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African-American and Latino homeowners still are much more likely than whites to receive high-interest, sub-prime loans, according to a study being released today.
In a report based on 2002 data, the Association of Community Organizations for Reform Now found that 27.6 percent of refinancing loans made to African-Americans were sub-prime level, as were 17.6 percent of all refinancings to Latino homeowners. Low-income homeowners were 2.6 times more likely to receive a sub-prime loan than were upper-income homeowners.
In Tampa-St. Petersburg-Clearwater, African-Americans are 3.4 times more likely to receive a high-interest, sub-prime loan than are whites when refinancing, ACORN reported, while Latinos are 1.9 times more likely to receive a sub-prime loan.
Nearly 35 percent of all refinancing loans to African-Americans in the bay area were sub-prime level. That was was the 10th-highest rate out of 117 metro areas analyzed by ACORN.
Sub-prime loans are typically made to people with tarnished credit, but activists and regulators have cracked down in recent years on predatory lenders who market the high-interest loans to those with solid credit but limited financial resources.
ACORN cited Fannie Mae estimates that 30 percent to 50 percent of sub-prime loans are made to borrowers who could have qualified for prime loans. The sub-prime loans cost a typical homeowner $200,000 or more in payments over the life of a 30-year loan.
"We do not equate sub-prime with predatory lending, but the pool of sub-prime loans is the pool that predatory sharks swim in," said Brian Kettenring, head organizer of Florida ACORN.