For Release Monday, February 23, 10:00 a.m.

(2/23/98) Mayors Attack Urban Redlining, Mortgage Discrimination

San Francisco Mayor Brown: Shouldn't All Boats be Rising on Strong Economic Tide?

The U.S. Conference of Mayors today issued a report which condemns urban redlining and mortgage lending discrimination for limiting homeownership in the nation's cities to just 49 percent of all households – a dramatic 22.5 percent below the suburban homeownership rate of 71.5 percent.

The Conference of Mayors study, "America's Homeownership Gap," finds that "center city residents of all income levels are less likely to own a home than suburban residents with similar incomes. This is not only unfair to those families denied the opportunity to live in the home of their choice, it also unfairly limits the ability of cities to maintain the homeowner base that is so vital to the economic and social stability of urban neighborhoods."

The report says that "mortgage lending discrimination forces many urban home seekers to move to the suburbs to pursue the dream of homeownership" and calls for "a renewed commitment to eliminate discriminatory lending practices and expand homeownership opportunities in America....As the number of homeowners increases nationwide, mayors across the country are appropriately concerned that center city residents are being left behind."

Conference of Mayors Executive Director J. Thomas Cochran said the report documents the need for cooperative actions by government at all levels and the private sector in order to expand homeownership opportunities for city residents.

As an example of needed action, the mayors' report says that "the private mortgage industry has a special obligation to work with the Federal Housing Administration (FHA) and other public agencies to ensure that all households willing and able to purchase a home have access to mortgage credit."

Cochran said a proposal in President Clinton's 1999 federal budget to raise the limits on home mortgages insured by the FHA would be one important step to narrow the homeownership gap between cities and suburbs. He announced the Conference of Mayors is endorsing the initiative. "The door to homeownership must be opened as wide to city residents as it is to those in suburbs," Cochran said. "The homeownership gap must be closed."

San Francisco Mayor Willie Brown, Chair of the Conference of Mayors Committee on Community Development and Housing, said the report is particularly disturbing because it shows even the strong economy has not torn down roadblocks to homeownership for minorities. "Unemployment is low, inflation is low, interest rates are low, crime rates are low, the federal deficit is low," Mayor Brown said. "We've got more people in more jobs making more money and buying more homes. But these homebuyers aren't minorities, and that raises the question: Shouldn't all boats be rising on this strong economic tide?"

The Conference of Mayors report also cites statistics from a 1997 report by the Harvard University Joint Center for Housing Studies which found the homeownership gap also divides whites from minorities who are disproportionately concentrated in the nation's cities. "Discriminatory practices, of course, are particularly problematic for minority families," the mayors' report says. "Urban redlining has ruined and continues to ruin thousands of minority communities." The mayors' report points out that while 71.3 percent of whites are homeowners, only 43.6 percent of African Americans and 41.7 percent of Hispanics are homeowners. The report also says statistics collected by the Federal Reserve Board show that "minority households applying for mortgage credit were much more likely to be rejected than white households with similar income."

For example, the data show that only 10 percent of white applicants with incomes between 100 and 120 percent of the area median are denied conventional mortgages. The denial rate for Hispanics with the same income range jumps to 19.6 percent, and soars to 22.8 percent for African Americans. "Despite a dramatic surge in the nation's homeownership rates," the mayors' report says, "academics and housing experts continue to document discriminatory lending practices in inner cities today. The long and infamous history of housing and lending discrimination in this country scarred the lives of millions of families seeking to realize the dreams and aspirations of all Americans – to own a home. Unfortunately, such practices remain with us, in the form of urban redlining, mortgage steering, and other discriminatory actions."

The report concludes: "The denial of mortgage credit does more than limit the homebuying aspirations of families, it limits efforts to revitalize urban areas. The Conference of Mayors challenges all segments of the mortgage industry to ensure that the legacy of discriminatory practices is not allowed to persist in the market place of today."

CONTACT: Gene Lowe, (202) 861-6710 or Mike Brown, (202) 861-6708

The United States Conference of Mayors

J. Thomas Cochran, Executive Director
1620 Eye Street, NW, Washington, DC 20006
Telephone (202) 293-7330, FAX (202) 293-2352

Copyright © 1996, US Conference of Mayors, All rights reserved.