Home Mortgage Refinancing Guide

Nearly 200 mortgage lenders are being scrutinized by the Federal government to determine if they are abiding by fair lending practices or are discriminating against minority races by charging them higher interest rates. The government review, which is being spearheaded by several agencies that regulate the mortgage industry in the United States, was instigated by a report last month by the Federal Reserve. The government found about a third of African-Americans got high interest rate loans when purchasing a home last year, as opposed to 9 percent of Caucasians. As for Hispanics, 20 percent got more expensive mortgage loans. These more expensive mortgage loans, sometimes called subprime mortgages, are typically written for people with credit problems; this means higher monthly payments than the less expensive prime mortgage loans. Industry experts say they do not discriminate when writing loans, regardless of race or ethnic background; homeowners are charged high interest rates only if they have lousy credit scores.

In the Federal Reserve report last month, government officials state that the difference in loan interest rates is based on individual credit scores and factors such as income, but stated that nearly 2 percent of the 8,853 lenders they reviewed showed a statistically significant discrepancy in the number of higher interest rate mortgage loans between Hispanic and African-American mortgage holders; including non-Hispanic white mortgage borrowers. The government stated they would begin contacting mortgage lenders to investigate their lending practices. However, government officials urged caution in drawing conclusions from the data. The government has provided lists of mortgage lenders needing review to the different agencies regulating the mortgage industry. The government regulators would not specify which mortgage lenders are on that lists.

Mortgage Refinancing