Prime mortgage lending declined dramatically between 2006 and 2008, with low-income communities and minority neighborhoods the hardest hit, a report released Wednesday by the Empire Justice Center in Rochester shows.
“The very communities that are suffering the most from the foreclosure crisis—neighborhoods of color and low-income areas—are finding it increasingly hard to access mortgage credit,” said Barbara van Kerkhove, researcher/policy analyst at the center, in a statement.
“We are now seeing indications of red-lining in these neighborhoods, places where, until recently, there was reverse red-lining going on.”
Prime refinance lending in Rochester neighborhoods with at least 80 percent minority residents declined by 59 percent during the three-year period, the report found. The decline was 33 percent in neighborhoods where minorities are 50 to 79 percent of the population and 8 percent in neighborhoods with a minority population of less than 10 percent, the report says.
“This research confirms that homeowners in neighborhoods hit hardest by predatory lending and the foreclosure crisis are not getting refinance loans, one of the primary ways to get out of unaffordable loans,” Ruhi Maker, a senior attorney in the center’s Rochester office, said in the statement.
The center recommends expanding and modernizing the federal Community Reinvestment Act to promote responsible lending, updating the federal Home Mortgage Disclosure Act to include all data necessary to keep pace with the financial services industry and identify lending discrimination and pushing banks to repair neighborhoods hit hard by foreclosures by helping homeowners with their mortgage situations.
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