Banks’ Embrace of Jumbo Mortgages Means Fewer Loans for Blacks, Hispanics
*This is the kind of story that tends to fly under the radar. Banks now have a preference for “jumbo” mortgages, those for more than $417,000. They are less of a risk but federal law says banks must serve a racially diverse set of customers. The problem is that almost no Latinos apply for “jumbo” loans and they’re getting less and less mortgages because of it. VL
By Rachel Louise Ensign, Paul Overberg and Annamaria Andriotis, Wall Street Journal (10 minute read)
Last decade’s financial crisis left many losers in banking. One winner is the jumbo.
The biggest U.S. banks are tilting toward these high-dollar mortgages as they overhaul loan operations. And jumbo loans, which were less important during the subprime-loan boom, are helping banks take on less risk, as mandated by regulators in the postcrisis era.
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These loans, however, could put banks at odds with another federal regulatory mandate—one that says lenders should serve a racially diverse set of customers. As they approve relatively more jumbos, major banks are granting fewer mortgages to African-Americans and Hispanics than just before the crisis, a Wall Street Journal analysis found.
For banks, “it’s one of those damned if you do, damned if you don’t situations . . . READ MORE
[Photo courtesy of American Advisors Group/Flickr]
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