Orlando’s Minority Communities Considered to be at Great Risk
On Wednesday, September 5th , the national community group ACORN will
release “Foreclosure Exposure: A study of racial and income disparities
in home mortgage lending in 172 American cities.” The report looks at
which communities will be hit hardest by foreclosures from rising
interest rates as the three-fourths of all subprime home loans that are
adjustable rate mortgages (ARMs) become harder for borrowers to repay.
Together with affected homeowners, elected officials & community
leaders, ACORN will host a press conference Wednesday, September 5^th ,
2:00 pm, in front of the Orange County Courthouse, 425 N. Orange Ave,
Orlando.
Using data available under the Home Mortgage Disclosure Act, ACORN’s
study examines the extent of high-cost (subprime) lending in 172
metropolitan areas and the disparities between borrowers of different
race and income levels. Borrowers with subprime loans are already paying
higher interest rates and are more likely to be lower-income and have
fewer resources to cope with the rising payments and the foreclosures
that come with those high payments.
“We have seen a sharp increase in foreclosures in some of the urban and
minority communities that most need to build wealth through
homeownership,” said ACORN National President Maude Hurd. “Too many of
our neighbors were steered into unaffordable exploding ARMs without
given the option fixed-rate and now face foreclosure, which harms their
families and our communities.”
“ACORN is attacking the problem by helping as many people as possible
negotiate with their lenders to avoid foreclosure,” according to Tamecka
Pierce, Florida ACORN Chair. “But legislators and banking regulators
need to do their part to protect our communities from unscrupulous
lending practices.” ACORN is calling on lenders and servicers to modify
loans so that they will be affordable to borrowers. ACORN is also
calling on state and federal legislators to pass strong anti-predatory
lending legislation that would protect consumers from abusive practices
without pre-empting local legislation.
*Local Disparities in the Orlando metropolitan area:*
The study revealed that minority neighborhoods are at a greater risk of
rate shock than neighborhoods that are predominantly white, because of
the disproportionately high share of subprime loans held by homeowners
in these communities.
* In Orlando, homebuyers of all races have a high incidence of
receiving a high-cost home purchase loan. About one of three home
purchase loans in the metropolitan area, 33.6%, were high-cost loans.
* African-American homebuyers were 2.2 times more likely than whites
to get a high cost loan.
* Latino homebuyers were 2.1 times more likely than whites to get a
high cost loan.
* There was also a high incidence of refinance borrowers to receive
a high-cost loan. About one of three refinance loans in the
metropolitan area, 32.5%, were high-cost loans.
* African-Americans getting a refinance loan were 1.9 times more
likely than whites to get a high cost loan.
* Latinos getting a refinance loan were 1.5 times more likely than
whites to get a high cost loan.
Upper-income minority borrowers are at a greater risk than upper and
lower-income white borrowers as well.
· In Orlando, upper-income African-American homebuyers were 2.4 times
more likely to receive a high-cost loan than low-income whites.
Upper-income Latinos were 2.4 times more likely to get high-cost loans
than upper-income whites.
· Upper-income and middle-income African-Americans homebuyers were more
likely to receive a high-cost loan than low-income whites. Upper-income
and middle-income Latino homebuyers were more likely to receive a
high-cost loan than low-income whites.
· In Orlando, upper-income African-Americans receiving a refinance loans
were 1.9 times more likely to receive a high-cost loan than a
high-income white borrower. Upper-income Latinos were 1.7 to get a
high-cost loan than a high-income white borrower.
· Upper-income and middle-income African-Americans were more likely to
receive a high-cost refinance loan than low-income whites. Upper-income
and middle-income Latinos were more likely to receive a high-cost
refinance loan than low-income whites.
In the Orlando area as a whole, 33.1% of all loans made were high-cost
loans; that is, they were likely to be subprime and therefore more
likely to lead to foreclosure. This is an increase in subprime loans of
loans over ACORN’s 2005 study of 24%.
ACORN used a sample of 363 lenders that are owned by 19 of the largest
lenders in the country. According to industry estimates, these lenders
represent 68.5 percent of all residential mortgages originated in 2006
and 50.5 percent of the subprime market.
Borrowers are advised to seek HUD-certified homeownership counseling to
receive advice about receiving an appropriate loan and to ensure they
are not taken advantage of by unscrupulous lenders. Borrowers can also
call the local ACORN office for assistance.
