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WASHINGTON – The homeownership rate in the U.S. has gone up every year since 1993, but unfortunately findings contained in a newly published report from the Association of Community Organizations for Reform Now show that there is a growing disparity between whites and minorities and lower-income groups that point to the fact that not everyone has been enjoying this trend. The report from ACORN, The Great Divide: Home Purchase Mortgage Lending Nationally and in 120 Metropolitan Areas indicates that many lower income and minority families are still being shut out of the homebuying market because of the persistence of “serious racial and economic disparities.” In fact, the report reads referring to the national homeownership rates in the U.S. rising slightly to 68.3% in 2003, “this national figure masks continued sharp disparities between the experience of Americans of different races and income levels.” The home ownership rate for whites increased from 74.7% in 2002, to 75.1% in 2003. The rate for African-Americans decreased from 48.9% in 2003 to 48.4% in 2003. The Latino homeownership rate in 2003 remained at 47.4%, which is where it stood in 2002. In addition, the report states: “While the homeownership gap between white and African-American families slowly narrowed from a 27.8 percentage point difference in 1993 to a 25.6 point difference in 1998, much of that progress was eradicated over the next five years as the gap grew to a full percentage point to 26.7 in 2003.” The Great Divide: Home Purchase Mortgage Lending Nationally and in 120 Metropolitan Areas is based on an analysis of data made available under the Home Mortgage Disclosure Act (HMDA) of home purchase loans originated in 2003. It also compares this data to that from 2002, five years earlier (1993) and 10 years earlier (1993). The most significant findings of the study are: * the disparity between minority and white denial rates fell from 1993 to 1998, but by 2003 it had returned to 1993 levels. African-Americans were 2.2 times more likely than whites to be denied when applying for a conventional loan in 2003, the same as in 1993 and an increase from 1998 when African-Americans were 1.8 times more likely than whites to be denied. Latino applicants were 1.6 times more likely to be denied than whites in 2003. This represents an increase from 1998 when Latinos were 1.4 times more likely to be denied and just a slight increase from 1992 when Latinos were 1.7 times more likely to be denied. * although minority homebuyers showed a larger percentage increase than whites in the number of conventional loans they received from 1993 to 2003, a significant portion of the increase in loans to minorities was due to higher cost subprime loans. The number of conventional home purchase loans originated to Latinos increased 347% from 1993 to 2003, while rising 206% for African-Americans and 64% for whites. However, more expensive subprime loans accounted for 23.3% of the conventional loans made to Latinos, 25.4% of loans to African-Americans, and 8.2% of those to whites. * low and moderate-income neighborhoods continue to be underserved by conventional lenders despite some progress in this area. Low and moderate income census tracts account for 31.3% of the country but received only 15.4% of the conventional loans in 2003. In comparison upper-income neighborhoods make up 25.6% of the country, and received 39.7% of the conventional home purchase loans; * government backed loans such as FHA, VA, and Farm Service Agency (FSA)/Rural Housing Service (RHS) continue to make up a greater portion of the purchase loans to minorities than those to white borrowers. Government-backed loans accounted for 25.7% of home purchase loans received by African-Americans in 2003 and 31.0% of those received by Latinos. These types of loans only accounted for 12.9% of the loans to whites. In addition, the study notes that “while these percentages represent a decrease from previous years for minority homebuyers, much of the increase in conventional loans to minorities is due to the rapid growth of subprime lending.” ACORN made several recommendations to diminish existing disparities. Among those for regulators and legislators are: * strengthening the Community Reinvestment Act * Federal regulators must stop blocking state efforts to protect consumers * Federal banking regulators should set higher standards for banks’ CRA lending performance and pay closer scrutiny to bank’s involvement in predatory lending. * Congress should increase funding for HUD’s Housing Counseling program * Fannie Mae, Freddie Mac, mortgage lenders, and state and local governments should mandate and expand funding for programs on lending that enable people to protect themselves from predatory practices. For lenders, ACORN recommends: * lenders should more actively make good loans in minority and low-income communities * they should offer both prime and subprime products and establish pricing and underwriting guidelines. -

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