Were Minorities Targeted?

The Record ( — Thursday, January 15, 2009


As the nation reels amid the fallout of the subprime boom, its impact on minority home ownership has emerged as a topic of debate.

Census figures show the number of owner-occupiers in the African-American, Asian and Hispanic communities increased significantly from 2000 to the 2005-to-2007 period.

The number of Hispanic owner-occupied homes, for instance, grew by more than 50 percent in that time.

The African-American owner-occupier total increased by 15 percent. And the number of Asian owner-occupiers rose by 66 percent.

In each case, the rise in minority ownership easily outstripped population growth in those communities.

Yet the number of white owner-occupied homes increased by just 1 percent over the same period.

One reason for the increase was the ready availability of subprime loans, which came with looser borrowing standards than regular mortgages.

Critics say mortgage companies and brokers targeted minorities, who accepted the higher fees and interest of a subprime loan because they believed they couldn't get a regular mortgage.

Other industry observers, however, reject the claim, saying that poor credit or the lack of documented financial history explains the higher levels of subprime loans among minorities.

What's clear is that some minorities ended up with subprime loans at a higher rate than did white borrowers.

Federal mortgage figures show that subprime mortgages accounted for half of all mortgages granted to Hispanics and African-Americans in New Jersey in 2005 and 2006, according to figures compiled by Washington-based Center for Responsible Lending.

Yet only about 15 percent of mortgages made to white borrowers in those years were sub-prime. Less than 14 percent of the mortgages to Asian borrowers were subprime, the figures show.

How that has translated into foreclosure rates in different communities is unclear.

The number of foreclosures in Bergen County jumped from about 1,100 in 2005 to 3,345 in 2008, according to the New Jersey Judiciary.

The number in Passaic rose from 986 to 3,110 over the same time period, the figures show.

The judiciary, however, does not record the ethnic or racial background of people in foreclosure.

Sylvine Marabotto, executive director of the Cedar Knolls-based Consumer Credit Counseling Service of New Jersey said the demographics of the clientele that seeks her agency's services don't appear to show a minority bias.

"We really haven't seen any particular group that happens to be in foreclosure more than another group," she said.

Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, disagreed.

She said that it's not surprising that she sees a high proportion of minority clients, given that her agency has offices in Paterson, Jersey City and Camden.

But she said she has no doubt that minorities were "absolutely targeted" by brokers and mortgage companies.

"A large majority of people who were given subprime loans are now in trouble," she said.

"And we look at their credit reports and see they probably would have qualified for a prime loan."

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