Low-income financial loans in Baltimore might have been much more costly

Borrowers in Baltimore, MD may have fallen prey to expensive loans. Some have accused lending groups of discriminatory lending practices. When getting an FHA loan, the rate, no matter your income or credit rating, is supposed to be within a narrow range. Some research says that Baltimore consumers might have paid a higher rate when they bought homes in minority neighborhoods.

Baltimore Federal Housing Administration loans

A study was released that supposedly proves there is discrimination when it comes to obtaining Federal Housing Administration loans by a community-organizing group in Baltimore. The rate of interest should be about the exact same for any financial loans from the Federal Housing Administration that are secured. Unlike traditional housing financial loans, the credit score and amount of the loan have very little impact on the rate. Then there are Veteran's Administration loans. They are very similar. In Baltimore, Maryland, something about FHA loans was discovered within the study. It showed that there were higher interest rates for homes in minority and low-income neighborhoods.

Problem is with overages

For more than a decade, the Justice Department has identified “overages” as a place of possible abuse in Federal Housing Administration financial loans. When determining "overages" and processing fees on financial loans, employees are able to make some of the decisions. These mortgage overages help determine the commission the salesperson is paid for the GHA mortgage they help set up. Overage charges are generally higher in low-income or minority neighborhoods. This ends up showing discrimination that happens.

Exactly what discrimination charge had the Federal Reserve Expressing

In an analysis of the Federal Housing Administration financial loans during 2008, the very same year that Communities United studied, the Federal Reserve counters the charge of discrimination. The same Baltimore FHA loans were studied by the Federal Reserve. The details used isn't available to the public yet though. Privacy was a concern though. That means in the publishing, the exact dates weren't listed. The dive in home prices in late 2008 is what the Federal Reserve attributes the anomaly in mortgage cost to come from. The Baltimore FHA mortgages may actually be discriminatory. In that case, more research needs to be done with the 2009 and on data to see if it is true.

Articles cited

Baltimore Sun

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