In a recent article published by the Star Tribune, H.J. Cummins raises some interesting home loan points.  Cummins assets that income alone “does not explain why minority borrowers got a disproportionate number of sub-prime home loans in the run-up to the current foreclosure crisis.”.  That study also ranked cities by the home loan disparities between white borrowers and those from racial and ethnic minorities. Only Milwaukee gave a worse sindication than the Minneapolis metro area, based on data concluded in 2006.  The 2007 and 2008 data in not available yet.  This data was gathered and collected under the federal Home Mortgage Disclosure Act (HMDA).

John Taylor who is the head of the National Community Reinvestment Coalition said “The financing data reminds us that the current housing crisis was overwhelmingly the result of the explosion of bad loan products in financially vulnerable communities.” However it should be noted that the the study did not consider credit scores or loan payment delinquencies.  FHA home loans are the most popular financing tool used today for buying or refinancing a home and they do not use credit scores into the underwriting score card.  

In the Minneapolis area, middle- and upper-income blacks were three times more likely than comparably paid whites to get loans that carry more expensive terms designed for high-risk borrowers called sub-prime or “Alt-A” home mortgage loans. Middle and upper-income Hispanics were 2.4 times more likely; Asians, 1.6 times.

Dave Snyder, a community organizer at Jewish Community Action in St. Paul was not surprised by the financing data revealead. “It’s not a statistic that stands in isolation,” Snyder said. He continued by noting that Minnesota has one our country’s lowest homeownership rates for black people, and one of the highest for white people.