Potier, Beth

Seif, Amy

English

UNH Scholars' Repository

University of New HampshireUniversity of New Hampshire Scholars' RepositoryMedia Relations Administrative Offices10-3-2006Carsey Report: Predatory Mortgage Lending IsPrevalent In Rural CommunitiesAmy SeifBeth PotierFollow this and additional works at: https://scholars.unh.edu/newsThis News Article is brought to you for free and open access by the Administrative Offices at University of New Hampshire Scholars' Repository. It hasbeen accepted for inclusion in Media Relations by an authorized administrator of University of New Hampshire Scholars' Repository. For moreinformation, please contact nicole.hentz@unh.edu.Recommended CitationSeif, Amy and Potier, Beth, "Carsey Report: Predatory Mortgage Lending Is Prevalent In Rural Communities" (2006). UNH Today.986.https://scholars.unh.edu/news/9869/18/17, 1(59 PMCarsey Report: Predatory Mortgage Lending Is Prevalent In Rural CommunitiesPage 1 of 2http://www.unh.edu/delete/news/cj_nr/2006/october/as_100306carsey.cfm@type=n.html Carsey Report: Predatory Mortgage Lending IsPrevalent In Rural CommunitiesRural Minorities More Likely To Take Out Higher-Cost LoansContact:  Amy Seif 603-862-4650Carsey Institute Beth Potier 603-862-1566UNH Media RelationsOctober 3, 2006DURHAM, N.H. -- Predatory mortgage lending, which can trap borrowers in a cycle of highinterest payments and abusive fees and can ultimately devastate their financial futures, isprevalent in rural areas, a new policy brief from the Carsey Institute at the University of NewHampshire finds. The report, “Subprime and Predatory Lending in Rural America: Mortgagelending practices that can trap low-income rural people,” also finds that rural minorities aremore likely than rural whites to take out higher-cost mortgage loans.The subprime mortgage market is where people who may not qualify for conventional creditborrow. Subprime lending plays an important role in access to credit and is booming acrossthe nation, but at the same time, abusive, predatory practices have been flourishing in asubset of this market.“Lacking access to many lending options, rural residents are susceptible to a range ofpredatory financial institutions and products that charge excessive fees and diminish theirability to save and build wealth,” said Cynthia “Mil” Duncan, director of the Carsey Institute.“Predatory lending hurts not only individual borrowers, but it can have significant impact onrural children, families, and communities through increased foreclosures and vacant housingunits.”Analyzing the most recent Home Mortgage Disclosure Act (HMDA) data, the report finds that17.4 percent of mortgage loan originations in rural areas were classified as High APR Loans(HALs), defined as loans with interest rates at least three percentage points higher than thatof comparable U.S. Treasury securities. This is slightly higher than the national rate of 15percent. Closer analysis of these data indicates that HALs are concentrated in rural areas withchronic poverty and, often, a high percentage of minorities.“Predatory lending has been called red-lining in reverse,” says report co-author TheresaSingleton, director of research and information at the Housing Assistance Council ofWashington, D.C. “Just as some poor and minority communities were once denied access tocredit, those same communities are being flooded with loan products that often strip equityand diminish wealth.” A case study of predatory lending in Maine, which accompanies thereport, showed that as many as many as 15 percent of borrowers qualified for cheaper loans9/18/17, 1(59 PMCarsey Report: Predatory Mortgage Lending Is Prevalent In Rural CommunitiesPage 2 of 2http://www.unh.edu/delete/news/cj_nr/2006/october/as_100306carsey.cfm@type=n.htmlthan they actually got.Rates of high APR lending are higher in the central and southern regions of the country,particularly in Persistent Poverty Counties – those counties that have had poverty rates of 20percent or more for the last three decades.Racial and ethnic minorities in rural America received a disproportionate share of HALs. Inrural areas, nearly one-third of all Latino and Native American borrowers and almost half of allAfrican-American borrowers received HALs, compared to less than 17 percent of rural non-Hispanic white borrowers. Counties across the Mississippi Delta region and counties withNative American reservations and poor Hispanic communities have higher concentration ofHALs.Further, HALs are widespread in purchasing manufactured housing, a key component of therural housing market. Among rural residents who took out a real estate loan to purchase theirmanufactured homes, half received HALs.“A home is the most valuable asset for most low-income rural residents, as it is for mostAmericans,” says co-author Carla Dickstein, senior vice president for research and policydevelopment at Coastal Enterprises, Inc., of Maine. “To protect the benefits ofhomeownership, national and state officials should adopt and enforce policies that betterregulate subprime lending terms, monitor lending and real estate practices, and educate andprotect borrowers.”Dickstein authored a case study – “The Persistence of Predatory Lending: A Case Study fromMaine” – that accompanies the policy brief.The policy brief can be downloaded at www.carseyinstitute.unh.edu.The Carsey Institute at the University of New Hampshire conducts research and analysis onthe challenges facing families and communities in New Hampshire, New England, and thenation. The Carsey Institute sponsors independent, interdisciplinary research that documentstrends and conditions affecting families and communities, providing valuable information andanalysis to policymakers, practitioners, the media, and the general public. Through this work,the Carsey Institute contributes to public dialogue on policies that encourage social mobilityand sustain healthy, equitable communities.The Carsey Institute was established in May 2002 with a generous gift from UNH alumna andnoted television producer Marcy Carsey.

Carsey Report: Predatory Mortgage Lending Is Prevalent In Rural Communities

University of New Hampshire

University of New Hampshire
University of New Hampshire Scholars' Repository
Media Relations Administrative Offices
10-3-2006
Carsey Report: Predatory Mortgage Lending Is
Prevalent In Rural Communities
Amy Seif
Beth Potier
Follow this and additional works at: https://scholars.unh.edu/news
This News Article is brought to you for free and open access by the Administrative Offices at University of New Hampshire Scholars' Repository. It has
been accepted for inclusion in Media Relations by an authorized administrator of University of New Hampshire Scholars' Repository. For more
information, please contact nicole.hentz@unh.edu.
Recommended Citation
Seif, Amy and Potier, Beth, "Carsey Report: Predatory Mortgage Lending Is Prevalent In Rural Communities" (2006). UNH Today.
986.
https://scholars.unh.edu/news/986
9/18/17, 1(59 PMCarsey Report: Predatory Mortgage Lending Is Prevalent In Rural Communities
Page 1 of 2http://www.unh.edu/delete/news/cj_nr/2006/october/as_100306carsey.cfm@type=n.html
 
Carsey Report: Predatory Mortgage Lending Is
Prevalent In Rural Communities
Rural Minorities More Likely To Take Out Higher-Cost Loans
Contact:  Amy Seif 
603-862-4650
Carsey Institute 
Beth Potier 
603-862-1566
UNH Media Relations
October 3, 2006
DURHAM, N.H. -- Predatory mortgage lending, which can trap borrowers in a cycle of high
interest payments and abusive fees and can ultimately devastate their financial futures, is
prevalent in rural areas, a new policy brief from the Carsey Institute at the University of New
Hampshire finds. The report, “Subprime and Predatory Lending in Rural America: Mortgage
lending practices that can trap low-income rural people,” also finds that rural minorities are
more likely than rural whites to take out higher-cost mortgage loans.
The subprime mortgage market is where people who may not qualify for conventional credit
borrow. Subprime lending plays an important role in access to credit and is booming across
the nation, but at the same time, abusive, predatory practices have been flourishing in a
subset of this market.
“Lacking access to many lending options, rural residents are susceptible to a range of
predatory financial institutions and products that charge excessive fees and diminish their
ability to save and build wealth,” said Cynthia “Mil” Duncan, director of the Carsey Institute.
“Predatory lending hurts not only individual borrowers, but it can have significant impact on
rural children, families, and communities through increased foreclosures and vacant housing
units.”
Analyzing the most recent Home Mortgage Disclosure Act (HMDA) data, the report finds that
17.4 percent of mortgage loan originations in rural areas were classified as High APR Loans
(HALs), defined as loans with interest rates at least three percentage points higher than that
of comparable U.S. Treasury securities. This is slightly higher than the national rate of 15
percent. Closer analysis of these data indicates that HALs are concentrated in rural areas with
chronic poverty and, often, a high percentage of minorities.
“Predatory lending has been called red-lining in reverse,” says report co-author Theresa
Singleton, director of research and information at the Housing Assistance Council of
Washington, D.C. “Just as some poor and minority communities were once denied access to
credit, those same communities are being flooded with loan products that often strip equity
and diminish wealth.” A case study of predatory lending in Maine, which accompanies the
report, showed that as many as many as 15 percent of borrowers qualified for cheaper loans
9/18/17, 1(59 PMCarsey Report: Predatory Mortgage Lending Is Prevalent In Rural Communities
Page 2 of 2http://www.unh.edu/delete/news/cj_nr/2006/october/as_100306carsey.cfm@type=n.html
than they actually got.
Rates of high APR lending are higher in the central and southern regions of the country,
particularly in Persistent Poverty Counties – those counties that have had poverty rates of 20
percent or more for the last three decades.
Racial and ethnic minorities in rural America received a disproportionate share of HALs. In
rural areas, nearly one-third of all Latino and Native American borrowers and almost half of all
African-American borrowers received HALs, compared to less than 17 percent of rural non-
Hispanic white borrowers. Counties across the Mississippi Delta region and counties with
Native American reservations and poor Hispanic communities have higher concentration of
HALs.
Further, HALs are widespread in purchasing manufactured housing, a key component of the
rural housing market. Among rural residents who took out a real estate loan to purchase their
manufactured homes, half received HALs.
“A home is the most valuable asset for most low-income rural residents, as it is for most
Americans,” says co-author Carla Dickstein, senior vice president for research and policy
development at Coastal Enterprises, Inc., of Maine. “To protect the benefits of
homeownership, national and state officials should adopt and enforce policies that better
regulate subprime lending terms, monitor lending and real estate practices, and educate and
protect borrowers.”
Dickstein authored a case study – “The Persistence of Predatory Lending: A Case Study from
Maine” – that accompanies the policy brief.
The policy brief can be downloaded at www.carseyinstitute.unh.edu.
The Carsey Institute at the University of New Hampshire conducts research and analysis on
the challenges facing families and communities in New Hampshire, New England, and the
nation. The Carsey Institute sponsors independent, interdisciplinary research that documents
trends and conditions affecting families and communities, providing valuable information and
analysis to policymakers, practitioners, the media, and the general public. Through this work,
the Carsey Institute contributes to public dialogue on policies that encourage social mobility
and sustain healthy, equitable communities.
The Carsey Institute was established in May 2002 with a generous gift from UNH alumna and
noted television producer Marcy Carsey.


https://scholars.unh.edu/cgi/viewcontent.cgi?article=1985&amp;context=news

Carsey Report: Predatory Mortgage Lending Is Prevalent In Rural Communities

Abstract

Similar works

Full text

Available Versions

UNH Scholars' Repository

University of New Hampshire