Black and Latino borrowers received government-backed loans insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs significantly more often than white borrowers, raising concerns about redlining, a new study has found.

The 29-page report, "Paying More for the American Dream," which the California Reinvestment Coalition released Tuesday, used Home Mortgage Disclosure Act data to analyze lending patterns in seven cities: Boston, Charlotte, Chicago, Cleveland, Los Angeles, New York City and Rochester, N.Y.

The report found a pattern of two-tiered lending in which borrowers in communities of color received more government-backed loans and disproportionately fewer conventional mortgages than white borrowers. Eighty-five percent of black borrowers in Cleveland received FHA or VA loans compared to 47% of white borrowers.

FHA and VA loans accounted for three out of every four home loans made to black borrowers, and two out of every three loans made to Latinos, compared to one out of every three loans made to white borrowers, the study found.

The report, a collaboration of seven consumer advocacy groups, suggests expanding the Community Reinvestment Act to include not just a loan applicant's income but also race and ethnicity. Federal banking agencies had said the CRA would be updated in 2010, but no action has yet been taken.

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