Date: Sep 24, 2012

Mortgage Crisis Hits L.I.'s Minority Communities Hardest: Hofstra Study

National Center for Suburban Studies Study Reveals Racial Disparities in Lending Practices

Hofstra University, Hempstead, NY – A new study from Hofstra University suggests that in the wake of the foreclosure crisis, many black and Latino borrowers have lost access to mortgage capital.  Households and communities that saw much of their wealth disappear now find themselves unable to rebuild it, likely widening the racial wealth gap on Long Island.

Mortgage lending for black and Latino applicants in Long Island has dropped at nearly double the rate of white mortgage applicants during the recession, according to the new study by the National Center for Suburban Studies at Hofstra University. For black and Latino applicants, lending fell by 79 percent and 82 percent, respectively, compared to 42 percent for white applicants and 34 percent for Asian applicants.

The study, which examined mortgage lending in Nassau and Suffolk counties between 2005-06 and 2009-10, found that while there were significant regional losses, those losses were not felt evenly in all communities.

Some areas, such as Wyandanch, Brentwood, and Gordon Heights, saw lending drop by more than 90 percent.  In areas such as Garden City and Rockville Centre, lending declined only modestly.

“The housing crisis is far from over on Long Island, and it is not just about foreclosures any more,” said Dr. Christopher Niedt, Academic Director of the NCSS. “Communities that had been denied mortgages for years finally got them during the subprime boom, but this new lending was high-rate and often predatory.  Once foreclosures hit, both the good and bad lenders alike disappeared.  Our findings indicate that many communities have gone from no loans to bad loans, and then back to no loans again.”

The study examined mortgage denial rates over time, finding that denial rates rose across groups and communities, with particularly sharp increases in the communities hardest hit by the foreclosure crisis. Mortgage applications also declined in these places, however, indicating each recessionary hardship, the loss of local financial services, or both. The NCSS study, based on a report commissioned by Bethpage Federal Credit Union, used federal data collected under the Home Mortgage Disclosure Act.

The National Center for Suburban Studies at Hofstra University® is a non-partisan research institution dedicated to promoting objective, academically rigorous study of suburbia's problems and promise. Rooted in the laboratory of Long Island's diverse and aging suburbs, the National Center studies a broad range of local and national issues. The suburbs have emerged as the nexus of dynamic demographic, social, economic and environmental change. The tasks of identifying, analyzing and solving the problems of suburbia are key to the health of the country - and central to the Center's mission.

Hofstra University is a dynamic private institution where students can choose from more than 150 undergraduate and 160 graduate programs in liberal arts and sciences, business, communication, engineering, education, health sciences and human services, and honor studies, as well as the Maurice A. Deane School of Law and the Hofstra North Shore-LIJ School of Medicine.