Minorities found to pay high mortgage rates

African-Americans are at least 2 1/2 times more likely than whites to receive a higher-cost mortgage or home loan refinancing last year, a national study found. Latinos were at least 1 1/2 times more likely than whites to get a costlier mortgage, according to the study, released yesterday by Association of Community Organization for Reform Now. The nonprofit group looked at lending practices in 125 American cities.

A high-cost loan was defined in the study as one with rates more than 3 percentage points above certain Treasury rates. Although the group did not factor in household income or consumer creditworthiness, either of which could influence a loan rate, the authors contend there is a large disparity connected to both race and geography.

"Right now, it says if you're a lender and you have disparate results, that's on you to find out where the problem is," said Valerie Coffin, a researcher who conducted the study. "Are there inherent problems in your underwriting system that you aren't aware of?"

Keith Foster, director of enforcement and compliance for the Fair Housing Center in Toledo, said the findings are a first step. More research is needed to determine if the appearance of discrimination is accurate and to what extent, he said.

"This is a cause for concern and red flag for us to find out what is behind that data and get to the bottom and find out whether it is really related to race or some other thing," he said.

In metro Toledo, the study found that one in every five total loans was a high-cost loan through a subprime lender, generally used by people with lower income and more risk of being unable to pay back the loan.

But, almost half the first-time mortgages to local blacks were high-cost loans, one-fourth of those to Latinos, and just one-fifth of those to whites, the study found. Also, buyers in minority neighborhoods were more than three times as likely as those in white neighborhoods to receive a high-cost loan.

The study used figures reported under the Home Mortgage Disclosure Act by 18 Toledo-area lenders. ACORN said those lenders made 2,516 first-time mortgages last year, with 153 going to African-Americans, 68 to Latinos, and 2,101 to whites. They also issued 1,289 refinanced loans, with 83 to African-Americans, 30 to Latinos, and 1,090 to whites.

Compared to other communities nationally, Toledo ranked 24th highest among metro areas with at least half of refinanced loans to blacks being high-cost. Toledo's rate was 53 percent. Dayton ranked first, with 69 percent of its refinancings to blacks as high-cost loans. Cleveland was fifth, with 65 percent.