Name of Report: Unequal Access to Home Mortgages Persists in Rapidly Changing Marketplace
Organizational Affiliation: Joint Center for Housing Studies of Harvard University
Author: N/A
Date: Spring 2004
Contact Information: Laurel Trayes (Newsletter Editor) Phone: (617) 495-7908 Fax: (617) 496-9957 Email: jchs@gsd.harvard.edu Website: www.jchs.harvard.edu Address: 1033 Massachusetts Avenue 5th Floor Cambridge, MA 02138
Pages: 1

Content Summary
This article addresses changes in the mortgage market due to new technology, focusing on the expansion of the mortgage lending industry in low-income, low-wealth, and minority communities. It reviews the findings of a report released by the Joint Center on March 9, 2004, entitled "Credit, Capital and Communities: The Implications of the Changing Mortgage Banking Industry for Community Based Organizations." The article also outlines the major themes emerging from discussion during "Building Assets, Building Credit: Improving Financial Services in Low-Income Communities," a symposium held at the Joint Center in November 2003. The article contains a table comparing access to prime mortgages among African Americans, Hispanics, and Whites, across all income levels.

Major Findings
The Community Reinvestment Act transformed the structure of mortgage and financial services. As a result, there has been an increase of higher-cost subprime lending and the emergence of a dual-market structure in which borrowers with similar risk assessments are charged different prices for mortgages on the basis of some characteristic unrelated to creditworthiness or risk of default. Improved access to mortgage opportunties from new technologies has also brought about increasingly aggressive "push marketing" of low-downpayment, high-cost mortgages that can lead to crushing mortgage debt, if not undertaken responsibly.These changes negatively impact the ability of low-income, low-wealth, and minority populations to obtain affordable and stable long-term homeownership opportunities, despite increased access to capital.

Themes emerging from discussion at the symposium dealt with improving access to homeownership through financial services. First, participants agreed that priority must be given to improving credit score accuracy and expanding collected information in order for credit scores to facilitate increased access to credit. Also, the participants questioned the value of financial literacy education in the face of aggressive push marketing. Finally, a consensus was reached on how to improve mortgage credit and the ability to build assets in low-income populations: "provide incentives.to save and engage in transactions reported to credit bureaus."

Related Issues
This article would benefit from a more detailed discussion of parallel transformations in the home mortgage market and in the U.S. credit market overall. Although the Community Reinvestment Act and new technologies have certainly influenced the nature of the current home mortgage market, it is useful to view these changes in the context of financial transformations of the U.S. credit market and its corresponding effect on portfolio allocations. A 2004 study by Zhou & Shaw explains disparities in home mortgage finance ability in the context of these market transformations.

Reference List
Zhou , Bin and Wendy Shaw . "Financial Transformation and Portfolio Reallocation: Impacts on House Mortgage Finance in the USA." Housing Studies 19.2 (2004): 207-228.

How to Access Report
http://www.jchs.harvard.edu/media/newsletter_spring04.pdf