Empire Justice report details how the increase in mortgage lending between 2011 and 2013 did little to help communities of color participate more fully in the American Dream.
Rochester, NY – July 28, 2015 – (RealEstateRama) — Today, at a community forum at the Telesca Center for Justice, Empire Justice Center released its most recent report, “The River Runs Dry II: The Persistent Mortgage Drought in Rochester’s Communities of Color,” analyzing home purchase lending in the Rochester metro area and the City of Rochester.
“We are happy to be sharing our findings with the community today. It’s important that we do these analyses to assess how well our community is doing to ensure that all families have fair access to homeownership, a big part of the American Dream and economic opportunity,” stated Ruhi Maker, a senior attorney.
Some of the key findings are:
Home purchase lending for the Rochester metro area and suburban Monroe County experienced a significant recovery since its lowest point in 2011, and was higher in 2013 than any year since 2010. Compared to 2010, lending in 2013 was 13% higher in the metro area and 17% higher in suburban Monroe County. For the City of Rochester, however, lending recovered only slightly between 2011 and 2013 and was still 16% lower than it was in 2010.
While the share of home purchase loans received by white borrowers consistently increased between 2010 and 2013 and remained somewhat consistent for Latino and Asian borrowers, the share received by African American borrowers continued to decline. As of 2013, African Americans received only 3.2% of the home purchase loans made in the Rochester Metropolitan Statistical Area, less than in 2011 (3.7%) or 2010 (4.5%).
Middle income African American applicants were, on average, denied home purchase loans 2.5 times more often than middle income whites, and upper income African Americans were denied twice as often as upper income whites.
Denial rates for neighborhoods of color grew as lending recovered between 2011 and 2013, while rates remained relatively flat for other neighborhoods. The denial rate for 80-100% non-white neighborhoods grew from 14% in 2011 to 27.8% in 2013, so that by 2013, applicants in these neighborhoods were denied 3.3 times more often than applicants in neighborhoods with less than 10% non-white residents.
“I am amazed at how the 1935 Home Owners’ Loan Corporation neighborhood rating map so closely matches the pattern of high denial rates and lack of lending we see in Rochester in 2013. It sadly illustrates the persistence of redlining in this community, and that we need to confront the issue head-on,” noted Barbara Van Kerkhove, the report’s primary author, as she reflected on a comparison made in the report.
The report’s specific recommendations include:
Vigorous enforcement of federal fair lending laws.
Modernizing the Community Reinvestment Act (CRA) and its regulations to better serve people and communities of color. This includes changing the law to obligate covered institutions to serve people and communities of color, as well as enhancing the regulations to cover other financial services providers. Also, there is a need to expand the definition of assessment area to include geographies where institutions have an appreciable market share.
The use of alternative credit scoring models to increase the chance that applicants with “thin files”—limited credit histories or not enough credit accounts—will be approved for loans.
Requiring that mortgage loan originators and realtors participate in anti-racism and cultural competency training to improve racial justice and address implicit bias with respect to purchasing a home and obtaining a mortgage.
“What’s the definition of insanity? Doing the same thing and expecting different results. We need to try something we haven’t tried before, something dramatically different. Only then will our community be able to address these persistent disparities,” said Van Kerkhove.
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ABOUT EMPIRE JUSTICE CENTER: Empire Justice Center is a statewide, multi-issue, multi-strategy, public interest law firm focused on changing the “systems” within which poor and low income families live. Empire Justice protects and strengthens the legal rights of people in New York State who are poor, disabled or disenfranchised through: systems change advocacy, training and support to other advocates and organizations, and high quality direct civil legal representation. Empire Justice has offices in Albany, Rochester, Westchester and on Long Island.
Contact:
Barbara Van Kerkhove
bvankerkhove (at) empirejustice (dot) org
(585) 295-5815
Ruhi Maker
rmaker (at) empirejustice (dot) org
(585) 295-5808
