Daily News: Banks Issue Fewest Conventional Mortgages in Minority Neighborhoods

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Daily News

By Clare Trapasso
It took Dante Jones four years of living with his folks and working absurdly long hours to scrape together a $15,000 downpayment for a home in southeast Queens for himself, his fiancé and his six children.

The city employee was pre-approved for a mortgage on a five-bedroom house in St. Albans last year, but just as he was expecting to close, the bank backed out of the deal.

Prospective homebuyers in St. Albans, a predominantly black neighborhood that is the epicenter of the foreclosure crisis, received the fewest number of conventional home mortgage loans from banks in the city, according to the New Economy Project.

The southeast Queens neighborhoods of Rosedale, Springfield Gardens and Jamaica, and the Brooklyn communities of Brownsville, Canarsie and East Flatbush, got the fewest numbers of conventional mortgages, the Manhattan-based financial justice group said.

“There’s a long history of banks not extending mainstream loans to neighborhoods of color — whether or not the people who live there are creditworthy,” said the project’s co-director Sarah Ludwig. “This is good old-fashioned discrimination.”

It’s also hard to get a mortgage in the South Bronx, according to the 2012 government data the project analyzed.
“Your mortgage is going to cost you more if you live in a community of color in New York City,” Ludwig said.

Many residents of minority communities are unable to come up with 20% downpayments to secure a conventional mortgage. They can qualify for a more expensive, government-backed loan by putting only 3.5% down, but they’re likely to pay more in fees and monthly mortgage insurance premiums.

Jones, 44, of Jamaica, lost the home in St. Albans, where he had hoped to raise his family, and he’s still looking for a house of his own.

“It’s unfair,” he said. “I’m still trying to buy a home. It’s a terrible ordeal. It’s unfair. Someone really needs to look into why this is happening.”

Sadly, this is nothing new, said real estate broker Richard Gibbs, who has been selling homes in St. Albans for 37 years.

“We were raped with these fraudulent mortgages that resulted in the explosion of the foreclosure market,” Gibbs said of southeast Queens. “It’s going to be a long time for this area to rebuild.”

Before the housing market tanked, homebuyers could get a mortgage with credit scores in the mid-600s, he said. Now those scores must be in the 700s.

“[A decade ago,] if you breathed, the banks would give you a mortgage,” Gibbs said. “Now you have to stand on your head to get mortgage.”

Expensive mortgages can lead to more vacant homes in an area, gentrification and putting homebuyers at risk for foreclosure, housing experts said.

“What if you lose your job?” said Ismene Speliotis, executive director of the Mutual Housing Association of New York, a Brooklyn-based group that helps folks get mortgages. “What if your tenants stop paying?”

But critics claim the report doesn’t tell the whole story.

“It’s just a little bit misleading to just point the fingers at the banks,” said Isa Abdur-Rahman, executive director of the Farmers Boulevard Community Development Corp., in St. Albans.

“In other communities, it’s more common that parents and grandparents are able to contribute to the down payments,” he said. “Many black families have not yet reached that point where parents and grandparents are financially able to contribute.”