This afternoon, Piedmont Housing Alliance hosted dozens of local residents, both white and African American, in order to address a #1 rating that Charlottesville doesn’t want. Every year, data from the Home Mortgage Disclosure Act (HMDA) is collected from lenders across the country.  In July, HMDA data from 2005 was analyzed by National Community Reinvestment Coalition (NCRC) – PDF.  The Charlottesville MSA finished 1st (or, if you will, last) in the greatest disparity between African Americans and whites for high cost mortgage loans. 43% of all mortgage loans made to African Americans were high cost, but only 11.1% were high cost for whites.

For a community that prides itself as a great place to retire, boasts 2006’s best new major concert venue and has health care options sought out for hundreds of miles, this report came as quite a shock.

Why did this happen?

Racism is offered as a cause.  No doubt – whether you consider us Mid-Atlantic or South, a higher percentage of communities in those areas appeared high on the list.

Also, Virginia is open for business, meaning out-of-state predatory lenders can open up a virtual business here, without building the relationships necessary for local loan officers to achieve long-term success.  Further, loan officers do not need licenses to conduct business.  As preposterous as this sounds, an eighteen year old can walk into a mortgage office, apply to be a loan officer and be advising home buyers, in what will be their largest financial decision, later that day.  Can you imagine the insurance, legal, real estate or accountant fields with such lax standards?

One more item: don’t expect positive news come this January.  Data has not yet been parsed for 2006 and we are too deep into 2007 to make significant improvement.  We might be much better or still last.  It doesn’t really matter.  What matters is how the industry and community addresses the future.

On Saturday, the perspectives from participants on the panel…

Ed Note: This is part one of a multi-part series of posts authored by Matt Hodges, a mortgage broker in Charlottesville. This matter is of vital importance to the Charlottesville area real estate market, and all citizens and real estate professionals should know as much as possible about it. That so many members of the community are talking is surely a positive sign.

For more information, see this story from July when the report was first released and this one from late last month, notably this quote from the NCRC report itself:

The disparities discussed in this report reflect a number of factors including income, wealth, credit rating, and many others. Discrimination, of course, remains a significant factor. Several studies discussed below have found that even controlling on credit-related factors, disparities persist. The disparities in this report do not necessarily reveal levels of discrimination in the marketplace; but they do reveal the presence of ongoing barriers associated with socioeconomic factors.

Update 10/6/07: There was more just than race affecting the mortgage industry. Read the whole thing (Hat Tip: RCG)

The Daily Progress has coverage of yesterday’s forum.

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