New Report Shows Minorities Denied Mortgage Credit 3 Times More Often Than Whites

By: Alicia Schuller, Marketing Coordinator, NHS of Baltimore

Call it is a symptom of the current housing and economic crisis; the credit market has tightened for everyone across the board. Business owners have found it more difficult to get lines of credit for their pay rolls, just as consumers are facing stricter requirements for credit scores and collateral; even more disturbing is that the retraction of credit is hurting minorties at a greater rate. A press release out by the Federal Financial Institutions Examination Council (FFIEC) reveals that mortgage credit has tightened almost 3 times more for minorities than it has for whites. According to the data, African Americans were denied conventional mortgages 36.1% of the time in 2008, compared to Hispanics at 31.1% and whites at 13.6%.

Additionally, the market share of minority homeowners shrank drastically in 2008, with African Americans seeing a decline from 8.7% to 6.3% and Hispanics from 12.1% to 8.5%, while the market share for white homeowners actually increased from 62.7% to 69.1%.

NHS of Baltimore's own numbers explain the decrease in homeownership among minorities as being largely connected to the collapse of the subprime mortgage market. When the collapse first began, the majority of our foreclosure clients were low to moderate income, African American homeowners who fell victim to subprime lending. As their interest rates went up but the value of their went down, they found themselves both unable to pay their mortgage and unable to sell their home.

"The sub-prime market provided access to homeownership for families and individuals with poor or limited credit. However it did not promote sustainable borrowing practices and therein became a major threat to wealth accumulation for low to moderate income households," said Tanya Washington, Chief Operating Officer, NHS of Baltimore.

Low to moderate income, minority homeowners need to have access to sustainable, conventional mortgage loans in order to increase homeownership and build their net wealth. NHS of Baltimore encourages folks who are thinking about buying a home to seek financial and homeownership counseling prior to applying for a mortgage loan. It's true that mortgage lenders are requiring much higher credit scores, more downpayment, and more savings. Don't give them an excuse to turn you down. Make sure your credit and finances are in order first. Nonprofits such as NHS of Baltimore offer this counseling free of charge and will work with you personally to ensure you are prepared