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Subprime Racial Disparities Grew
Worse in 2007 at JPMorgan Chase, Bank of America, Citigroup, WaMu,
Other
Large Banks and Countrywide, "Time to Stop the Bail-outs," says Inner
City Press
NEW YORK,
April 7 -- In the first study of the just-released 2007 mortgage
lending data, Inner City Press / Fair Finance Watch has identified
worsening
disparities by race and ethnicity in the higher-cost lending of some of
the
nation's largest banks. The findings call into question the use of JPMorgan Chase
to bail-out Bear Stearns, and Bank of America's
proposal to acquire Countrywide
Financial. 2007 is the fourth year in which the data distinguishes
which loans
are higher cost, over the federally-defined rate spread of 3 percent
over the
yield on Treasury securities of comparable duration on first lien
loans, 5
percent on subordinate liens.
JPMorgan
Chase in 2007 confined African Americans to higher-cost loans above
this rate
spread 2.44 times more frequently than whites, according to Fair
Finance Watch.
Chase's disparity to Latinos was 1.60. The percentage of Chase's loans
which
were over the rate spread actually went up from 2006 (19.28%) to 2007
(20.96).
In
its headquarters Metropolitan Statistical Area (MSA) of New York City,
Chase
confined African Americans to higher-cost loans above the rate spread
2.92
times more frequently than whites. Chase's disparity to Latinos was
2.50.
In
the New Orleans MSA Chase confined African Americans to higher-cost
loans above
the rate spread 2.25 times more frequently than whites. It denied over
50% of
mortgage applications from African Americans. Meanwhile the Federal
Reserve is
bending if not breaking applicable law to allow Chase to acquire Bear
Stearns
and bail it out from its speculative involvement in predatory lending.
"These
disparities in Chase's
lending must be considered and acted on," says Inner City Press.
"Particularly in New Orleans in the wake of Hurricane Katrina, Chase's
denying of 50% of applications from African Americans requires an
investigation, including Chase and other large banks on the Gulf
Coast."
Bank
of America in 2007 confined African Americans to higher-cost loans 1.88
times
more frequently than whites, and denied the applications of Latinos
1.62 times
more frequently than whites. Meanwhile, the large and troubled
Countrywide
Financial, which Bank of America has applied to buy, confined African
Americans
to higher-cost loans 1.95 times more frequently than whites, and denied
the
applications of Latinos 1.53 times more frequently than whites.
The
U.S. Federal Reserve Board, while still trying to avoid any public
comments on
or review of the controversial Bear Stearns - JPMorgan Chase bail-out,
has
agreed to hold public hearings on Bank of America's Countrywide
application, in
Chicago on April 22 and in Los Angeles on
April 28 and 29. Inner City Press
and Fair
Finance Watch had requested the public hearings, and in preparation are
submitting to the Federal Reserve that Countrywide in the Los Angeles
MSA in
2007 confined 18.91% of its African American borrowers to higher cost
loans
over the rate spread. Countrywide in the Chicago MSA in 2007 confined
African
Americans to higher-cost loans 1.93 times more frequently than whites,
while
confining Latinos to higher-cost loans 1.35 times more frequently than
whites.
"Given
Countrywide's disparities and its ongoing foreclosure practices, the
Federal
Reserve should not allow Bank of America to acquire it has proposed,"
Fair
Finance Watch. "The golden
parachutes are just a form of impunity."
Citigroup
in 2007 confined African Americans to higher-cost loans above this rate
spread
2.33 times more frequently than whites. Fully 109,511 of Citigroup's
448,542
mortgages in 2007, or 24.41%, were high cost loans over the rate
spread.
In
its headquarters Metropolitan Statistical Area of New York City,
Citigroup was
even more disparate, confining African Americans to higher-cost loans
above the
rate spread 2.61 times more frequently than whites. Citigroup's
disparity to
Latinos was 1.90.
Citigroup
was most disparate in home purchase loans, confining African Americans
to
higher-cost home purchase loans above the rate spread 3.41 times more
frequently than whites. Citigroup's disparity to Latinos was 1.76.
Citigroup
has acquired Argent, an affiliate of Ameriquest which, like Citigroup,
has settled
governmental charges of predatory lending.
"How
the 2007 data of defunct lenders like Ameriquest, New Century, American
Home
Mortgage and others is being reported is not clear," Fair Finance Watch
notes. "The regulators have a duty to make sure those loans are
reported,
particularly by those still buying predatory lenders, such as
Citigroup, HSBC,
Merrill Lynch and Deutsche Bank."
At Wachovia,
the nation's fourth largest bank, Latinos in 2007 were confined to
high cost loans 1.71 times more frequently than whites.
Washington
Mutual, the nation's largest savings bank, in 2007 confined African
Americans
to higher-cost loans above this rate spread 2.05 times more frequently
than
whites. Fully of 54,914 WaMu's 261,476 mortgages in 2007, or 21%, were
high
cost loans over the rate spread.
Royal
Bank of Scotland, one of the largest banks in the world, through
its U.S.
subsidiaries in 2007 confined African Americans to higher-cost loans
above the
rate spread 1.76 times more frequently than whites. It denied over 66%
of
mortgage applications from African Americans, and over 62% of
applications from
Latinos.
National
City in 2007 confined African Americans to higher-cost loans above the
rate
spread 1.77 times more frequently than whites. National City's
disparity to
Latinos was 1.73. Fully 25,012 of National City's 246,138 mortgages in
2007, or
10.16%, were high cost loans over the rate spread.
Keycorp
in 2007 confined African Americans to higher-cost loans above the rate
spread
fully 2.2 times more frequently than whites.
Suntrust
in 2007 confined African Americans to higher-cost loans 2.51 times more
frequently than whites, and denied the applications of African
Americans 2.34
times more frequently than whites. Fully 15,435 of Suntrust's 2007
loans were
high cost loans over the rate spread.
U.S.
Bancorp continued to make super high-cost loans subject to the Home
Ownership
and Equity Protection Act (HOEPA) -- that is, at least eight percent
over comparable
Treasury securities.
Regions
Financial, in a new low, provided its data at the deadline but only in
paper
format, on over 2000 pages, so that it could not yet be
computer-analyzed.
Lehman Brothers provided only a PDF file of over 6000 pages, to avoid
any
analysis of disparities.
Where
the rubber will meet the road will be in how the Federal Reserve and
other
agencies act on specific disparities at specific lenders, including as
these
are formally raised to them in timely comments on merger applications,
such as
that of Bank of America to acquire Countrywide, and the needed review
of JPM
Chase - Bear Stearns.
Methodology
and scope of review:
ICP Fair Finance Watch reviewed, using the SPSS program [Statistical
Package
for the Social Sciences], Countrywide Financial's 3,517,321 loan
mortgage application
records for 2007, 912,814 of which were originated loans, 157,409 (or
17.24%)
of these over the rate spread. JPM Chase reported 989,683 loan mortgage
application records for 2007. Citigroup in 2007 reported 1,540,325 loan
application records; Wachovia reported 737,875 records. US Bancorp
reported
313,908 records, including 19,206 high cost loans over the rate spread.
Suntrust reported 395,188 records, including 15,435 high cost loans
over the
rate spread. Washington Mutual, the nation's largest saving bank, in
2007
reported 643,765 mortgage records, including 54,014 high cost loans
over the
rate spread.
For or with more information, contact us.
ICP's book on these topics, "Predatory
Bender" CL
Review order
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