Black and Hispanic home buyers are more likely to pay high mortgage rates than white borrowers with similar credit ratings and income levels, an advocacy group found.
The Center for Responsible Lending said either loan sellers are charging higher rates to the minority customers or those borrowers are being steered to loan sellers that specialize in higher rates.
Using an industry database, the Durham-based nonprofit center compared credit scores, down payments and other financial information on about 177,000 loans made in 2004 by "subprime" lenders — companies that charge higher interest rates than banks. The lenders provided the borrowers' income and race.
The study, released Wednesday, found that blacks were 29 percent more likely to pay a high interest rate on a fixed-rate home purchase loan. A Hispanic borrower also was more likely to pay a high rate, it found.
"African Americans and Latinos are paying a premium for home loans because of the color of their skin," said Hilary Shelton, director of the NAACP's Washington bureau.
The Federal Reserve Board said last fall it had identified about 200 lenders whose records showed possible discrimination. Regulators said they would look more closely at those lenders.
The center's data did not include all the factors used by lenders, such as a borrower's total debts, making the study's conclusions incomplete, said Doug Duncan of the Mortgage Bankers Association. He also questioned the ability of any national study to prove discrimination, which would require an analysis of specific lenders.
The Charlotte Observer reported in August that blacks who borrowed from 25 of the nation's largest lenders were four times more likely than whites to pay high rates. Even blacks with incomes above $100,000 a year were charged high rates more often than whites with incomes below $40,000, the newspaper found.