.S. Department of Housing and Urban Development to commit half its business to low-and moderate-income borrowers. That means half the mortgages bought by Fannie Mae would be from those income brackets."  Disturbingly, neither Fannie Mae nor Freddie Mac have instituted programs to enable disadvantaged non-minorities (European Americans) to qualify for a home mortgage.  (Based on Reuters, via Builders On-Line 10/13/99, by Richard Leong)
[link http://builder.hw.net/news/1999/oct/13/mort13.htx ]

Mortgages (National):  Bad Credit by Minorities is Inherently Racist!  (10/05/99 - dead link)
          Like Fannie Mae, Freddie Mac is a federally chartered agency that provides loans and capital for home mortgages.

          "A Freddie Mac study concluding that far more black people have bad credit than white people, even when both have the same incomes, has come under attack in Congress, and some experts have questioned whether it oversimplifies a complex [racial] issue.

          "The study's [Freddie Mac] authors defended their conclusions but said they probably should have chosen language other than "bad credit" or "good credit" because they were trying to say whether people had trouble paying their bills.

          "The study of 12,000 Americans with incomes up to $75,000 received wide media coverage when it was released last month by Freddie Mac ..."

          "[The Freddie Mac study] is one part of a new program to teach minorities how to improve their credit, in partnership with the NAACP, the National Urban League and five historically black colleges, including Howard University."  [No such programs are offered by Freddie Mac for the benefit of "white" mortgage applicants.]

          "The [Freddie Mac] researchers, relying on data from credit reports, designated people as having "bad credit" if they had two bills overdue more than 30 days in the past two years, one bill more than 90 days late, a lien, a judgment or a bankruptcy. Their data showed that a higher percentage of African Americans with incomes of $65,000 to $75,000 had "bad credit" than whites with incomes below $25,000.

          U.S. Rep. Maxine Waters (D-Calif.), who strongly supports preferential credit and mortgage policies for designated minorites, said: "In other words we [minorities] are a credit risk because no matter how much money we make, we are also too stupid and undisciplined to know how to spend, plan and save."  (Washington Post 10/05/99 by D'Vera Cohn)
[former link **http://www.washingtonpost.com/wp-srv/WPlate/1999-10/05/089l-100599-idx.html]

Michigan (Detroit): Lenders offer advice on improving credit rating (04/20/99 - dead)
          "MT. CLEMENS -- Many African Americans say they are wary of discrimination among home mortgage lenders, but lenders at a mortgage fair sponsored by The Detroit News said a bigger problem is poor credit.

          "The fair at the Mt. Clemens Public Library was the fourth such event since Feb. 7, when The News published an in-depth story that found upper income blacks in Metro Detroit were denied home loans at nearly twice the rate of whites with similar incomes.

          "James Jefferson of Mt. Clemens said he attended the fair because his family is looking for their first house, he had heard stories about lending discrimination and wanted to head off problems before starting the process. "I wanted to make sure I knew what I needed to do before I got started," said Jefferson, who attended the fair with his son Jamelle, 7.

          "While lenders who spoke Monday evening offered advice on how to improve credit ratings and other problems, they also acknowledged that discrimination can be a problem. "There's discrimination in America in general," said Anthony Weekly, NBD vice-president. "About one in seven people that (ask for information) gets a loan, but usually the denial is for poor credit."  (Detroit News 04/20/99 by Jodi Upton)
[former link *http://www.detnews.com/1999/metro/9904/20/04200235.htm]

Utah (Salt Lake City):  Companies Help Minorities With Home Mortgages (05/01/99)
          "Premier and M&T Mortgage in Midvale this week agreed to work with the U.S. Department of Housing and Urban Development (HUD) to make an even deeper commitment to helping minorities buy homes.   Both companies already seek out low-income and minority customers, especially Latinos, through Spanish-speaking loan officers.

          "But they also now have signed formal agreements with HUD to conduct second reviews when loans are declined and to help those who don't qualify address the factors that led to loan denials.  "It basically requires lenders to go the extra mile," said Richard Bell, community representative at HUD in Salt Lake City. "It's sometimes hard to persuade them to agree to something like this."

          "The agreements do not require lenders to change their underwriting practices. Each applicant still must have a satisfactory credit history, manageable debt load, be employed, and in most cases, have some type of down payment.  About 20 Utah lenders have signed HUD agreements in the past two years, but Bell said Premier and M&T have perhaps taken the concept of marketing to minorities and helping them qualify for loans the furthest.  (The Salt Lake Tribune, Sat., 05/01/99, by Lesley Mitchell)
[link http://www.sltrib.com/1999/may/05011999/business/101982.htm ]

Wisconsin (Milwaukee): Racial Lending Gap Here Still Too Wide, But There's Hope (04/11/99)
          "The hubbub over the large racial gap in home loans here obscures a trend: a dramatic jump in the rate in which home seekers of all races are turned down for loans around the nation.  For some reason, Milwaukee has bucked this trend, and on both sides of the color line. (On the white side ... the mortgage rejection rate stood pat; on the [minority] side, it rose and then fell.) A consequence is that the nation's white home seekers now fare about as badly in obtaining loans as do Milwaukee's home seekers of color.

          "That parity was not exactly the objective of efforts to close the racial lending gap here. Rather, the goal was parity within Milwaukee. Nonetheless, the parity between Milwaukeeans of color and white Americans as a whole may oddly act as a tribute to those efforts, which may have kept the minority rejection rate from soaring here, as it did across the nation.

          "At first glance, the city's latest mortgage data was glum. Milwaukee still led the nation in racial disparity, the city comptroller noted in his annual report on the gap. Outsiders had exhorted the industry to practice fairness. The industry itself had vowed to tackle the problem.

          "Ironically, whites may have directly benefited from efforts to expand the number of minority people who receive home loans. After all, making the application process fairer could expand the pool of eligible whites as well as eligible minorities.  Hence, such efforts may help explain why the rejection rate has not soared among whites here as it has across the nation."   (Milwaukee Sentinel Journal 04/11/99)
[link http://www.jsonline.com/news/editorials/0411loans.asp ]

Wisconsin (Milwaukee): Did You Know Bad Credit is Racist!   (04/01/99 - dead)
          "The city comptroller's office released numbers showing non-whites in metropolitan Milwaukee were nearly three times as likely to be denied a mortgage or home improvement loan as whites with the same income."  The comptroller's report failed to mention bad credit histories.

          "Race doesn't come into factor, as far as we're concerned," said Kip Malmstadt of All-American Mortgage in Brookfield.

          "An account executive at a local bank said lenders were wary of accusations of bias because the applicant's race is included on many federal loan applications. "Everyone's heard about redlining lawsuits, we're very aware of that." The result: "You really don't look at race."

          "All of the experts interviewed stopped just short of saying most blacks seem to have inferior credit compared with whites. That's understandable.

          "It's a loaded question, one fraught with land mines. But my Tuesday column made the distinction between personal and institutional racism. An individual's personal feelings don't have to jibe with company policy to create a bias.  They still insisted, it's about credit.

          "An e-mail from a loan officer put it this way: "As president of a credit union who lends money to white, blacks, Hispanics and anyone else based not only on income, but more importantly on credit rating, I know that any survey which does not take credit rating into account is worthless."

          "Another caller explained, "In this industry, we look at three things, call them the three C's . . . credit, capacity (income) and character."

          "There was also this suggestion to explain why Milwaukee remains first in the gap between black and white. There is an awful lot of black poverty here. And that's not the mortgage loan industry's fault." (Milwaukee Journal Sentinel 04/01/99 by Eugene Kane)
[former link *http://www.jsonline.com/news/0401kane.asp] 

Fannie Mae:  Fannie Mae, NAACP Join in Minority Mortgage Plan (01/21/99 - dead link)
          "Fannie Mae Chairman Franklin Raines last week called for continued efforts by Fannie Mae and mortgage lenders to reach out to those 'at the margins' of home ownership.  Blacks, Hispanics and immigrants trying to buy homes would be a major focus of outreach, Raines said."  Raines made no mention of assistance for the millions of white families who have difficulty purchasing homes.

          "Raines, a former White House budget chief, noted that home ownership by white families is close to peak levels, now at 73 percent.  Only 45 percent of U.S. homeowners are minorities, suggesting an untapped market, he said."  [Raines ignores the fact that 'minorities' account for far less than 45 percent of total U.S. population.]

          "Fannie Mae, the largest source of financing for U.S. home mortgages, and the NAACP, the oldest U.S. civil rights organization, said they will join forces on Thursday to help more black families buy homes."  [Notably absent from the NAACP / Fannie Mae press release was any mention of assistance for the significantly larger number of non-minority families who have difficulty purchasing homes.]  (FoxNews, 01/21/99)
[former link **http://www.foxnews.com/js_index.sml?content=/news/wires2/0121/n_rt_0121_2.sml]

Home Loans:  If You Are A Minority, Traditional Credit Does NOT Apply  (03/22/99)
          "Residential mortgage lending is on the rise in San Antonio, exceeding the national growth rate for home-purchase loans, according to recently released government figures. But the statistics also reveal ongoing disparities in home mortgage lending in the San Antonio area along ethnic lines, particularly among upper-income borrowers.

          "The data, gathered by the Federal Financial Institutions Examination Council under the Home Mortgage Disclosure Act (HMDA), were presented in a report published by the Federal Reserve Bank of Dallas. Some 8,000 lending institutions nationwide are covered under HMDA -- including banks and nonbank lenders such as mortgage companies.

          "The figures encompass both conventional and government-insured loans and are broken down geographically by Metropolitan Statistical Areas (MSAs). The San Antonio MSA includes Bexar, Comal, Guadalupe and Wilson counties.  The data do not take into account borrowers' credit histories, assets or debt -- all of which play an important role in the mortgage application process, according to industry observers."  (San Antonio Business Journal, 03/22/99, by Sebastian Weiss)
[link http://www.amcity.com/sanantonio/stories/1999/03/22/story3.html ]

END (2) Mortgages, Fannie Mae