Amidst Evidence of Increased Lending Disparities, ACORN Opposes CRA-Weakening Proposal; National Study Shows Lending Disparities.

WASHINGTON -- On October 14, less than a week before the Federal Deposit Insurance Corporation (FDIC) closes the comment period on weakening the Community Reinvestment Act (CRA), ACORN will release a mortgage lending study that shows evidence of increased lending disparities.

Nationally, the study found that even upper-income (1) African-Americans were more than twice as likely (2.6 times) to be turned down than upper-income whites. Findings also show that larger gains in lending to minorities and lower income people were made in the earlier 1993-1998 time period, while disparities increased in the more recent five years since 1998. Although, lending to minorities and lower income families has increased, it is still at low levels compared to their share of the population and the quality of these loans has changed.

ACORN opposes proposed regulations by the FDIC to weaken the CRA by eliminating the investment and service requirements for all banks with under $1 billion in assets, resulting in significantly fewer home loans to underserved communities. ACORN is submitting comments opposing these regulations and calling on consumers to do the same at www.acorn.org

"The FDIC could really undermine the hard won successes of the Community Reinvestment Act over the past years," said ACORN National President Maude Hurd. "Federal bank regulators should do their jobs and continue to foster homeownership opportunities, especially since this study shows that many Americans are increasingly more likely to be turned down for home mortgage loans. While CRA has pressured many lenders onto the right track, regulators are creating a potential trainwreck for working families."

Senator John Kerry also supports strengthening the CRA, he said, "As ACORN's new study underscores, low-income and minority families still face unfair barriers to homeownership. We need to work together to break down those barriers. Unfortunately, the Bush Administration has chosen favors for special interests over opportunity working families. The Administration is supporting a proposal that will weaken the Community Reinvestment Act, making it harder for minority and working families to buy a home. This will prevent many hardworking Americans from reaching the economic mainstream in urban and rural America. I strongly support CRA because it helps families and communities across the country. Rather than weaken the CRA, we should redouble our commitment to home-ownership and expanded access to capital for small business, which will help improve the lives of millions of Americans."

According to ACORN, strengthening the CRA would help change the current direction of disparity levels. Since the passage of the CRA in 1977, great progress has been made in ending redlining and pushing banks to improve their lending performance in underserved communities. Other recommendations in the report address subprime lending and increased funding for housing counseling and fair housing programs.

The report looks at the differences in mortgage lending between 2003, 1998 and 1993. Data from more metropolitan areas than ever before was analyzed. 120 cities were studied and then ranked according to the racial and economic disparities in mortgage lending.

Additional National Findings Include:

--For African-American applicants, the disparity in denial rates is at the same level as in 1993 and an increase from 1998 when African-Americans were 1.8 times more likely to be denied.

--For Latinos, the disparity in denial rates is slightly less than in 1993 when they were 1.7 times more likely to be denied, but still a much greater disparity than in 1998 when Latinos were 1.4 times more likely to be denied than whites.

--African-Americans received only 5.9 percent of the conventional home purchase loans originated in the United States although they comprise 11.8 percent of the population. Latinos are 13.5 percent of the population and received 9.9 percent of the loans.

--Low and moderate income neighborhoods account for 31.3 percent of the country but received just 15.3 percent of the conventional loans.

--Subprime lenders originated 25.4 percent of the conventional home purchase loans originated to African-Americans, 23.3 percent of the loans to Latinos and 8.2 percent of the loans to white borrowers. This is dramatic increase from 1993 and still twice the share of loans to Latinos in 1998.

--Minority neighborhoods (those with at least 50 percent minority population) comprise 29.2 percent of the census tracts in the U.S., but received only 16.9 percent of the conventional home purchase loans originated in 2003.

The report is available online. Go to http://www.acorn.org/?2798

ACORN is the nation's largest community organization of low- and moderate-income families, with over 150,000 member families organized into 700 neighborhood chapters in 60 cities across the country. Our priorities include: better housing for first time homebuyers and tenants, living wages for low-wage workers, more investment in our communities from banks and governments, and better public schools. We achieve these goals by building community organizations that have the power to win changes -- through direct action, negotiation, legislation, and voter participation. ACORN is an acronym, and each letter should be capitalized. ACORN stands for the Association of Community Organizations for Reform Now.

ACORN's website is at http://www.acorn.org.

(1) Upper-income is defined as families earning 120 percent or above the metropolitan area median income. Low-income is defined as families earning below 50 percent of the area median family income; moderate-income as those earning 50-79 percent of the area median family income; middle-income includes those earning 80-119 percent of the area median family income.