By: Marc H. Morial
President and CEO
National Urban League
A recent study by the Durham, N.C.-based Center for Responsible Lending (CRL)
concluding that African Americans are more likely than whites to fall into the highinterest
high-cost mortgage loan trap fuels the fire of a longstanding debate about
predatory lending practices by financial institutions.
The center's overall conc lusion is not new: numerous studies have confirmed it in the
past. In 2004, a study by Columbia University Professor Lance Freeman that as part of
the State of Black America 2006 concluded that black homeowners in the 1990s
obtained mortgages with interest rates that were six-tenths of a percentage point
higher than their white counterparts.
In an August 2005 investigation, the Charlotte Observer found that African Americans
who borrowed from the nation's top 25 banks were four times more likely to pay higher
rates.
Before now, lenders have said they had a perfectly legitimate reason for charging
minorities higher interest rates. They claimed they needed to compensate for the
higher risk associated with lending to minorities. They asserted that incomes of African
Americans tended to be lower, their credit histories shakier and their down payments
were lower than those of whites.
But the difference here is that for the first time researchers compared apple to apples
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