OAKLAND (CBS SF) — A new report by two Bay Area racial justice organizations found significant racial disparities in mortgage lending in Oakland, as well as other California cities.
This month, Berkeley’s Greenlining Institute and Oakland’s Urban Strategies Council found significant discrepancies in the lending market by analyzing data from California’s top 12 lenders by mortgage volume, released under the federal Home Mortgage Disclosure Act of 1975.
The study titled, Locked Out of the Market: Poor Access to Home Loans for Californians of Color, found that in 2013, the top 12 lenders in Oakland financed just 54 home loans for African American buyers. Those same lenders financed 79 homes for Hispanic buyers and a whopping 416 homes for white buyers.
In Oakland, “African Americans and Hispanics, representing 56% of the population, received just 10% of mortgage dollars lent,” the authors found.
The study found that “the nation’s recovery is redlining African American and Hispanic families across California.”
Redlining, as defined by the Merriam Webster dictionary, is the withholding of home-loan funds or insurance from neighborhoods considered poor economic risks.
The study also examined mortgage loans in Fresno and Long Beach, and there too, also found that more white borrowers received mortgage loans than people of color.
The study found that in 2013, the top 12 lenders funded over $187 billion in mortgage credit in California, but only $53 billion of this went to Asian, African American, and Hispanic borrowers.
The authors suggest that part of the disparity comes from an overall low number of mortgage loan applications submitted by minority groups across the state.
“Decades of discriminatory practices by mortgage lenders … produced a shameful legacy that still all too frequently determines who gets access to America’s central vehicle for wealth creation: homeownership,” argue the study’s authors Sasha Werblin and Zach Murray.
Just last year, the Consumer Financial Protection Bureau and the U.S. Department of Justice announced a joint action against Hudson City Savings Bank for discriminatory practices that allegedly denied fair access to mortgage loans to residents in neighborhoods that were majority black and Hispanic in New York, New Jersey, Connecticut, and Pennsylvania.
In that case, the complaint alleged that Hudson City Savings Bank redlined by strategically locating their branches and loan officers, and also selected mortgage brokers and marketed products, in order to avoid prospective borrowers in predominantly black and Hispanic communities.
The regulators announced a record-setting $33 million settlement with the bank in September 2015.
Werblin and Murray note that the reasons for ethnic and racial disparities are not fully known, but listed some steps banks could take “to bolster their connections with communities of color.”
The authors suggest that banks hire loan officers from diverse backgrounds and market to a wider range of communities.
They also suggested building better partnerships with housing counseling agencies and creating mortgage products tailored to low and moderate income buyers.
America’s Equal Credit Opportunity Act, adopted in 1974, states that no creditor can discriminate against any applicant on the basis of race, color, religion, national origin, sex, marital status, or age.
NOTE: This article was updated on 6/15/17 when the report cited in it was republished with corrected data. The original article stated “the top 12 lenders financed just four Oakland home purchases for African American buyers. Those same lenders financed only seven homes for Hispanic buyers, yet financed 40 homes for white buyers in Oakland.” It has been corrected above.
By Hannah Albarazi – Follow her on Twitter: @hannahalbarazi.