The Urban Institute has completed an excellent analysis with Home Mortgage Disclosure Act (HMDA) data. I had been wanting to work with the HDMA data after Michigan Legal Services and the ACLU won a lawsuit against Morgan Stanley for employing racial discrimination in subprime home mortgages offered to Black Detroit homeowners during the economic recession. The New Century Financial Group (now bankrupt) was tasked with seeking out Black homeowners to offer subprime mortgages. From Reuters:
“The ACLU asked the court to certify the case as a class action. It said as many as 6,000 black homeowners in the Detroit area may have suffered similar discrimination as a result of being offered loans that many could not afford.”
Recently, JP Morgan Chase (Chase Bank) announced that it would be investing $100 million in Detroit over the next 5 years. This could only be seen as a corporate move to appease their racial discrimination. Detroit has been named as the 5th hardest hit city during the housing crisis. At the Detroit Homecoming Mayor Duggan told the audience that the city had sold 162 homes, but people are saying, “we can’t get mortgages.” It seems that Mayor Duggan should be keeping a very watchful eye on Chase Bank, Morgan Stanley, JP Morgan Chase, etc. if he truly hopes to stem the tide of migration out of Detroit.
Text from the Urban Institute‘s page:
A delayed recovery still hurts minorities most: Detroit
Detroit is the poster child for cities that have lacked a strong recovery like San Francisco’s. The sharp drop in the number of mortgages reflects this ailing Rust Belt city’s sweeping economic decline. According to the US Census Bureau, Detroit’s population fell from 951,270 to 713,777 between 2000 and 2010 as the auto industry stumbled, jobs disappeared, and the city entered the largest municipal bankruptcy on record. Though the recession took a toll on the entire region, the housing bust still disproportionately hurt minority borrowers.
Detroit’s downtown, which held a large share of mortgages made to African American borrowers during the boom, has remained virtually devoid of new mortgages since the bust. From 2006 to 2012, the number of mortgages in the metropolitan area fell 79 percent for African American borrowers as lending within city limits fell off the map. In comparison, the number of mortgages made to white borrowers dropped only 11 percent. Recent investments from the private sector suggest a comeback could be under way, but the mortgage market in the inner city shows no sign of recovery yet.