Low-income loans in Baltimore might happen to be more costly

In Baltimore, Maryland, and surrounding areas, there have been accusations of discriminatory lending rates. When taking out a Federal Housing Administration loan, the rate, no matter your income or credit rating, is supposed to be within a narrow range. One group’s research claims that minority neighborhood FHA loans might have had a higher rate.

Need to have a Federal Housing Administration mortgage while in Baltimore?

A study was released that supposedly proves there is discrimination when it comes to obtaining FHA financial loans by a community-organizing group in Baltimore. For all financial loans that are FHA secured, the interest rate should be close to the same. There is not much of an impact on the rate from the credit rating and amount of loan which isn't like traditional house loans. Then there are Veteran's Administration financial loans. They are very similar. In Baltimore, Maryland, something about FHA loans was discovered within the study. It showed that there were higher interest rates for homes in minority and low-income neighborhoods.

Overages may be responsible

The Justice Department has identified "overages" as one place for abuse. This is for FHA financial loans mostly. Some employees are able to make decisions on things like "overages" on financial loans. This includes processing fees. These mortgage overages help determine the commission the salesperson is paid for the GHA mortgage they help set up. Overage charges are generally higher in low-income or minority neighborhoods. This ends up showing discrimination that happens.

Exactly what discrimination offense had the Federal Reserve Expressing

2008 was when Communities United did its study. The FHA loans had an analysis that year that countered the offense of discrimination from the Federal Reserve. The Federal Reserve studied these same Baltimore Federal Housing Administration loans, using information that is not readily accessible to the public. In order to preserve privacy, the exact dates mortgages are offered aren’t published. The dive in home prices in late 2008 is what the Federal Reserve attributes the anomaly in mortgage cost to come from. The Baltimore FHA mortgages might really be discriminatory. In that case, more research needs to be done with the 2009 and on data to see if it is true.

Articles cited

Baltimore Sun

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