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A dream denied 

Banking while black, or brown, still a handicap

click to enlarge James Stewart, president of the Colorado Springs Black - Chamber of Commerce, also serves on the board for Ent - Federal Credit Union. - FILE PHOTO
  • File Photo
  • James Stewart, president of the Colorado Springs Black Chamber of Commerce, also serves on the board for Ent Federal Credit Union.

If owning a home is an essential part of the American Dream, then blacks, Latinos and American Indians in El Paso County still are being denied the dream in disproportionate numbers, regardless of income level.

Local people of color continue to be turned down for mortgage loans far more often than whites, reveals a review of 2004 lending data by the Independent. And of those who are approved, many get stuck with high-cost loans.

The differences reflect a nationwide phenomenon that long has been a major concern of policymakers and advocacy groups, some of whom blame it on discrimination.

Locally, civil rights advocates say that while they haven't examined the numbers independently, the findings are disturbing.

"These figures are of great concern," says Rosemary Harris, president of the Colorado Springs chapter of the NAACP. The struggle for economic equity long has been central to the civil rights movement, Harris adds.

"It's amazing to me," says Luis Cortez, president of the local chapter of the League of United Latin American Citizens. "We're still fighting the same issues that we fought years ago."

29 percent rejected

Data supplied to the federal government by the lenders themselves shows that last year, white people applying for mortgage loans in El Paso County were denied 18 percent of the time. The denial rate was 29 percent for blacks, 26 percent for both American Indians and Latinos, and 21 percent for Asian-Americans.

Almost three years ago, when the Independent examined lending figures for 2001, whites were denied mortgage loans about 10 percent of the time, while blacks were denied more than 20 percent of the time. (See Out of Reach, Jan. 30, 2003, available online at csindy.com. )

While denials for all ethnic groups have jumped sharply since then -- possibly because soaring housing prices have outpaced growth in the local economy -- the rate for blacks continues to be more than 10 percentage points ahead of the rate for whites.

Last year's data also shows, for the first time, that people of color often are pushed into high-cost or "subprime loans," which carry significantly higher interest rates, and often less favorable payment terms, than regular mortgage loans.

Of conventional mortgage and refinance loans given to white people in El Paso County, 13 percent were classified by the federal government as high-cost. The rate was 36 percent for blacks, 33 percent for American Indians, 29 percent for Latinos and 15 percent for Asian-Americans.

On average, white people earn more money and have better credit ratings than people of color. But those factors alone don't fully explain the differences.

click to enlarge CHRIS DIDARIO

Last year in El Paso County, high-income blacks applying for a mortgage loan still were turned down slightly more often than low- to moderate-income whites.

And nationally, while blacks are 1.5 times more likely than whites to be denied loans due to poor credit ratings, they are 3.7 times more likely to end up with high-cost loans, according to an analysis by the National Community Reinvestment Coalition, a fair-lending advocacy group.

Such findings have led the coalition and other advocates to conclude that racial bias is involved.

"There's discrimination out there," says James Stewart, president of the Colorado Springs Black Chamber of Commerce. "There's no doubt about that."

Significant disparities

Stewart also happens to be chairman of the board for Ent Federal Credit Union, one of the three biggest mortgage lenders operating in the county. The other two are Wells Fargo and Countrywide Home Loans.

All three saw significant racial disparities in their denial rates last year -- and Ent had the biggest gap of the three, with 16 percent denials for whites, versus 35 percent for blacks and 34 percent for Latinos.

Stewart speculates that the credit union might have a greater-than-average disparity because of its philosophy of "conservative" lending. While many lenders will offer subprime loans as an alternative after turning down a customer for a regular mortgage loan, Ent doesn't, explains Bill Vogeney, Ent's chief lending officer.

Vogeney says he's hoping other efforts by Ent, including numerous free financial seminars for community residents and programs to aid low-income and first-time homebuyers, will help more people get access to affordable loans, regardless of race.

"We're never satisfied," Vogeney says.

Martin Smith, southern Colorado area manager for Wells Fargo Home Mortgage, says that when customers are turned down for loans from his institution, it's because they don't make enough money, can't make a sufficient down payment, or have poor credit.

Nonetheless, he calls racial disparities in lending "a huge concern." Wells Fargo is trying to address the problem by making sure employees are trained to practice fair, nondiscriminatory lending, he says. The company also opened a satellite branch in Colorado Springs this year that specializes in lending to minority and low- to moderate-income customers.

Representatives for Countrywide did not respond to a request for comment.

-- Terje Langeland

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