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July 23, 2007

HMDA Lending Study Finds Racial Differences 
A study released by the National Community Reinvestment Coalition on July 10 found that racial differences in lending increased as income levels rose. The study was based on an analysis of Home Mortgage Disclosure Act data for 2005 on high cost loans. In 167 metropolitan areas, the report found middle- and upper-income African Americans were found to be twice as likely or more to receive high cost loans than whites with the same income. In contrast, only 70 metropolitan areas had similar discrepancies for high cost mortgages between low- and moderate-income African Americans and whites. The report noted that while persistent racial disparities across all income levels does not prove discrimination, "it would appear that stakeholders could take action to narrow particularly large disparities for middle- and upper-income minorities and whites." In comparing the lending disparities between African American borrowers and white borrowers, the Charlottesville, Va., Metropolitan Statistical Area had the worse ratio and El Paso, Texas, had the best ratio. MSAs with the worse ratios were predominantly located in the South and Midwest with some in the mid-Atlantic and New England.

Federal Reserve Bank of Chicago, 230 South LaSalle Street, Chicago, Illinois 60604-1413, USA. Tel. (312) 322-5322

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