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THURSDAY, MAY 2, 2002

Native American homeowners pay higher loan rates than their white counterparts, according to a study released on Wednesday.

The disparity reached across all income levels and all parts of the country, the Center for Community Change reported. The difference was most notable in the Southeast and Midwest, where Native homeowners are nearly twice as likely to receive "subprime," or high interest, mortgage rates than whites.

Combined with federal data on home foreclosures, the high rates raise doubts about lending practices, the group concluded. "The persistent racial patterns found in this analysis raise questions as to whether factors other than risk alone account for them," the "Risk or Race?" report stated.

The finding was supported by statistics among African-American and Hispanic homeowners. When compared to whites, the center found that subprime loans, which are meant to correct for poor credit histories or other financial issues, actually increased among higher income minority borrowers.

This phenomenon was not repeated among American Indians and Alaska Natives, however. But the group said this could be attributed to limited data and warned that the problem among Native lenders may indeed be worse.

Still, nearly a third (28 percent) of Native homeowners have less than optimal mortgaging, according to the report. The nationwide average for all racial and ethnic groups is 25 percent.

The metropolitan area with the largest rate (35 percent) of Native subprime lending was Phoenix-Mesa, Arizona. Native homeowners here were 1.8 times as likely to have higher interest loans than whites.

Phoenix has largest proportion of Natives for cities with a population over 1 million, according to the Census Bureau. About 2.7 percent of the population is Native.

In Oklahoma City, Oklahoma, 28 percent of Native homeowners have subprime loans. About 5.7 percent of the population is Native.

The greatest disparity between whites and Natives was shown in the Washington, D.C., area, which has a less than 1 percent Native population. Native homeowners were 2.4 times as likely to receive less than favorable rates here.

But in Tulsa, Oklahoma, where 7.7 percent of the population is Native, the disparity rates were actually reversed. Native homeowners here were less likely to receive subprime rates than whites.

The report coincided with legislation being pushed by Sen. Paul Sarbanes (D-Md.), chairman of the Senate Banking Committee. The bill seeks to limit predatory lending practices.

Of the high rates, Sarbanes said: "They overwhelmingly target minorities, driving a wedge between these families and the hope of a productive life in the economic and financial mainstream of America."

Get the Report:
Executive Summary [pdf] | Full Report [pdf]

Relevant Links:
Center for Community Change - http://www.communitychange.org

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