Indiana Mortgage Companies Rate Poorly in Minority Lending
A number of area banks don’t score well on the number of mortgage loans made to minorities, the Northwest Indiana Times reports.
The Home Mortgage Disclosure Act requires banks to disclose their mortgage loan activity, said Jean Ishmon, president of the Northwest Indiana Community Reinvestment Alliance.
“The numbers are low,” she said. “It’s obvious that (minority) buyers are going to other sources for mortgage loans, opening themselves up to predatory lending.”
The HMDA analysis was designed to give a snapshot of mortgage lenders in minority markets to determine if it has been, in any way, discriminatory, said Cheryl Smith, who formerly worked for the Department of Housing and Urban Development (HUD) in Chicago and now does consulting work.
“The data is mind-numbing,” she said. “Even though banks will tell you and show data regarding their loans, every time the Federal Reserve Bank does a study of home loans every five years, they find discrimination. People say they are not prejudiced, but they tend to loan money to people who look like them.”
Unfortunately, HMDA doesn’t regulate mortgage companies or Indiana mortgage brokers, and there’s abuse in the system. Smith indicated there is a need in the banking industry to hire more professional minorities.
In October, the Justice Department alleged Centier Bank violated the Fair Housing Act and Equal Credit Opportunity Act by unlawfully failing to equally market and provide products and services to predominantly black and Hispanic neighborhoods in Gary, East Chicago and Hammond.
While Centier Bank admitted no wrongdoing, it came to terms with the government and stepped up its efforts to enhance services in those areas.
Centier agreed to open new offices and expand operations in excluded areas, invest $3.5 million in a special program and spend at least $875,000 for consumer protection, outreach and promotion in previously excluded areas.
Michael Schrage, Centier President and CEO, said the bank’s efforts already have resulted in an increased level of activity through programs, including participation in the Gary Centennial and hiring more minority staff.
“Those moves have proven to be very positive in generating additional contacts and opportunities to lend money to people who are underserved,” he said.
Nancy Norris, spokesperson for J.P. Morgan Chase, said the lender makes its home mortgage loans based on ability to repay.
“Race does not enter into the decision at all,” she said. “We reach out to consumers to make loans that they can afford and those decisions are based on the ability to repay. We offer a wide variety of loan types to appeal to more borrowers. We also work with aspiring buyers through seminars, credit counseling, debt consolidation and financial education.”
Pam Stalling, executive director of the Consumer Credit Counseling Service of Northwest Indiana, said the issue is not just about black, white or even green — it’s about credit scores.
“Credit is critical, along with financial literacy. Each community is different. But we have to reach out and customize the products. We have to continue providing education programs for prospective home buyers and financial literacy programs,” Stalling said.