Expensive loans for low-income borrowers in Baltimore

In Baltimore, MD, and surrounding areas, there happen to be accusations of discriminatory lending rates. When taking out a Federal Housing Administration mortgage, the rate, no matter your income or credit rating, is intended to be within a narrow range. Minority-neighborhood consumers in Baltimore may not have gotten a fair shake in 2008, though. One study claims that these borrowers paid higher rates during that year. Article source – Discriminatory FHA loans could have cost Baltimore borrowers by MoneyBlogNewz.

Need an FHA loan while in Baltimore?

In Baltimore there was a study released by a community-organizing group. Supposedly, it proves that Federal Housing Administration loans use discrimination. For all financial loans that are Federal Housing Administration secured, the interest rate should be close to the exact same. There isn't much of an effect on the rate from the credit score and amount of mortgage which isn't like traditional house financial loans. Then there are Veteran's Administration financial loans. They are very similar. In a study of the FHA financial loans offered to Baltimore, MD, residents, however, it was discovered that homes in minority and low-income neighborhoods tended to have higher interest rates.

Overages

The Justice Department has identified "overages" as one place for abuse. This is for Federal Housing Administration financial loans mostly. When determining "overages" and processing fees on loans, employees are able to make some of the decisions. Many times the loan overages will decide what the GHA mortgage salesperson can be getting paid. This is part of their commission. By charging low-income or minority neighborhood consumers more in overages, purposefully or not, the financial loans could end up discriminatory.

Discrimination charge discussed by Federal Reserve

The charge of discrimination was countered by the Federal Reserve during 2008 in an examination of FHA financial loans, which was the very same year Communities United studied. Details not yet accessible to the public was used as the Federal Reserve studied the exact same Baltimore Federal Housing Administration loans. Privacy was a concern though. That means within the publishing, the exact dates weren't listed. The Federal Reserve states the anomaly in mortgage cost taken place due to the dive in home prices in late 2008. If the Baltimore Federal Housing Administration mortgages were discriminatory, then the data from 2009 and later years needs to be researched to determine the truth.

Data from

Baltimore Sun

weblogs.baltimoresun.com/business/realestate/blog/2010/11/study_raises_questions_about_disparities_in_fha_loans.html