Chris Kromm refers us to an ACORN study on the impact of high-cost lending practices on southern home foreclosures. According to the report, 7 of the top 10 cities with high-cost loans are in the South. Memphis, TN is one of those cities. More than one of every two home loans in Memphis is a high-cost loan, which means that high-cost borrowers will pay more in interest when they could have qualified for more affordable loans.
Race seems to play a part in high-cost loans. Almost three-quarters of all 2006 high-cost loans in Memphis were made to African-American homeowners, and black Memphians are 1.7 times more likely to receive high-cost loans than white Memphians (Latinos, 0.9 times more likely than whites).
By comparison, fewer loans (1 in 3) in Nashville-Davidson-Murfreesboro are high-cost. But more than half go to African Americans, and black Nashvillians are still 1.7 times more likely to receive high-cost loans than are white Nashvillians (Latinos, 1.2 times more likely than whites). Nonetheless, 1 out of every 3 white homeowners in Nashville-Davidson-Murfreesboro are also under the burden of high-cost loans.
Predatory lenders take advantage of lower-income earners in all parts of the south at a much higher rate than they do upper-income earners. ACORN is calling upon lenders to make loans more affordable for lower-income earners and it is calling upon governments to pass laws against predatory lending.