Discrimination in Loan Servicing

David Berenbaum

Chief Program Officer

National Community Reinvestment Coalition

Fair Housing 2010: Time to Act

2010 National Fair Housing Policy Conference

U.S. Dept of Housing and Urban Development

New Orleans, Louisiana 70130

July 2010

Foreclosure in the Nation’s Capital: How Unfair and Reckless Lending

Undermines Homeownership

• The study’s findings are particularly significant because its controls for the most important factors used to determine risk during the origination process, including credit score, loan characteristics, neighborhood characteristics, and investor identifiers.

Foreclosure in the Nation’s Capital: How Unfair and Reckless Lending Undermines Homeownership

Foreclosure in the Nation’s Capital: How Unfair and Reckless Lending

Undermines Homeownership

• The study finds that minorities are disproportionately affected by the foreclosure crisis, beyond levels that can be explained by objective criteria.

• It confirms that disparities in lending have a clear racial component that has not been adequately addressed through enforcement of the nation’s fair lending laws.

Foreclosure in the Nation’s Capital: How Unfair and Reckless Lending

Undermines Homeownership

• FINDINGS:• Nearly 35 percent of subprime loans were issued to

borrowers who could have qualified for fixed-rate prime loans.

• Even controlling for other factors, Latinos were 70 percent more likely and African Americans 80 percent more likely than their white counterparts to receive a subprime loan.

• African Americans were almost 20 percent more likely and Latinos were 90 percent more likely than their similarly situated white counterparts to go into foreclosure.

Foreclosure in the Nation’s Capital: How Unfair and Reckless Lending

Undermines Homeownership

HAMP Mortgage Modification Survey 2010

• NCRC conducted a survey of distressed homeowners seeking assistance from NCRC’s Housing Counseling Network (HCN).

• Surveys were distributed to 76 organizations in 45 cities. At the time of publication, 29 organizations responded. Over a period of two months, 179 homeowners responded to the survey.

HAMP Mortgage Modification Survey 2010

HAMP Mortgage Modification Survey 2010

• There have been no major studies focusing on how quickly lenders and servicers move their delinquent borrowers through the foreclosure process and whether the speed of this process differs by race.

• NCRC’s survey provides a first glimpse of possible racial disparities in the speed of the foreclosure process.

HAMP Mortgage Modification Survey 2010

• FINDINGS: Loan servicers foreclose upon delinquent Black or African‐American borrowers more quickly than delinquent White or Hispanic borrowers.

– White borrowers found themselves in a foreclosure after being delinquent on their mortgages for 7 months or fewer.

– African- Americans found themselves in the foreclosure process after only 4 months or fewer.

HAMP Mortgage Modification Survey 2010

Number of Months Past-due for Homeowners with Foreclosure Filing or Judgment by Race and Ethnicity

Race Count Minimum 50thPercentile 75thPercentile Maximum

White 10 2 4.5 7 11Black 10 3 3 4 8Hispanic 6 3 6 10 26Other 1 9 9 9 9Not Provided

1 4 4 4 4

Total 28 2 4 6.5 26

HAMP Mortgage Modification Survey 2010

• FINDINGS: White HAMP‐eligible borrowers are almost 50% more likely to receive a modification than African‐American HAMP‐eligible borrowers.

– Only 24.3 percent of African‐ American respondents and 32.3 percent of Hispanic or Latino respondents received some kind of modification.

– In contrast, 36.4 percent of HAMP‐eligible whites received a modification.

HAMP Mortgage Modification Survey 2010

Loan Modifications by Race and Ethnicity of Respondent (HAMP Eligible)

Modification: No Yes Pending Missing Total

Racecount % count % count % count % count %

White 18 40.9 16 36.4 8 18.2 2 4.5 44 100.0

African American

21 56.8 9 24.3 6 16.2 1 2.7 37 100.0

Hispanic 16 51.6 10 32.3 4 12.9 1 3.2 31 100.0

Asian 1 25.0 1 25.0 1 25.0 1 25.0 4 100.0

Other Race 2 66.7 0 0.0 1 33.3 0 0.0 3 100.0

Not provided 1 33.3 2 66.78 0 0.0 0 0.0 3 100.0

Total 59 48.4 38 31.1 20 16.4 5 4.1 122 100.0

HAMP Mortgage Modification Survey 2010

• As a result of the findings from this survey, NCRC seeks to broaden both the scope of data collected and analyzed and increase the number of respondents. We are hoping to hear from over 100 housing counseling agencies and over 1000 borrowers.

The National Community Reinvestment Coalition

The National Community Reinvestment Coalition (NCRC) is an association of

more than 600 community-based organizations that promote access to basic

banking services including credit and savings, to create and sustain affordable

housing, job development and vibrant communities for America's working

families. Our members include community reinvestment organizations, community

development corporations, local and state government agencies, faith-based

institutions, community organizing and civil rights groups, minority and women-

owned business associations, local and social service providers from across the

nation

For more information:

David Berenbaum, Chief Program Officer

National Community Reinvestment Coalition

727 15th Street, Suite 900Washington, DC 20005dberenbaum@ncrc.org P: (202) 628.8866 F: (202) 628.9800

www.ncrc.org