The Seattle Times analyzed loan applications for single-family, owner-occupied homes in 2004 from 25 of the nation’s largest lenders and concluded that minorities are paying more for loans in Seattle. The numbers show that black people in Seattle are more than four times likely to carry a high-rate mortgage than white people (13.2% vs 3.1%). However, the data also shows that black people in the rest of the country are even worse off as they are more than twice as likely to carry a high-rate mortgage than in Seattle (26.6% vs. 13.2%).

Also interesting is that the rates are not due to income differences as “low-income whites are far less likely than high-income blacks to wind up with high-interest mortgages (3.9 percent vs. 11.3 percent).” In looking for answers to why, the times speculates that differences “may be due to a variety of factors, ranging from the financial savvy of loan customers with differing backgrounds, to which lenders operate in which parts of town.”

I’m pretty sure that everyone reading this blog is aware that it is illegal for lenders to discriminate based on race and/or to discriminate against a neighborhood known as “redlining”. And I’m positive that all lenders are aware that this is illegal, so it makes me think that the difference must have something to do with the financial savvy of the loan customers.

What is the solution to this problem? It seems like educating the consumers of high-rate loans. Along those lines, here are some helpful links and organizations that I’m aware of:

• Fair Loans, Fair Housing (*.pdf) by the City of Seattle that provides some advice on avoiding predatory loans.
• Community Home Ownership Center (CHOC) (206-587-5641) CHOC provides seminars for first-time home buyers with links to statewide seminars, and also provides training for real estate agents.
• El Centro de la Raza (206-329-7960) El Centro provides home buyer education classes in English and Spanish.
• HomeSight (206-723-4355) HomeSight provides purchase assistance and other financial and educational information to home buyers (in Seattle, South King County and Snohomish County).
• International District Housing Alliance (206-623-0122) Provides home buyer education and housing counseling in Vietnamese, Cambodian, Tagalog and several Chinese dialects including Cantonese, Mandarin and Taiwanese.
• Urban League of Metropolitan Seattle (206-461-3792) Provides one-on-one counseling and monthly home buyers seminars.

If anyone is aware of any other local programs, I’d definitely be interested in hearing about them. In particular, I’d be interested in hearing about mortgage brokers that are working to educate minorities.

Thanks to Todd at Lendorama for highlighting the Seattle Times article.