Race Discrimination - NOT a thing of the past! To lie about your race or not to lie ..... to own your home, or NOT to own your home!

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: In the Fall 1998 Newsletter published by Option One Mortgage Corporation  I found an excellent article on discrimination.  It mentioned a HUD sting operation, proving that race discrimination does exist to a VERY serious extent in US mortgage lending TODAY.

: I searched for AccuBanc at the HUD site and found the press release at
: http://www.hud.gov/pressrel/pr98-146.html

: Excerpt:

: "Tests of the lender were conducted by whites and minorities posing as applicants for home mortgage loans. One test in Dallas showed that a minority tester was told he was eligible for an $85,000 loan, while a white tester with a less favorable financial record was told he was eligible for a loan of $110,000 to $150,000. 

: In another test, a minority tester was told he was eligible for a $115,000 loan, while a white tester with a similar financial record was told he was eligible for a loan of up to $150,000. There were similar results in other tests."

: I would have NEVER thought that lenders would increase the loan amount to a white person by 30% or more.

: When I was actively brokering loans, I gave a lot of my business to AccuBanc, formerly Medallion Mortgage.  I know that they did NOT discriminate against MY clients.  

: I'm posting about discrimination for two reasons:

: 1)  When you mail, fax or E-mail a loan application, you can pick your color.  

: When working with a mortgage broker, it depends on the individual agent/broker whether they would "correct" your race. 

: The race/sex section is BELOW your signature, so it's "OK" to lie.

: I remember that some borrowers left the race/sex section blank, and I had to complete it although I never saw the borrower.  I had to guess by the last name.   I don't think that many borrowers are aware of this requirement.

: 
: 2) HUD uses the race/sex info from the loan application to establish compliance with Fair Lending Laws.

: Obviously, the picture is greatly distorted because many minority applicants change colors for their mortgage.  

: What does HUD think?  Minorities are stupid?  

: Minorities don't consider that they're going to have a better chance of approval being white?

: The entire process is severely flawed!

: HUD is effectively ENCOURAGING discrimination!  

: Underwriting is an extremely stressful job.  Often, especially with low-income and/or questionable credit borrowers, the underwriters are walking VERY fine lines.   When a loan goes bad, they get to hear about it.  

: Under NO circumstance should the underwriter be aware of the applicant's race!

: How about getting the race questionnaire at CLOSING or DENIAL of application?  Attach a prepaid postcard to the document, to be mailed by the borrower to HUD directly.  Let the Lenders pay for the scanner and the database, it's so easy!

: I'm sending a copy of this posting to HUD for comments.

: So here's the MILLION DOLLAR QUESTION:

: Should you be WHITE when applying for a mortgage?

: My minority clients almost always ask me how to complete the "race/sex" section at the end of the mortgage application.

: My answer:

: Some lenders discriminate against minorities, BUT when they're caught, they have to give preferences to minorities.   So, it depends on the individual lender.

: Another excerpt from the HUD press release:

: "The highest settlement of mortgage lending discrimination allegations in U.S. history - a conciliation agreement signed by AccuBanc Mortgage Corporation targeting $2.1 billion in mortgages to minorities and low- and moderate-income families in the next three years to enable them to become homeowners.

: In addition, AccuBanc agreed to spend $24 million over the next three years in mortgage closing cost assistance to enable more minorities and low- and moderate income borrowers to receive mortgages. Fair housing agencies expect over 15,700 families will receive mortgages because of the agreement."

: Right now it looks like you might be better off disclosing your minority status when applying with AccuBank.

: But in general, I believe that minority applicants would benefit from being white.

: I'll send a copy of this posting to Option One, maybe they'll post their entire extremely well written article "What you should know about discrimination."

: Christine Baker
: chris@bayhouse.com
: "Want to borrow?  Be WHITE!!!???"


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