Mortgage originators aren't lending enough to people of color or the poor in the St. Louis, Milwaukee and Minneapolis metropolitan areas, the National Community Reinvestment Coalition said.
The NCRC's report found extensive imbalances when comparing neighborhoods based on race and income across all three areas, with a higher concentration of loans in majority-white, higher-income locales. The organization called for an expansion of the Community Reinvestment Act and its enforcement and for stronger affordable housing goals in the secondary market.
In the Milwaukee metropolitan statistical area, while African-Americans represent 16% of the population they received only 4% of mortgage loans. Similarly, African-Americans make up 18% of the population in the St. Louis metropolitan area but received only 4% of all home loans made there.
Both of these areas were also noted for high levels of segregation, with African-American families concentrated in neighborhoods where there was little, if any, lending activity.
NCRC researchers cited studies that showed it is difficult for any borrower, regardless of race, to secure a loan in "high poverty, highly segregated" neighborhoods. Moreover, the study's authors said, such disparities in lending can further entrench segregation and geographical divides by race.
For example, the Minneapolis metropolitan area, researchers said, "has developed a vibrant economy while increasing its racial and ethnic diversity" and it "is not hyper-segregated." Nevertheless, lending data suggested disparities based on race here as well, though the variable that best predicted home loan activity was the neighborhood's median family income.
African-Americans in the Minneapolis area represent 7% of the population but received only 2% of all mortgage loans. And Hispanic borrowers got only 2% of all loans there, despite making up 5% of the population.
"This report clearly shows the lack of mortgage lending in low- and moderate-income neighborhoods and predominantly minority neighborhoods," NCRC President and Chief Executive John Taylor said in a news release Tuesday. "Without access to responsible mortgage credit and the opportunity to become a homeowner, the ability for working people to build wealth is severely curtailed."