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WASHINGTON – ACORN and ACORN Housing Corporation released their 2001 study documenting the concentration of subprime lending to minority and low-income borrowers, and the data compared to last year’s findings showed that despite consumer groups’ best efforts and legislation that’s been enacted, minority and low-income borrowers continue to overwhelmingly be more likely to receive higher priced subprime loans. Among the study’s findings, subprime lenders now account for half-51%-of all refinance loans made in predominantly black neighborhoods, compared to just 9% of the refinance loans made in predominantly white neighborhoods. In short, said the study, “subprime lending with its higher prices and attendant abuses, is becoming the dominant form of lending in minority communities.” “While minority borrowers continue to be rejected more often for loans on fair terms, our neighborhoods are in danger of drowning in overpriced predatory loans,” said ACORN National President Maude Hurd. “It’s a kind of financial apartheid, where minority and low-income borrowers pay more, even when they have good credit.” The study recognized that not all subprime lenders are predatory lenders, still “just about all predatory loans are subprime, and the subprime industry is a fertile breeding ground for predatory practices. There is as legitimate place for flexible loan products for people whose credit or other circumstances will not permit them to get loans on “A” terms.Unfortunately, these problems pervade too much of the subprime industry.” Not only are minority borrowers more likely to receive higher priced subprime loans, too often these higher rate loans come loaded with abuse features such as high fees, large and extended prepayment penalties, and financed single premium credit insurance. These wind up costing borrowers even more money and locking them into the higher loan rates. Subprime lenders also target lower income white homeowners, the study found. Subprime lenders made 25.5% of all conventional refinance loans received by low-income white homeowners and 24% of all refinance loans received by moderate-income white homeowners. In comparison, subprime lenders only made 12.4$ of the refinance loans to upper-income white homeowners. In contrast, African-Americans in 2000 received 13.4% of all the subprime refinance loans made in the U.S., a share almost three times larger than the 4.7% they received of prime refinance loans. Latinos received roughly the same percentage of both subprime and prime refinance loans. White homeowners, the study reported, received 43.3% of the subprime refinance loans, but 69.5% of prime refinance loans. Despite attempts by consumer groups and federal agencies to curb predatory lending practices, “the problem of predatory lending has yet to be significantly curtailed in most parts of the country.the voluntary charges made by companies thus far leave most abuses in place; and too many in the mortgage industry have used high-paid lobbyists and large campaign contributions to vigorously oppose anti-predatory lending legislation. Meanwhile, predatory lenders continue to reap their profits, ravaging low-income and minority communities and leaving a wake of destruction in their path,” the report stated. -

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