Empire Justice Center Report finds that this key aspect of an economic recovery is not reaching low income families and communities of color
(Central Islip, NY) – Today, at a community forum at the Touro Law Center, Empire Justice Center released its most recent report, “The Lingering Storm: Mortgage Lending Disparities on Long Island,” analyzing mortgage lending in Nassau and Suffolk Counties.
The report is a snapshot of mortgage lending in 2013 and explores the recovery of Long Island communities in terms of access to mortgage credit and, by extension, access to the American Dream of homeownership.
The analysis of the tables and maps in the report indicates that all or parts of several Long Island communities—Hempstead, Roosevelt, Elmont, Uniondale and Freeport in Nassau County, and Central Islip, Brentwood and Wyandanch in Suffolk County—had little access to conventional home purchase lending in 2013. As shown in Empire Justice Center’s 2013 report, these low-moderate income neighborhoods and communities of color had high concentrations of foreclosures and high rates of subprime lending before the foreclosure crisis.
“When neighborhoods that are low-moderate income AND majority non-white also have a legacy of subprime lending and foreclosures, as well as high denial rates and low levels of conventional lending, I get very concerned. Clearly, these areas are missing out on a key part of the American Dream,” noted Barbara Van Kerkhove, the report’s primary author.
Some of the key findings are:
- Low income applicants had the highest denial rates of any income level.
- In Nassau County, low income applicants were denied 40% of the time, 2.7 times more often than the average for all applicants.
- Lending to borrowers of color was less than expected.
- While African-American and Latino borrowers make up 23% of Suffolk County’s total population, they received only 8% of the total mortgages (8,933).
- African American applicants were denied the most of any racial/ethnic group, almost twice (1.9) as often as white applicants.
- In Nassau County, 22% percent of black applicants were denied home purchase loans, while 26% were denied in Suffolk.
- Residents of neighborhoods with the highest proportions of people of color (80-100% non-white) received the fewest home purchase loans (831) in 2013.
- Applicants from 80-100% non-white neighborhoods were denied 2.3 times more often in Nassau County, and 2.5 times more often in Suffolk County, than applicants in neighborhoods with less than 10% people of color.
“All families and communities should have a fair chance at economic opportunity and to be part of the recovery, especially if they felt the brunt of the recession. We need to work together to make this happen,” stated Ruhi Maker, a senior attorney.
Forum attendees were encouraged to share ideas to address lending disparities and improve access to credit on Long Island.
“Long Island has many community based nonprofits working with families every day repairing credit, providing homebuyer education, and connecting first time homebuyers with the best loan products available such as those offered at LIHP. There is always a need to increase these services. We just need the additional program funding to make it happen,” stated Peter Elkowitz, President and CEO of Long Island Housing Partnership.
Some of the report’s specific recommendations include:
- Increase funding to HUD-approved housing counselors to increase the number of consumers financially ready and able to qualify for, and maintain, prime-rate loans.
- Modernize the Community Reinvestment Act (CRA) to specifically obligate covered institutions to serve people and communities of color, especially African American, Latino, and recent immigrant people and communities.
- Use alternative credit scoring models to increase the chance that applicants with “thin files”—limited credit histories or not enough credit accounts—will be approved for loans.
- Create a state Community Restoration Fund (CRF) or similar model for the flexible acquisition and disposition of distressed mortgages and foreclosed or vacant properties to get homes back on the market for purchase by home buyers.
“A fund like the Community Restoration Fund is an important strategy to stabilize communities that are still knee-deep in foreclosures or vacant properties. The CRF can be used to acquire and rehab properties and get them on the market for resale, which will help address the affordable housing shortage in many Long Island communities,” said Maria DeGennaro, a staff attorney and the Long Island regional coordinator for the NYS Attorney General’s Homeownership Protection Program (HOPP).