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Subprime Survivors
Wells, BofA and JPM Chase Were
More Disparate By Race in 2008 than Wachovia or Countrywide, Trends
Will Worsen
Under Current Regulators
NEW YORK, April 2
-- In
the first study of the
just-released 2008 mortgage lending data, Inner City Press / Fair
Finance Watch
has found that the seeming survivors of the banking meltdown, Wells
Fargo, Bank
of America and JPMorgan Chase, had worse disparities by race and
ethnicity in
denials and higher-cost lending than the banks they acquired, Wachovia
and
Countrywide. Mortgage lending in the U.S. will become more and not less
disparate because of the emergency mergers and bailouts engineered by
the
regulators, the study predicts.
Fair
Finance Watch notes that JPMorgan Chase's massive closing of branches
of
Washington Mutual will also make credit harder to come by, especially
in poor
neighborhoods. 2008 is the fifth 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.
Wells
Fargo Bank in 2008 confined African Americans to higher-cost loans
above this
rate spread 2.18 times more frequently than whites, according to Fair
Finance
Watch. Wachovia Mortgage FSB, the largest lender of Wachovia which
Wells Fargo
acquired, had a lower disparity, at 1.46.
Bank
of America NA in 2008 confined Latinos to higher-cost loans above the
rate
spread 1.51 times more frequently than whites, the data show.
Countrywide Bank,
which B of A acquired, had a lower disparity, at 1.22.
JPMorgan
Chase was even more disparate to Latinos, confined them to higher-cost
loans
2.10 times more frequently than whites, almost as pronounced as its
disparity
between African-Americans and whites, 2.26. Citigroup, perhaps due to
its
shrinking, some say dying, business had disparities of 1.90 for African
Americans and 1.23 for Latinos. For US Bancorp, the disparity for
African
Americans was 1.55 and for Latinos, 1.35.
"The
banks the regulators favored in 2008, allowing emergency takeovers like
JPMorgan Chase's of Washington Mutual, Bank of America's of Countrywide
and
Merrill Lynch, and Wells Fargo's of Wachovia, were the most racial
disparate
lenders," states the Fair
Finance Watch report. "The regulators did not put any conditions on the
mergers
or Troubled
Assets Relief
Program bailouts, for example allowing Chase to
close dozens of Washington
Mutual
branches. As things are going, it will be worse and more disparate in
2009. The
new administration has yet to make any substantive change to this."
Several
lenders had worse denial rate
disparities in 2008 between Latinos and whites then between African
American
and whites, a change from previous years. Bank of America NA, for
example,
denied applications by African Americans 1.44 times more frequently
than
whites, while denying Latinos fully 1.57 times more frequently than
whites.
Atlanta-based SunTrust in 2008 denied applications by African Americans
1.37
times more frequently than whites, while denying Latinos fully 1.78
times more
frequently than whites.
The
law
required that the 2008 data be provided by April 1, following March 1
requests
by Fair Finance Watch. Some lenders did
not provide their data by the deadline. Regions Financial provided its
data at
the deadline but only in paper format, on over 2000 pages, so that it
could not
yet be computer-analyzed. Further studies will follow.
For or with more information, contact us.
ICP's book on these topics, "Predatory
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