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In the wake of the housing bust and recession, financial institutions curbed their lending to the relatively few buyers who were still shopping for homes. The volume of applications for loans in Salt Lake County fell 75 percent between 2006 and 2011, according to the U.’s study. The Hispanic share of the applicant pool dropped from 15 percent during the housing boom in 2006 and 2007 to 7 percent in 2009. It later stabilized at 8 percent.
Meanwhile, Hispanic approval rates soared, according to the study. They rose from 36 percent in 2008 to 69 percent in 2010. The increase was driven mostly by a shift from conventional loan applications to applications for non-conventional loans guaranteed by a government agency such as the Veterans Administration or the Federal Housing Administration.
What mortgage lenders must, must not do:
» Consider public assistance income the same way as other income
» Consider income from part-time employment, Social Security payments, pensions and annuities
» Consider alimony and child support
Must not do
» Reject mortgage applications because of race, color, religion, national origin, sex, marital status or age
» Consider sex, race or national origin, although applicants are asked to disclose this information voluntarily to help federal agencies enforce anti-discrimination laws
» Impose higher interest rates or bigger down payments based on sex, race or other prohibited factors
» Consider the racial composition of the applicant’s neighborhood
» Ask about applicants’ plans for having a family
» Require a co-signer if the applicant meets the lender’s standards
Source: Federal Trade Commission
Just 2.7 percent of Hispanic applications in 2006 were for non-conventional loans. By 2009, the rate had risen to 79 percent. But after accounting for only conventional loan applications, the approval rate dropped to 60 percent in 2010.
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