From the CBS station in Richmond, VA:
Millions will be spent to help black homeowners after investigation revealed inequity POSTED 12:32 PM, JULY 17, 2017, BY SCOTT WISE,Hence, disparate impact.
Millions will be spent to help black homeowners after investigation revealed inequity
RICHMOND, Va. — Millions of dollars will soon be spent in Richmond to help increase the number of African-Americans homeowners. A newly announced partnership between Housing Opportunities Made Equal of Virginia, Inc. (HOME) and Wells Fargo will provide $4 million to help close the racial home ownership gap.
“Differences in homeownership between African Americans and white Americans are the foundation of wealth inequality in Richmond and across the country,” HOME president and CEO Heather Crislip said. “HOME is committed to rooting out these differences in opportunity to reduce racial gaps and inequities and build a strong middle class.”
The partnership between HOME and Wells Fargo was created after HOME investigated mortgage lending activity and had concerns about under-service in minority communities by Wells Fargo in Richmond.
A 2015 study HOME did on lending discrimination for the City of Richmond found the following:
1. White borrowers comprised the largest segment of home purchase and refinance loan activity in the city.
Between 2010 and 2013, white borrowers accounted for 1,243 home purchase loan originations; black borrowers accounted for 112 loan originations; and Hispanic borrowers of any race accounted for just 24 home purchase loan originations.
White borrowers also comprised the largest share of the refinance loan market, accounting for 2,720 loan originations.
Black borrowers accounted for 382 refinance loan originations, and Hispanic borrowers accounted for 46 originations.
The vast majority (1,464) of refinance loans went to upperincome white borrowers; this group accounted for 53.8 percent of all loan originations to white borrowers.
2. Significant disparities exist in the origination and denial rates of all loan types based on the race/ethnicity of the applicant. For home purchase loans, white borrowers exhibited a 48.2 percent origination and 13.7 percent denial rate, while black borrowers exhibited a 25.8 percent origination rate and 34.6 percent denial rate.
For refinance loans, white borrowers exhibited an origination rate of 40 percent and denial rate of 32 percent. The rates for African-American borrowers were the inverse; the origination rate was 24 percent and denial rate 52 percent.
3. Borrower income does not account for the disparities in loan outcomes exhibited by applicant race/ethnicity. The disparity in home purchase loan origination rates between black and white applicants increased from 9.9 points for low-income borrowers to 27.5 points for upper-income borrowers.
Black applicants, regardless of income, were less likely to receive a home purchase loan.
The disparity in origination rates for refinance loans between black and white borrowers increased from 9.3 percentage points to 23.9 percentage points among upper-income borrowers. Black applicants, regardless of income, were less likely to receive a refinance loan.
Of course, blacks and Hispanics have, all else being equal, much higher default rates during crises. But you aren’t supposed to know that.
Some things I discovered back in 2008:
- There are a gigantic number of these type of “fair housing” NGOs across the country. One national association of them had over 600 organizations as members.
- A lot of these NGOs fighting white racism in mortgage lending are run by white people like Ms. Crislip.
- A $4 million payoff is a lot to an NGO, but is a minor cost of doing business to one of the Four Big Banks like Wells Fargo. The mortgage market is so big that the word “trillions” comes up: for example, in January 2005, Countrywide Financial launched the metastasization of the Housing Bubble when Angelo Mozillo, having attained agreement from Fannie Mae to buy his dubious mortgages, announced his plan to lend One … Trillion … Dollars to minority and lower income borrowers by 2010.
- The Obama Administration had lots of schemes to rake off mortgage money to its allies in these kind of NGOs that search out examples of disparate impact and trumpet them until they get paid off.
- Of course, the real problem is when all the control systems in society are set up to nudge lender decisionmaking to the left by blocking any errors or even corrections to the right. Eventually, as happened during the housing bubble, years of prodding by the Bush Administration, the NGOs, the media, etc. to lend more to blacks and Hispanics left a lending industry that actually believed that it could Get Rich Quick by cutting traditional down payment and documentation standards that had disparate impact on blacks and Hispanics.
- The long term problem is that because Diversity is our Sacredest Cow, nobody can allow themselves to even notice what happened a decade ago. How many Americans are conceptually equipped so that they can make sense of what is behind this kind of article?