The 2007 Annual Minority Lending Report, compiled by Compliance Technologies and Genworth Financial, was released today at the 3rd Annual Mortgage Lending Industry Emerging Markets and Diversity Conference outside Washington, D.C.
Perhaps the most startling statistic in the analysis was data that pointed out that nearly 4 out of 10 (39.1 percent) mortgage loans made to minorities in 2006 were subprime.
“The level of subprime lending to minorities that the report shows is troubling, which is something we will examine closely at our Mortgage Lending Diversity Conference this week,” stated Maurice Jourdain-Earl, Managing Director of Compliance Technologies.
According to the report, only 18 percent of mortgages extended to white borrowers were subprime.
“This new report indicates that, for a variety of possible reasons, many minorities who took out a new mortgage last year are financing their home with a subprime loan,” said Kevin Schneider, president of Genworth Financial’s U.S. mortgage insurance business.
In 12 states, more than half of all mortgage loans extended to African Americans in 2006 were subprime loans.
Michigan saw the highest percentage of subprime mortgages sold to African-Americans in 2006, a whopping 70.7 percent, followed by Wisconsin with 61.6 percent, Missouri with 59.4 percent, Illinois with 58.8 percent, and Indiana 57.4 percent.
The number of African-American home buyers rose slightly last year, reflecting a 0.6% increase over 2005.
Interestingly, the opposite was seen with Asian borrowers.
According to the data, 17 percent of all mortgage loans sold to Asians in 2006 were subprime, far less than half the national subprime rate for all borrowers (39 percent) and lower than the national subprime rate for whites (18 percent).
The study also found that the number of minority home buyers who took out a mortgage in 2006 dropped 7.1%, led by a 21.5% decrease in the number of Asian-American buyers.