According to a report sponsored by a multistate coalition of minority advocate groups, “communities of color” are likely to be more negatively impacted than their white counterpart communities by changes in refinance lending[1]. The Woodstock Institute released information on the report, titled “Paying More for the American Dream V: The Persistence and Evolution of the Dual Mortgage Market,” early this morning. The report expressed concern on the part of sponsoring groups that conventional refinancing loans could become inaccessible in minority communities largely due to the “disproportionate” effects of the housing crisis on minority neighborhoods. Other reports and agencies including the National Fair Housing Alliance (NFHA) have recently alleged banks have opted not to take care of REO properties in African-American neighborhoods, which could be contributing to the recent decline in successful refinance applications in similar demographic areas[2]. In an analysis of conventional refinance lending patterns in 2008 and 2009 in seven metropolitan areas including New York City and Chicago, researchers determined that lenders denied refinance applications at “significantly higher rates in communities of color than in predominantly white neighborhoods.”

Should refinance successes continue to fall, communities could suffer additional destabilization, fear experts. “Refinance loans are critical to stabilizing communities hardest hit by the foreclosure crisis,” explained co-director of the Neighborhood Economic Development Advocacy Project (NEDAP) Sarah Ludwig. The report indicates that “lenders are loosening up credit in predominantly white neighborhoods,” added director of research at the Community Reinvestment Association of North Caroline Adam Rust. Analysts fear that if the trend continues, minority communities may not be able to sustain an economic recovery. Do you think that a seven-city study is broad enough to fully address this issue? How do you think demographic discrepancies in lending should be dealt with now and moving forward as lending practices change?

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[1] http://www.woodstockinst.org/blog/blog/home-mortgage-lending-plummets-in-neighborhoods-of-color-national-study-exposes-unequal-access-to-credit-and-redlining-/

[2] http://rejournalonline.com/fair-housing-organizations-accuse-banks-of-neglecting-minority-neighborhoods/853751/