Mortgage lending fell sharply in 2007 because lenders denied nearly one-third of loan applications, according to a report by the Federal Reserve.
Minorities were most affected. The number of mortgage loans made to Hispanic borrowers fell 49 percent and the number to African-American borrowers declined 35 percent between the first half of 2006 and the second half of 2007. The number of loans to white borrowers also declined by 22 percent during the same time period.
Black and Hispanic borrowers were more likely to receive high-rate loans. In the second half of 2007, 29.5 percent of first-lien home-purchase loans to African-Americans and 24.3 percent of such loans made to Hispanics exceeded the high-rate threshold, compared with 9.2 percent for non-Hispanic whites. (The figures exclude government-backed loans.)
The following are the main reasons given for loan denials in 2007, according to Fed researchers. (The analysis excludes investment properties and home-equity loans. The percentages add up to more than 100 percent.)
- Credit history, 30.25 percent
- Not enough collateral, 23.4 percent
- Other, 23.3 percent
- Debt-to-income ratio, 20.7 percent
- Credit application incomplete, 14.2 percent
- Unverifiable information, 8.4 percent
- Insufficient cash, 3.8 percent
- Employment history, 2 percent
- Mortgage insurance denied, 0.2 percent
Source: The Wall Street Journal, Ruth Simon and Tom McGinty (09/12/08)
No comments:
Post a Comment