Reaction to the Fed's Bias Study
Government-insured mortgages - long touted as tickets to homeownership for minorities -- took some lumps in this week's Federal Reserve study, which has suggested bias in mortgage lending.
For example, the study found that upper-income blacks last year were turned down for government mortgages far more frequently than low-income whites. On conventional loans, rejection rates for low-income whites were slightly higher than for upper-income blacks.
Thomas Noto, an attorney with Washington-based Brownstein, Seidman & Schomer, also noted that rejection rates on government loans were higher in low-income neighborhoods with large minority populations than in comparable neighborhoods populated by whites.
"Under any facet of analysis - geographic or demographic - you see troubling statistics," Mr. Noto, a former Fed staff member, said in an interview.
Mortgage companies, which originate most government loans, "absolutely have reason to be concerned," Mr. Noto said.
Warren Lasko, executive vice president of the Mortgage Bankers Association of America, said he was "puzzled" by the data on government loans as well as other parts of the study.
The group has formed a nine-member task force to examine the data.