Home Loans
Minorities Are Likely To Receive Higher Refinance Rates
(presented by www.refinance-refinance.net - mortgage lenders)
By Martin Lukac
A study released Wednesday indicates that black and hispanic homeowners are more likely to receive refinancing loans aimed at borrowers with low credit ratings.
The study, conducted by the Consumer Federation of America, surveyed nearly five million refinanced mortgages made by 30 lenders nationwide. The study found that about half of black mortgage seekers and one-third of Hispanics received subprime mortgages with higher interest rates. Only one-quarter of white borrowers received subprime mortgages.
Subprime loans have higher interest rates in order to compensate the lender for the increased risk that borrowers with lower credit ratings bring to the table. Interest rates on subprime, adjustable-rate fefinanced mortgages increase sharply as the market sees increases. This often makes it harder for the borrower to repay the loan.
“Some of the differences in lending we saw are undoubtedly due to risk-based pricing, but the variation is too great to be explained by risk factors along,” said Patrick Woodhall, senior researcher with the Consumer Federation of America.
The study looked at 300 different cities and compared regional differences in lending practices. Over 36% of mortgage refinances were made at subprime rates in the Southwest and the Great Plains. Only 18% of mortgage refinancings were at subprime rates in the Pacific and Northwest.
Banking industry insiders say that comparing mortgage rates from different regions can overstate differences. It isn’t suprising to find higher rates of subprime loans in remote areas of the country since there are fewer competing lenders to drive down rates, explained James Ballentine with the American Bankers Association.
“It’s important, when you look at a particular market, to compare it to similar areas and not drastically different ones,” he said. “Comparing Jackson, Mississippi, to Los Angeles doesn’t tell you much because it’s not even comparing apples to oranges — it’s more like apples and grapefruits.”
g to Ame
rican Banker Online, the top issuers of subprime mortgages in the first half of 2005 were New Century Financial Corp., Countrywide Financial Corp and Washington Mutual Inc.
A Federal study is currently looking into lenders’ practices based on 2004 loan data, with April through August 2005 data already collected. The information is also being looked at by the Federal Reserve for a study that will come out this month.
|
Martin Lukac represents http://www.RateEmpire.com and http://www.1AmericanFinancial.com, a finance web-company specializing in real estate and mortgage rates. We specialize in daily updates, mortgage news, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies! |
===========================================
For additional Mortgage Refinancing information
and resources visit Mortgage Refinancing.
(http://www.refinance-refinance.net)
===========================================
Technorati Tags: mortgage refinance, refinance, home refinance, bad credit refinance, bad credit mortgage refinance, loan refinance, home loan mortgage refinance, mortgage refinance information, refinance mortgage, home equity loan, home equity loans, equity loans, debt consolidation, debt consolidation loans, debt consolidation loan, consolidation loans, credit card debt consolidation, credit card consolidation
