“A statistical portrait of gentrification” emerges in a new analysis of California home mortgage data that included troubling information gleaned from Long Beach, according to the authors.
The analysis released today by The Greenlining Institute and the National Community Reinvestment Coalition found that most loans in low-income tracts do not go to low-income buyers, say the researchers viewed statewide data as well as local statistics for Long Beach, Oakland and Fresno.
“African American and Latino borrowers continue to receive a disproportionately low share of home purchase and refinance loans, but that’s just the tip of the iceberg,” says the report’s co-author Vedika Ahuja, Greenlining’s Economic Equity senior program manager. “We see a lot of home purchase loans in low- and moderate-income neighborhoods, but few of them going to low- and moderate-income borrowers.”
Among the key findings:
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• Latinos and blacks together make up 43.8 percent of California’s population but only receive 24.2 percent of home purchase loans in the state.
• In Long Beach, loans in low- to moderate-income (LMI) census tracts from the top 10 lenders exceeded loans to LMI borrowers by four to one, suggesting that middle and upper income borrowers are displacing lower income buyers in these neighborhoods. In Oakland, the ratio was roughly three to one.
• Regulators for the Community Reinvestment Act (CRA)—which has led to more than $1 trillion in investments, loans and services to low-income neighborhoods over the past 40 years—are awarding financial institutions CRA credit for extending loans in LMI census tracts even if the borrower is wealthy.
• Statewide, five of the top 10 home purchase lenders were non-banks. These lenders are not subject to the CRA and may be under-capitalized. In addition, non-bank lenders have effectively marketed to low-income and immigrant communities, who may be more vulnerable to predatory lending.