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					     Who Really Gets Higher-Cost Home Loans?
  Home Loan Disparities By Income, Race and Ethnicity of Borrowers
      and Neighborhoods in 12 California Communities in 2004




                                     December 2005


                            California Reinvestment Coalition
                              474 Valencia Street, Suite 110
                             San Francisco, California 94103
                                     (415) 864-3980
                                   www.calreinvest.org


CRC is a nonprofit membership organization of more than two hundred (200) nonprofit
organizations and public agencies across the state of California. We work with
community-based organizations to promote the economic revitalization of California’s
low-income communities and communities of color. CRC promotes increased access to
credit for affordable housing and community economic development, and to financial
services for these communities. CRC promotes community reinvestment through
negotiation with and regular monitoring of major California financial institutions, as well
as through the provision of technical assistance to local communities in California.

This report was researched and written by Kevin Stein. CRC wishes to thank Maeve Elise
Brown (Housing and Economic Rights Advocates), Ilene Jacobs (California Rural Legal
Assistance), Sharon Kinlaw (Fair Housing Council of the San Fernando Valley), Heidi Li
(Housing and Economic Rights Advocates), and Caroline Peattie (Fair Housing of Marin)
for their thoughtful comments on earlier drafts of this report. Jim Campen (Mauricio
Gaston Institute for Latino Community Development and Public Policy) and Victoria
Leon Guerrero (California Reinvestment Coalition) also provided helpful edits.




                                                                                          1
Executive Summary

This report is CRC’s twelfth annual analysis of federal Home Mortgage Disclosure Act
(HMDA) data. This year represents the first in which the data include information about
how much home loans actually cost consumers.

This report looks at one window into the home loan market in California – how much
higher-cost lending is occurring here, and whether it appears targeted to certain
borrowers and neighborhoods within the state based on race and ethnicity, and income.

Whether a home loan is a higher-cost loan or not will have great impact on the borrower,
and the borrower’s community. The average interest rate on a 30-year fixed rate home
loan in 2004 was 5.84%. In contrast, the average higher-cost home loan in California
carried an Annual Percentage Rate (APR) of approximately 9.81%. In practical terms,
the average higher-cost borrower in California paid $691.76 more per month on her
home loan.

Who Really Makes Higher-cost Home Loans?

There were 264,348 higher-cost loans made to homeowners in California in 2004. These
loans carried annual percentage rates of approximately 8% and higher. Many of these
higher-cost loans were made by some of the largest banking and financial services
companies in the world, including: General Electric, Countrywide, Lehman Brothers,
Washington Mutual, HSBC, Wells Fargo, Citigroup, H&R Block, and Bank of America.
Indeed, Citigroup, HSBC and Wells Fargo made hundreds of loans in the state with APRs
of approximately 13% and higher.

When extremely high-cost loans are sold in California, both homeowners and
communities are greatly impacted. Homeowners who face a greater burden in making
mortgage payments will have a greater likelihood of falling behind and possibly losing
their homes to foreclosure. More money spent on housing costs means less money to
meet basic necessities, provide routine home maintenance, and respond to emergencies
that may arise. Communities are also adversely affected when homeowners have less
money to support local businesses, make needed home repairs that uplift neighborhoods,
and avoid the devastating ripple effect that comes with foreclosure.

Who Really Gets Higher-Cost Home Loans?

As is the case every year, the HMDA data reveal that African American and Latino
borrowers are paying more for their home loans, as are minority and low-income
neighborhoods.

Conservatively, people of color in California are paying nearly $50 million more per
month than white borrowers as a result of higher-cost home loans. This figure most likely
underestimates the added costs to people of color, since the HMDA data only capture a
fraction of the subprime lending occurring in California.


                                                                                          2
   •   African Americans pay more. Statewide, African American borrowers were
       more than twice as likely as White borrowers to have a higher-cost home
       purchase or refinance loan.

   •   Latinos pay more. Statewide, Latino borrowers were three times as likely as
       White non-Hispanic borrowers to get a higher-cost home purchase loan, and
       Latino borrowers were twice as likely as White non-Hispanic borrowers to get a
       higher-cost refinance loan.

   •   Minority neighborhoods pay more. Residents of minority neighborhoods were
       nearly four times as likely as those in White neighborhoods to get a higher-cost
       home purchase loan, and minority neighborhoods were more than three times as
       likely as white neighborhoods to get higher-cost refinance loans.

   •   Low-income neighborhoods pay more. Low-income neighborhoods were three
       times as likely as upper income neighborhoods to receive higher-cost home
       purchase and refinance loans.

Who Really Regulates Higher-Cost Lenders?

There are six regulatory agencies that have responsibility to ensure that their lenders are
complying with fair lending and related laws: The Federal Deposit Insurance Corporation
(FDIC), Federal Reserve Board (FRB), Department of Housing and Urban Development
(HUD), National Credit Union Administration (NCUA), Office of the Comptroller of the
Currency (OCC), and Office of Thrift Supervision (OTS). These regulatory agencies
must exercise their full authority to investigate illegal lending practices and to enforce
fair lending and consumer protection laws. CRC analyzed the lending patterns of
different lenders, separated out by regulator, and found:

   •   HUD-regulated lenders made, by far, the most higher-cost first lien home
       purchase and refinance loans in California, having originated 102,040 higher-
       cost loans. HUD regulates the largest number of lenders, more than 500 lenders in
       California alone, and these lenders include some of the largest subprime lenders
       in the nation, such as Ameriquest and New Century Mortgage.

   •   FDIC-regulated lenders had the largest percentage of higher-cost loans to
       underserved borrowers and communities. For example, 43.27% of all FDIC-
       regulated refinance lending to low-income neighborhoods was higher-cost
       lending.

   •   National banks regulated by the OCC displayed the greatest disparities. Of
       the eight categories of lending analyzed, the OCC-regulated lenders had the
       greatest disparities in five areas. Further, the national banks had the second
       highest disparities in two additional areas. For example, national banks were 4.15
       times as likely to make higher-cost refinance loans to African Americans as they
       were to make higher-cost loans to white borrowers.



                                                                                          3
       Savings associations regulated by the OTS exhibited the next largest
       disparities. OTS lenders had the highest disparities in three of the eight areas
       analyzed, and had the second highest disparity ratio in three additional areas. For
       example, OTS lenders in the aggregate were more than eight times as likely to
       make a higher-cost home purchase loan in minority neighborhoods as they were
       to make a higher-cost loan in predominantly white neighborhoods.

Which Communities Are Most Impacted by Higher-Cost Lending?

CRC analyzed higher-cost lending patterns in 12 California cities: Delano, El Centro,
Fresno, Los Angeles, Modesto, Oakland, Oxnard, Sacramento, San Diego, San Francisco,
Salinas, and Yuba City. This analysis focuses on high rate lending to African American
and Latino borrowers, and to minority and low and moderate-income neighborhoods.

In looking at the overall rate of higher-cost lending:

   •   Cities that can be characterized as “rural” had the greatest incidence of higher-
       cost lending, with Delano, El Centro, Fresno, Modesto, and Yuba City having
       25% to 15% of all home loans coming at higher-cost.

   •   Despite relatively low rates of higher-cost lending in California, African
       Americans continued to receive a large share of higher-cost loans.

           o In Oxnard, 28.21% of home purchase loans made to African Americans
             were higher-cost.

   •   Rural areas saw the greatest rates of higher-cost lending to Latino borrowers,
       while urban areas exhibited greater disparities between Latino and White non-
       Hispanic borrowers.

           o San Francisco and Los Angeles had the largest disparities for higher-cost
             lending to Latinos as compared to White non-Hispanics. In San
             Francisco, Latino borrowers were 6.42 times as likely as white borrowers
             to get a higher-cost home purchase loan, and 2.72 times as likely to get a
             higher-cost refinance loan. In Los Angeles, the figures were 4.28 and
             2.63, respectively.

   •   Rural communities witnessed a high percentage of higher-cost lending in minority
       neighborhoods, while the cities saw the greatest disparities and the largest number
       of higher-cost loans.

           o Delano had the largest percentage of higher-cost loans in its minority
             neighborhoods, for both home purchase lending (17.37% of loans in these
             neighborhoods were higher-cost) and refinance lending (30.10% were
             higher-cost).



                                                                                             4
           o There were 7,957 higher-cost refinance loans originated in minority
             neighborhoods within the city of Los Angeles alone.

   •   Higher-cost lending to low and moderate income neighborhoods was prevalent

           o The city of El Centro saw a very large percentage of loans in its low-
             moderate income neighborhoods come with higher-costs. This was true
             for both home purchase (29.41%) and refinance (31.55%) loans.

           o El Centro also had the highest home purchase loan disparity, with low
             and moderate-income neighborhoods 4.27 times as likely as middle and
             upper-income neighborhoods to get higher-cost loans.

Fringe Finance versus Access to Mainstream Credit

Banks that avoid locating branches in certain neighborhoods may be missing significant
business opportunity. They also are leaving those communities vulnerable to high cost
check cashers and payday lenders.

In looking at the 12 survey cities, disparities between check casher presence and bank
presence are stark:

   •   The number of check cashers in eight cities equaled or exceeded the number of
       bank branches there.

   •   Oxnard had the greatest disparity, with nearly 3 times as many check cashers as
       banks.

   •   Los Angeles has an astounding 568 check cashers. San Diego has 224.

The prevalence of check cashing establishments in survey cities suggests that access to
mainstream banks and low cost credit are impaired. Check cashers have clearly found a
niche, are serving a large number of consumers, and are making money doing so. Banks
and prime mortgage lenders should actively compete for this market.

Recommendations
In order to address the higher-cost lending disparities highlighted in this report, CRC
recommends:

   •   Ensuring that borrowers get the best loan. For those companies that have both
       prime and subprime lending channels, it is imperative that they offer all borrowers
       the best loan product for which they qualify, regardless of how they look or where
       they live.



                                                                                          5
•   Vigorously examining lending practices and enforcing anti discrimination
    laws. Federal and state regulators must more vigorously examine lending
    practices and enforce anti predatory, fair housing/fair lending, and consumer
    protection laws and regulations.

•   Expanding branches and CRA requirements. Lending disparities are smaller
    where banks lend within their Community Reinvestment Act (CRA) assessment
    areas. Loopholes in the CRA must be closed so that banks like Countrywide Bank
    and the potential H&R Block Bank cannot take deposits and conduct banking
    nationally, while reinvesting only in a few local areas.

•   Eliminating YSPs and discretionary pricing. Home loan sales where brokers or
    loan officers have discretion to charge different prices to different consumers is an
    invitation to discriminate. Yield Spread Premiums, which provide financial
    incentives for loan brokers to charge borrowers a higher rate than they deserve,
    should be eliminated.

•   Providing more flexible products for immigrants and people of color, and
    better outreach in rural areas and minority urban neighborhoods for prime
    products. Lenders should develop more flexible lending products that meet the
    needs of immigrants and people of color, and should aggressively market to the
    rural and inner city urban areas that are prey to higher-cost lenders. Lenders must
    get beyond their over reliance on credit scores, and focus on a borrower’s ability
    to repay the loan.

•   Expanding HMDA reporting requirements. The Federal Reserve should
    expand HMDA data by requiring lenders to report the very information that
    lenders say is needed to assess whether discrimination is occurring. Such
    information should include credit score, debt-to-income ratios, loan-to-value
    ratios and points and fee data. Shedding light on lending patterns inevitably leads
    to better lending.




                                                                                       6
Introduction

This report is CRC’s twelfth annual analysis of federal Home Mortgage Disclosure Act
(HMDA) data. HMDA data are important for several reasons, including:

    •   They speak to whether financial institutions are helping people obtain and
        maintain the largest asset most Americans may ever own – a home.
    •   They represent one of the most detailed publicly available data sets concerning
        lending and banking practices.
    •   They have as one of their important stated purposes, the lofty goal of assisting in
        identifying possible discriminatory lending patterns.

Over the years, CRC’s analysis of the HMDA data has evolved as the home loan market
and HMDA data have evolved. In the early years, the focus was on whether home loan
applications to underserved borrowers were approved or denied. The main concern was
that lenders were actively discriminating against African American, Latino and other
minority borrowers, and refusing to lend to, or redlining, the neighborhoods in which
these borrowers lived.

While redlining remains a sad reality in our lending landscape, we have seen a shift from
redlining to reverse redlining, where minority borrowers and neighborhoods are now
targeted for higher-cost, or subprime, loans they can ill afford. Subprime lending refers to
lending that is targeted to borrowers who have, or are perceived to have, blemishes on
their credit reports. Subprime loans carry higher interest rates and fees, and more onerous
loan terms.

With the explosion of subprime lending, CRC has looked at whether loans to underserved
borrowers and neighborhoods are coming from banks or higher-cost, subprime lenders.
CRC has attempted in recent years to look at the relationship between higher-cost lenders
and the mainstream banks that often own, or are affiliated with, these subprime lenders.

This year represents the first in which the public has access to loan pricing data. Several
excellent reports on the new data have already been issued since the data have been made
public.1

A major problem arises when subprime lending goes beyond fairly compensating the
lender for taking on the added risk of lending to a person with a poor credit history. CRC,

1
 ACORN Fair Housing, “The High Cost of Credit: Disparities in High Priced Refinance Loans to Minority
Homeowners in 125 American Cities,” September 27, 2005; Center for Responsible Lending (Ernst, Keith
S, and Goldstein, Deborah N.) “Comment on Federal Reserve Analysis of Home Mortgage Disclosure Act
Data,” September 14, 2005; Consumer Federation of America (Fishbein, Allen, and Woodall, Patrick)
“Subprime Cities: Patterns of Geographic Disparity in Subprime Lending, September 8, 2005; Greenlining
Institute (Gee, Peter) “The Price of Credit: Prime and Subprime Lending in California 2004;” National
Community Reinvestment Coalition, “The 2004 Fair Lending Disparities: Stubborn and Persistent,” April
2005; Woodstock Institute, “New Mortgage Pricing Data Sheds Light on Subprime Market,” Reinvestment
Alert, May 2005.


                                                                                                     7
Fannie Mae, and others have estimated that up to half of all borrowers with subprime
loans could qualify for a lower cost prime loan.2

Subprime loans are also more likely to include additional terms that are not in the
borrower’s interest, such as prepayment penalty provisions which trap borrowers into
higher-cost loans, and mandatory arbitration provisions which deny borrowers equal
access to the courts to seek redress for violations of law.

The issue of subprime lending takes on added significance in California. The National
Mortgage News has estimated that subprime lending accounted for more than $600
Billion in 2004.3 CRC believes that 25 to 50 percent of all subprime lending is occurring
in California, based on reviews of SEC filings relating to subprime securities. California
receives the largest share of higher-cost loans in the nation.4

Further, CRC believes that the new HMDA loan pricing data are only capturing about
50% of the subprime loan market. Many loans are priced just under the thresholds.
Brokers and lenders are aggressively marketing interest-only, option ARM (Adjustable
Rate Mortgage) and other exotic loan products that have an artificially low introductory
rate but that will inevitably rise. Next year, we may begin to see not only an increase in
subprime loan reporting under HMDA, but also an increase in the number of foreclosures
in California as interest rates rise and homeowners face mounting challenges in meeting
their monthly payments obligations.

This report looks at one window into the home loan market in California – how much
higher-cost lending5 is occurring here, and whether it appears targeted to certain
borrowers and neighborhoods within the state.

Whether a home loan is a higher-cost loan or not will have great impact on the borrower,
and the borrower’s community. According to Freddie Mac, the average interest rate on a
30-year fixed rate loan in 2004 was 5.84%, and the average points and fees paid was .7%.
2
  A poll of the 50 most active subprime lenders found that 50% of their clients could qualify for a
conventional loan, according to Inside Mortgage Finance, a trade publication. (Paul D. Davies, Beg,
Borrow, Besieged, Philadelphia Daily News, February 5, 2001.) A Freddie Mac publication cited the same
poll, attributing it to Inside B&C Lending, and estimated based on its own findings that between 10% and
35% of subprime borrowers could qualify for prime loans (Freddie Mac, Automated Underwriting: Making
Mortgage Lending Simpler and Fairer for America’s Families, September 1996).
3
  American Banker, “Subprime Market Share Nears 25%,” from National Mortgage News, Monday,
February 28, 2005.
4
  Inside B&C Lending, “Californians Get Most Rate-Spread Loans, HMDA Show,” estimating that
California received $47.48 billion in Higher-cost loans, roughly 20% of the national market.
5
  “Higher-cost loans” is defined in this report as those loans that were reported as “rate spread” loans under
the new HMDA reporting requirements. More specifically, this includes first lien loans with Annual
Percentage Rates (APRs) that exceed the rate on Treasury securities of comparable maturity by 3%, and
second liens with APRs that exceed the rate on Treasury securities of comparable maturity by 5%. Using
the Federal Financial Institutions Examination Council "Treasury Securities of Comparable Maturity under
Regulation C" Table, CRC estimates that the average comparable Treasury rate for 2004 was 5%, and that
higher-cost loans in 2004 therefore carried APRs of approximately 8% or higher for first lien loans, and
10% or higher for second lien loans. See, www.ffiec.gov.



                                                                                                             8
In contrast, the average higher-cost home loan in California in 2004 carried an APR of
9.81%.6

For a home loan borrower getting Freddie Mac’s low cost prime rate on a $275,000 loan,
the monthly payment would be approximately $1620.58, and the interest payments over
the life of the loan could reach $308,409.71.7

A borrower with the same $275,000 loan but with the average higher-cost APR of 9.81%
would pay considerably more each month. Assuming a consumer’s 9.81% APR translates
into a higher-cost home loan with an interest rate of 9.5%8, the monthly payment will rise
to a much higher $2,312.34, and total interest payments that could reach $557,445.66.
This means that a borrower with a higher-cost home loan will pay $691.76 more per
month, and a whopping $249,035.95 more in interest payments over the life of the
loan, than the majority of borrowers who obtain a lower cost prime loan!

Conservatively, people of color in California are paying $47.5 million more per
month than white borrowers as a result of higher-cost home loans.9




Who Really Makes Higher-Cost Loans in California?
Top Higher-Cost Lenders

There were 264,348 higher-cost home loans made to homeowners in California in 2004.10
These loans carried annual percentage rates of approximately 8% and higher.11 Many of
these higher-cost loans were made by some of the largest banking and financial services
companies in the world. The following chart depicts the lenders with the largest share of
higher-cost loans in the state.


6
  The average rate spread for higher cost loans in California in 2004 was 4.81%. A 4.81% average rate
spread + 5% average comparable Treasury rate = 9.81% APR for the average higher cost home loan.
7
  Payments were calculated using East West Mortgage Mortgage Payment Calculator,
www.eastwestmortgage.com.
8
  The remainder of the APR (9.81% APR – 9.5% interest rate) represents fees paid by the consumer. Here,
CRC estimates that the consumer will pay slightly more than 2 points, or more than 2% of the loan amount,
or more than $5,500 in points and fees.
9
  Estimate based on the following: The average higher-cost APR to owner occupants in single family and
manufactured homes in California in 2004 was roughly 9.81%. If American Indians, Pacific Islanders,
African Americans, and Latino borrowers all were as likely to receive a higher-cost home loan as White
non Hispanic borrowers, who saw a relatively low 8.59% of home loans come with higher-cost rates, nearly
70,000 additional residents of color would NOT be paying the increased monthly costs (an extra
$691.76/month) that come with the average higher-cost loan. This would yield a monthly cost savings of
$47,488,311.15 million to people of color and the communities in which they live in California.
10
   The 264,348 loans were single-family and manufactured housing loans made to owner occupants that
exceeded the new pricing thresholds.
11
   See note 5, above.


                                                                                                       9
Top Higher-Cost Lenders in California: 2004
Single Family and Manufactured Housing Loans to Owner Occupants
Market Share Report
                                                       $ Amount
Rank Lender                                   # Loans   (+000)
  1 Ameriquest                                 32009   7046607
  2 Fremont Investment & Loan                  22094   4973816
  3 General Electric/WMC Mortgage Corp         18937   3294060
  4 New Century Mortgage Corporation           17888   3100483
  5 Countrywide Home Loans                     15579   2564458
  6 Lehman Brothers                            14006   3314950
  7 Washington Mutual                           8744   1090752
  8 National City Bank, Indiana                 7352    873804
  9 Encore Credit Corp.                         7229   1589194
 10 Accredited Home Lenders, Inc.               7119    930966
 11 HSBC                                        6179    777467
 12 MortgageIT, Inc.                            5946   1506923
 13 Wells Fargo                                 5480    819970
 14 Citibank                                    5066    553197
 15 H&R Block                                   4626    839239
 16 Aames Funding Corporation                   4103    602519
 17 First NLC Financial Services                3820    641672
 18 Fieldstone Mortgage Company                 3816    659896
 19 Peoples Choice Home Loan Inc                3050    377228
 20 Bank of America                             3043    480375

This list includes some of the largest financial service corporations in the world, many of
which own lenders that make higher-cost loans to minority borrowers and in minority
neighborhoods.

Ameriquest includes: Argent Mortgage Company, Ameriquest Mortgage Company, Olympus Mortgage Company,
Town & Country Credit Corp, and Bedford Home Loans, Inc.
Countrywide includes: Countrywide Home Loans, Treasury Bank, NA, and Countrywide Mtg. Ventures, LLC
Lehman Brothers includes: Lehman Brothers Bank and Finance America, LLC
Washington Mutual includes: Long Beach Mortgage and Washington Mutual Bank, FA
H&R Block includes: Option One Mortgage Corp. and H&R Block Mortgage Corporation
Wells Fargo includes: Wells Fargo Financial Services, California, Wells Fargo Bank, NA, and
Wells Fargo Funding, Inc.
HSBC includes: Decision One Mortgage, Beneficial and HFC
Bank of America includes: OwnIt Mortgage Solutions, Inc. and Bank of America, N.A.
                                                                        12
Bank of America recently reported it has reduced its interest in OwnIt.
Citibank includes: Citifinancial Services, Inc., Citicorp Trust Bank, FSB, Citifinancial Mortgage Co, Inc.,
Washington Mutual Finance Corp (which Citi purchased), and Citimortgage, Inc.

12
  In a recent filing regarding the proposed acquisition by Bank of America of MBNA, Bank of America
asserts, “as of March 2, 2005, Ownit is no longer an affiliate of Bank of America. Bank of America
indirectly owns 24.9% of the voting common equity of Ownit, through a passive limited partnership
interest in CIVC Fund IIIA, L.P. No Bank of America associates serve on Ownit’s Board of Directors.”


                                                                                                       10
                             Top Higher Cost Lenders in CA 2004

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Top Highest Cost Lenders

Beyond showing whether a loan was higher-cost or not, the new HMDA data for the first
time revealed how much lenders actually charged borrowers. The highest category of
loans is listed as having Annual Percentage Rates (APRs) that exceed the comparable
Treasury Rate by 8 percentage points. The following 10 lenders had the largest share of
loans made with the highest rates charged – APRs that approximated 13% or higher in
2004.13




13
  See footnote 7. Loans classified as having a rate-spread of 8% or more over comparable Treasury are
estimated to carry APRs of 13% and higher.


                                                                                                        11
                   Top Highest Cost Lenders in CA: Single Family and Manufactured
                              Home Loans to Owner Occupants in 2004

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                                                                          U
When such extremely high cost loans are charged in California, both homeowners and
communities are greatly impacted. Homeowners who face a greater burden in making
mortgage payments will have a greater likelihood of falling behind and possibly losing
their homes to foreclosure. More money spent on housing costs means less money to
meet basic necessities, provide routine home maintenance, and respond to any
emergencies that may arise. Communities are also adversely affected when homeowners
have less money to support local businesses, make needed home repairs that uplift
neighborhoods, and avoid the devastating ripple effect that comes with foreclosure.

Who Really Gets Higher-Cost Loans in California?
Community groups are most concerned when higher-cost loans are more prevalent in
certain communities and with certain borrowers. As is the case every year, the HMDA
data reveal lending disparities by race and income. One of the new additions to HMDA
this year is the inclusion of data relating to ethnicity. For the first time, the data show
disparities between Latino borrowers and White non-Hispanic borrowers. The data also
this year distinguish between first lien loans and junior or second lien loan. The ensuing
analysis of lending disparities focuses only on first lien loans to owner occupants for both
home purchases and refinances.

Importantly, the Federal Reserve Board’s own analysis confirms that lending disparities
do exist, and that they cannot be fully explained by valid underwriting criteria.14

14
  “Adjusting the HMDA data for borrower-related factors plus lender – is insufficient to account fully for
racial or ethnic differences in the incidence of higher-priced lending; significant differences remain
unexplained.” Avery, Robert B., and Canner, Glenn B., “New Information Higher-Cost Loans Under
HMDA and Its Application in Fair Lending Enforcement, Federal Reserve Bulletin,” Summer 2005, p. 379.



                                                                                                                             12
Home Purchase Loan Disparities by Race and Ethnicity of Borrower:

   •   Statewide, 7.52% of all first lien home purchase loans were higher-cost loans.

   •   For White borrowers statewide, 7.16% of home purchase loans were higher-cost.

   •   For African American borrowers, the figures were more than twice that for
       whites, with 16.29% of home purchase loans constituting higher-cost loans.

   •   The figures were also large for higher-cost home purchase lending to American
       Indians (12.39% of loans were higher-cost) and Pacific Islanders (10.84%).

   •   Looking at lending patterns relating to ethnicity, a mere 4.69% of home purchase
       loans to White non-Hispanic borrowers were higher-cost.

   •   In comparison, 14.03% of home purchase loans to Latino borrowers were higher-
       cost, reflecting that Latino borrowers in California were roughly 3x as likely as
       White non Hispanic borrowers to get a higher-cost, first lien, home purchase loan.


           Higher Cost Lending by Race and Ethnicity of Borrowers: First
           Lien Home Purchase Loans to Owner Occupants in California
                                      2004

  18.00%
  16.00%
  14.00%
  12.00%
  10.00%
   8.00%
   6.00%
   4.00%
   2.00%
   0.00%
           American     Asian     African     Pacific    White      Latino   White Non
            Indian               American    Islander                        Hispanic




                                                                                        13
Home Purchase Loan Disparities by Race and Income of Neighborhood:

In addition to looking at which borrowers are more likely to receive higher-cost home
loans, HMDA data also permit an analysis of which neighborhoods are more vulnerable
to higher-cost lending. The analysis below compares lending to neighborhoods that are
predominantly white (less than 10% minority) to neighborhoods that are predominantly
of color (more than 80% minority). Similarly, lending in low-income neighborhoods (less
than 50% of the area median income) is compared to lending in upper-income
neighborhoods (more than 120% of area median income).

   • A scant 3.51% of home purchase loans in neighborhoods characterized as
       predominantly white had higher-cost loans.

   • Minority neighborhoods were nearly 4 times as likely to see home purchase
       loans coming with higher-cost rates (13.59% of loans to neighborhoods
       characterized as predominantly minority were higher-cost).

   • Similarly, a low 4.41% of home purchase loans to upper-income neighborhoods
       were higher-cost.

   • For low-income neighborhoods, the figure was 3 times as high. 14.67% of home
       purchase loans to these neighborhoods were higher-cost.


               Higher Cost Lending by Race and Income of Neighborhood:
                First Lien Home Purchase Loans to Owner Occupants in
                                    California 2004

      16.00%
      14.00%
      12.00%
      10.00%
       8.00%
       6.00%
       4.00%
       2.00%
       0.00%
                 <10% minority   80-100% minority     Low Income       Upper Income




Refinance Loan Disparities by Race and Ethnicity of Borrower:

                                                                                      14
•   Statewide, 8.49% of all first lien refinance loans were higher-cost.

•   For White borrowers statewide, 7.93% of refinance loans were higher-cost.

•   For African American borrowers, the figures were more than twice that for
    whites, with 17.31% of refinance loans being higher-cost.

•   The figures were also high for American Indians (14.24% of loans were higher-
    cost), and Pacific Islanders (11.74%).

•   Looking at lending patterns relating to ethnicity, only 6.42% of refinance loans to
    White non-Hispanic borrowers were higher-cost.

•   In contrast, 12.95% of refinance loans to Latinos borrower were higher-cost,
    twice that for White non-Hispanic borrowers.




         Higher Cost Lending by Race and Ethnicity of Borrower: First Lien
             Refinance Loans to Owner Occupants in California 2004

20.00%
18.00%
16.00%
14.00%
12.00%
10.00%
 8.00%
 6.00%
 4.00%
 2.00%
 0.00%
         American     Asian     African    Pacific    White     Latino     White Non
          Indian               American   Islander                         Hispanic




                                                                                       15
Refinance Loan Disparities by Race and Income of Neighborhood:

  • Only 4.37% of home purchase loans in predominantly white neighborhoods
      had higher-costs.

  • Minority neighborhoods were more than 3 times as likely to see home
      purchase loans coming with higher-cost rates (13.88% of loans to minority
      neighborhoods were higher-cost).

  • Similarly, a low 5.01% of home purchase loans to upper-income neighborhoods
      were higher-cost

  •   For low-income neighborhoods, the figure was more than 3 times as high, as
      16.51% of home purchase loans to these neighborhoods were higher-cost.


             Higher Cost Lending By Race and Income of Neighborhood:
           First Lien Refinance Lending to Owner Occupants in California
                                       2004

  18.00%
  16.00%
  14.00%
  12.00%
  10.00%
   8.00%
   6.00%
   4.00%
   2.00%
   0.00%
              <10% minority   80-100% minority    Low Income        Upper Income




Who Really Regulates Higher-Cost Lenders in California?
  Mortgage lenders are primarily regulated by one of six regulatory agencies.
    • Savings associations are regulated by the Office of Thrift Supervision (OTS).
    • National Banks are regulated by the Office of the Comptroller of the Currency
        (OCC).
    • Member banks and subsidiaries of bank holding companies are regulated by
        the Federal Reserve Board (FRB).
    • Non-member, state chartered banks are regulated by the Federal Deposit
        Insurance Corporation (FDIC).
    • Credit unions are regulated by the National Credit Union Administration
        (NCUA).


                                                                                   16
         •   Mortgage companies are regulated by the Department of Housing and Urban
             Development (HUD).

The regulatory agencies have tended to respond to concerns about predatory lending by
asserting that the institutions they regulate are not the problem actors. CRC believes that
each of the regulatory agencies must exercise its full authority to investigate illegal
lending practices and to enforce fair lending and consumer protection laws. Indeed,
HMDA data “raise legal issues of compliance with fair lending laws.”15

Looking at first lien home purchase and first lien refinance lending, broken out by
regulatory agency, CRC finds:

     •   HUD regulated lenders made, by far, the most higher-cost first lien home
         purchase and refinance loans, having originated 102,040 higher-cost loans.
         FDIC-regulated lenders originated the second highest total, at a much smaller
         16,887 higher-cost loans. HUD regulates the largest number of lenders, more than
         500 lenders in California alone, and these lenders include some of the largest
         subprime lenders in the nation, such as Ameriquest and New Century Mortgage.


                  Total Higher Cost Loans by Agency: First Lien Home
                  Purchase and Refinance Loans to Owner Occupants

         120000

         100000

          80000

          60000

          40000

          20000

              0
                     OCC          FRB         FDIC         OTS         NCUA          HUD



     •   Of all the agencies, the FDIC regulates lenders that, in the aggregate, had the
         largest percentage of higher-cost loans to underserved borrowers and
         communities. FDIC lenders were much more likely than other lenders to make

15
  Federal Reserve Governor Susan S. Bies, quoted by Reuters, “Warning to Bankers on Real Estate
Loans,” nytimes.com, October 13, 2005.


                                                                                                  17
    higher-cost loans for both home purchase and refinance to African American
    borrowers, Latino borrowers, minority neighborhoods and low-income
    neighborhoods.

    For example, 43.27% of all FDIC-regulated refinance lending to low-income
    neighborhoods was higher-cost lending. The next largest rate of higher-cost
    lending was by HUD lenders, with 25.52% of HUD regulated lending to low-
    income neighborhoods consisting of higher-cost loans.

    It is important to note that the lending patterns of FDIC-regulated institutions
    were skewed substantially by Fremont Investment & Loan, which accounted for
    roughly 95% of the higher-cost lending at FDIC institutions.


         Percentage of First Lien Refinance Loans to Owner Occupants in
          Low-Income Neighborhoods That Are Higher Cost: By Agency


50.00%
45.00%
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
 5.00%
 0.00%
            FDIC        HUD         FRB          OTS         OCC          NCUA


•   National banks regulated by the OCC displayed the greatest disparities. Of
    the eight categories of lending analyzed, the OCC-regulated lenders had the
    greatest disparities in five areas (home purchase lending to African Americans,
    refinance lending to African Americans, refinance lending to Latinos, refinance
    lending to minority neighborhoods, refinance lending to low-income
    neighborhoods). Further, the national banks had the second highest disparities in
    two additional areas (home purchase lending to Latinos, home purchase lending to
    low-income neighborhoods).

    For example, national banks were 4.15 times as likely to make higher-cost
    refinance loans to African Americans as they were to make higher-cost loans to
    white borrowers. This compares to the second place FDIC lenders that were 2.36
    times as likely to make higher-cost loans to African American borrowers as they
    were to white borrowers.




                                                                                   18
          Higher Cost Disparity Ratio by Agency: Greater Likelihood of
                   Higher Cost Lending to African Americans

  4.50
  4.00
  3.50
  3.00
  2.50
  2.00
  1.50
  1.00
  0.50
  0.00
           OCC         FDIC        OTS         FRB        NCUA           HUD



Savings associations regulated by the OTS exhibited the next largest disparities,
having the highest disparities in three of the eight areas analyzed (home purchase
lending to Latinos, home purchase lending to minority neighborhoods, home
purchase lending to low-income neighborhoods), and had the second highest
disparity ratio in three additional areas (home purchase lending to African
Americans, refinance lending to Latinos, refinance lending to low-income
neighborhoods).

For example, OTS lenders in the aggregate were more than eight times as likely
to make a higher-cost home purchase loan in minority neighborhoods as they
were to make a higher-cost loan in predominantly white neighborhoods. The next
greatest disparity was with Federal Reserve regulated lenders, which were 5.32
times as likely to make a higher-cost loan in a minority neighborhood than they
were to make such a loan in a white neighborhood.
             Higher Cost Disparity Ratio by Agency: First Liend Home
                  Purchase Lending to Minority Neighborhoods


  9.00
  8.00
  7.00
  6.00
  5.00
  4.00
  3.00
  2.00
  1.00
  0.00
            OTS         FRB         FDIC        OCC         HUD          NCUA




                                                                                19
Which Communities Are Impacted by Higher-Cost Lending?
CRC analyzed higher-cost lending patterns in 12 California cities: Delano, El Centro,
Fresno, Los Angeles, Modesto, Oakland, Oxnard, Sacramento, San Diego, San Francisco,
Salinas, and Yuba City.16 This analysis focuses on high rate lending to African American
and Latino borrowers, and to minority and low and moderate income (LMI)
neighborhoods.17

In looking at the overall rate of higher-cost lending:

     •   Cities that can be characterized as “rural” had the highest rates of higher-cost
         lending, with Delano, El Centro, Fresno, Modesto, and Yuba City having 25%
         to 15% of all home loans coming at higher-cost.

              Higher Cost Lending to Owner Occupants in 12 California
                                      Cities

     30.00%
     25.00%
     20.00%
     15.00%
     10.00%
      5.00%
      0.00%
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Higher-Cost Lending to African American Borrowers in 12 Cities:

     •   Despite relatively low rates of higher-cost lending in California, African
         Americans continue to receive a large share of higher-cost loans.

              o In Oxnard, 28.21% of home purchase loans made to African Americans
                were higher-cost.

16
   Tables with additional lending data, sorted by city, are located in the back of this report.
17
   As the geographic area of analysis becomes much smaller, we consider neighborhoods with less than
20% minority concentration (“white”), and neighborhoods with more than 50% minority concentration
(“minority”); and we look at middle and upper-income neighborhoods combined (“middle and upper-
income”), and low and moderate-income neighborhoods combined (“LMI”). Without aggregating census
tracts in this way, certain cities would yield no low-income, upper-income or white neighborhoods.



                                                                                                            20
          o Higher-cost refinance loans to African Americans exceeded 25% of
            lending to African Americans in Fresno (27.88%) and Modesto
            (25.07%).

          o In 11 out of 12 cities, African Americans were more likely to receive
            higher-cost home purchase loans than whites. San Francisco had the
            greatest disparity, with African Americans in that city nearly five times as
            likely as whites to receive a higher-cost loan.



                 Higher Cost Home Purchase Loan Disparities: Lending to
                              African Americans in 12 Cities

               6.00

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          o In 10 of 12 cities, African Americans were more likely to receive higher-
            cost refinance loans than whites. San Francisco saw the greatest disparity,
            where African Americans were 3.78 times as likely to get a higher-cost
            loan.

Higher-Cost Lending to Latino Borrowers in 12 Cities:
   •   Rural areas saw the greatest rates of higher-cost lending to Latino borrowers,
       while urban areas exhibited greater disparities between Latino and White non
       Hispanic borrowers.

          o Latino borrowers in Delano, Fresno, and Yuba City were most likely to
            have higher-cost loans.
                In Delano, 18.82% of home purchase loans and 25.64% of
                   refinance loans to Latinos were higher-cost.


                                                                                                          21
                     In Fresno, the figures were 17.13% and 23.36% respectively.
                     In Yuba City, it was 17.06% and 18.37%.
                     In El Centro, 25.13% of refinance loans to Latino borrowers were
                      higher-cost.

                      Higher Cost Refinance Lending to Latinos in 12 Cities


         30.00%
         25.00%
         20.00%
         15.00%
         10.00%
          5.00%
          0.00%




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          o San Francisco and Los Angeles had the largest disparities for higher-cost
            lending to Latinos as compared to White non Hispanics. In San
            Francisco, Latino borrowers were 6.42 times as likely as white borrowers
            to get a higher-cost home purchase loan, and 2.72 times as likely to get a
            higher-cost refinance loan. In Los Angeles, the figures were 4.28 and
            2.63.


Higher-Cost Lending to Minority Neighborhoods in 12 Cities:

   •   Rural communities witnessed a high percentage of higher-cost lending in minority
       neighborhoods, while the cities saw the greatest disparities and the largest number
       of higher-cost loans.

          o Delano had the largest percentage of higher-cost loans in its minority
            neighborhoods, for both home purchase lending (17.37% of loans in
            these neighborhoods were higher-cost) and refinance lending (30.10%
            were higher-cost).

          o Fresno came in second in both categories, with 15.99% of home purchase
            loans carrying higher-cost rates, and 24.42% of refinance loans doing so.

          o The urban areas of Oakland, San Francisco, and Los Angeles had the
            largest higher-cost disparities for home purchase loans (10.89 times, 9.03



                                                                                       22
             times, and 6.35 times, respectively) and refinance loans (4.96 times, 6.23
             times, and 7.51 times, respectively) to minority neighborhoods.

         o No disparity ratio could be calculated for the communities of Delano, El
           Centro, Salinas and Yuba City, as no loans were made to “white” census
           tracts (less than 20% minority).

         o There were 7,957 higher-cost refinance loans originated in minority
           neighborhoods within the city of Los Angeles alone.


                     Higher Cost Refinance Lending in Minority Neighborhoods


         9000
         8000
         7000
         6000
         5000
         4000
         3000
         2000
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                                            # high cost loans made




Higher-Cost Loans to Low-Moderate Income Neighborhoods in 12 Cities:

  •   Higher-cost lending to low and moderate-income neighborhoods was prevalent.

         o The city of El Centro had a very large percentage of loans in its low and
           moderate-income neighborhoods that came with higher-costs. This was
           true for both home purchase (29.41%) and refinance (31.55%) loans.

         o El Centro also had the highest home purchase loan disparity ratio, with
           low and moderate-income neighborhoods 4.27 times as likely as middle
           and upper-income neighborhoods to get higher-cost loans.




                                                                                     23
                      Higher Cost Home Purchase Disparity Ratio: Greater Likelihood that
                                Loans in LMI Neighborhoods Will Be High Cost


            4.50
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            3.50
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             o Oakland and Los Angeles had the highest refinance loan disparity ratios,
               at 3.55 times and 2.59 times, respectively.


Fringe Finance v. Mainstream Access
Importantly, in its own analysis of the new HMDA data, the Federal Reserve noted that
lending disparities are smaller around the assessment areas of banks.18 This is an
argument for a strong Community Reinvestment Act and for financial institutions to
develop strong reinvestment programs in underserved areas. Banks that avoid locating
branches in certain neighborhoods may be missing significant business opportunity.19
They also leave those communities vulnerable to the high cost check cashers and payday
lenders.

In Where Are the Bank Branches in My Community? An Analysis of Branch Distribution
in Low-Income Neighborhoods, CRC finds that the largest banks are not well serving low
and moderate income areas.20
18
   “However, whether the loan was originated by an institution in its CRA assessment area does matter.
Differences across groups for lending within an assessment area are about one-third of those for lenders
outside the assessment area. Moreover, for all racial and ethnic groups, lending within an assessment area
exhibits a much lower incidence of higher priced lending,” (Avery, Robert B., and Canner, Glenn B., “New
Information Higher-Cost Loans Under HMDA and Its Application in Fair Lending Enforcement, Federal
Reserve Bulletin,” Summer 2005, p. 382).
19
   A recently released report from the National Community Investment Fund notes, “Banks looking for new
customers and more deposits might be able to find them in low-income neighborhoods mostly served by
check cashers, payday lenders, and other fringe financial institutions.” (as reported by Ben Jackson in
“Study Argues for Prospecting in Poorer Markets,” American Banker, December 6, 2005).
20
   Serna, Rhea, California Reinvestment Coalition, Where Are the Bank Branches in My Community? An
Analysis of Branch Distribution in Low-Income Neighborhoods (November 2005), available at
www.calreinvest.org


                                                                                                       24
In looking at the 12 survey cities, disparities between check casher presence and bank
presence are stark21:

     •    The number of check cashers in eight cities equaled or exceeded the number of
          bank branches there.

     •    Oxnard had the highest concentration of check cashers, with nearly 3 times as
          many check cashers as banks.



                          Fringe v Mainstream Access Disparities: # of Check
                          Cashers Compared to # Bank Branches in 12 Cities

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                                                Check Casher/Branch Disparity



     •    Oakland, with a relatively low ratio of check cashers (59) to banks (79)
          compared to other survey cities, addressed concerns about the prevalence of check
          cashers and the negative impacts they have on the community by passing a land
          use ordinance restricting the location of new check cashing establishments.

     •    Likewise in San Francisco, which has the lowest check casher/bank ratio of
          survey cities, more than one-third of the 98 check cashers in the city are located in
          the Mission District, the City’s predominantly working class Latino



21
  Branch data was obtained from fdic.gov website. Check casher data was obtained from the California
Department of Corporations. Analysis reflects only those establishments that are identified as being located
within 1 of the 12 survey cities. This analysis does not account for bank branches or check cashers that are
identified by a different neighborhood name, though that neighborhood and that establishment may be
included within the boundaries of 1 of the 12 survey cities.


                                                                                                                 25
       neighborhood. San Francisco is also considering an ordinance to restrict the
       prevalence of check cashers in the community.

   •   While check cashers are a growing presence, banks are not keeping pace. The
       cities of Delano and El Centro each only have six bank branches in their midst,
       though Delano has eleven check cashers and El Centro eight check cashers.


       City            # banks     # check cashers   fringe ratio
       Oxnard             21             56           266.67%
       Delano             6              11           183.33%
       Fresno             85             155          182.35%
       Los Angeles       352             568          161.36%
       El Centro          6               8           133.33%
       Sacramento        115             145          126.09%
       Salinas            28             35           125.00%
       San Diego         226             224           99.12%
       Yuba City          14             13            92.86%
       Modesto            50             41            82.00%
       Oakland            79             59            74.68%
       San Francisco     246             98            40.24%



   •   Los Angeles has an astounding 568 check cashers. San Diego has 224.


                                 Check Cashers in 12 Cities

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The prevalence of check cashing establishments in survey cities suggests that access to
mainstream banks and low cost credit are impaired. Check cashers have clearly found a
niche, are serving a large number of consumers, and are making money doing so. Banks
and prime mortgage lenders should actively compete for this market.



                                                                                      26
Recommendations
In order to address the higher-cost lending disparities highlighted in this report, CRC
recommends:


     •   Ensuring that borrowers get the best loan. Most of the top 20 lenders identified
         in the report offer both prime and subprime loans. The Federal Reserve has noted
         that much of the lending disparity by race and ethnicity can be explained by the
         fact that people of color are more likely to use a higher-cost subprime lender.22
         The Fed paper goes on to note that the greater use of higher-cost lenders by
         people of color may reflect that lower-cost prime lenders are not well serving
         these communities, or that these borrowers are being steering improperly into
         higher-cost loan products. For those companies that have both prime and
         subprime channels, it is imperative that they offer all borrowers the best loan
         product for which they qualify, regardless of how they look or where they live.


     •   Vigorously Examining Lending Practices and Enforcing Anti Discrimination
         Laws. Federal and state regulators must more vigorously examine lending
         practices and enforce anti predatory, fair housing/fair lending, and consumer
         protection laws and regulations. Banking regulators, like the OCC, should not be
         allowed to thwart the efforts of state officials seeking to investigate and enforce
         violations of fair housing or state consumer protection law. This is especially so
         where the regulators have not shown themselves ready to aggressively combat
         lending abuses. Additionally, HUD, as the regulator of the largest number of
         subprime lenders, as well as some of the largest subprime lenders, must develop a
         mechanism for systematically monitoring compliance of the companies it
         ostensibly regulates. HUD has made recent statements suggesting it may pursue a
         more robust approach to enforcement.23 Additionally, the Department of Justice
         may be examining HMDA data in order to target enforcement action.24




22
   “Most of the reduction in the difference in the incidence of higher-priced lending across groups comes
from adding the control for lender to the control for borrower-related factors.” Avery, Robert B., and
Canner, Glenn B., “New Information Higher-Cost Loans Under HMDA and Its Application in Fair Lending
Enforcement, Federal Reserve Bulletin,” Summer 2005, p. 379.
23
   Zindler, Ethan, “In Focus: 200 Facing Scrutiny of HMDA Data,” citing Floyd O. May, HUD’s head of
the Office of Fair Housing and Equal Opportunity, as saying HUD was considering a full-scale
investigation, American Banker, September 19, 2005.
24
   The Justice Department has asked a number of mortgage lenders for more information on how they
priced loans to minorities, the agency said. Paletta, Damian, “Justice Dept. Activates Its Own HMDA Data
Probe,” American Banker, November 30, 2005.


                                                                                                      27
     •   Expanding branches and CRA requirements. A strong retail branch presence is
         an effective outreach mechanism for lenders seeking to make good loan products
         readily available to minority borrowers and neighborhoods. Additionally, the
         Federal Reserve notes that lending disparities are smaller where banks are lending
         in CRA assessment areas, which are determined in large part, by where bank
         branches are located. It is time for the Community Reinvestment Act to be
         updated so that the requirement to reinvest within CRA assessment areas captures
         banks like Countrywide Bank and the potential H&R Block Bank whose business
         models call for taking deposits and conducting banking nationally, but reinvesting
         only in a few local areas.

     •   Eliminating YSPs and discretionary pricing. Home loan sales where brokers or
         loan officers have discretion to charge different prices to different consumers is an
         invitation to discriminate. Federal Reserve Governor Mark Olson recently noted
         that institutions must examine if loan originators have discretion in pricing and
         receive incentives “to extract fees from vulnerable or less well-informed
         borrowers.”25 Lenders should eliminate this practice and regulators should
         vigorously pursue those lenders who do not. Yield Spread Premiums provide
         financial incentives for loan brokers to charge borrowers a higher rate than they
         deserve. YSPs are an inherently abusive product that only heightens the problem
         of borrowers of color paying more for their loans, and, as such, should be
         eliminated.

     •   Providing more flexible products for immigrants and people of color, and
         better outreach in rural areas and minority urban neighborhoods for prime
         products. Lenders should develop more flexible lending products that meet the
         needs of immigrants and people of color, and should aggressively market to the
         rural and inner city urban areas that are prey to higher-cost lenders. Lenders must
         get beyond their over reliance on credit scores, and focus on a borrower’s ability
         to repay the loan.

     •   Expanding HMDA reporting requirements. As HMDA data reveal more
         information about lending patterns, the lending industry appears to suggest that
         the data somehow is less meaningful. The Federal Reserve should put an end to
         this ongoing debate, by making available through HMDA data the very
         information that lenders say is needed to assess whether discrimination is
         occurring. Such information should include credit score, debt-to-income ratios,
         loan-to-value ratios and points and fee data. Shedding light on lending patters
         inevitably leads to better lending;




25
  Zindler, Ethan, “Olson: Pay Packages May Spur Predatory Lending,” American Banker, November 8,
2005.


                                                                                                   28
Lending in State

State of California
Conventional First Lien Loans for 1-4 Unit Owner Occupied Properties

Home Purchase Lending
Borrowers and Neighborhoods Lower Cost Loans Higher-Cost Loans % Higher-Cost Loans
American Indian                         9507              1344             12.39%
Asian                                  70515              3158               4.29%
African American                       16869              3282             16.29%
Pacific Islander                        6827               830             10.84%
White                                310082              23899               7.16%
Latino                               112997              18446             14.03%
White Non Hispanic                   199812               9830               4.69%
<10% Minority Tracts                    8985               327               3.51%
80-100% Minority Tracts                62599              9842             13.59%
Low Income Tracts                      12339              2121             14.67%
Upper Income Tracts                  223298              10297               4.41%
TOTAL                                529467              43037               7.52%

Refinance Lending
Borrowers and Neighborhoods Lower Cost Loans Higher-Cost Loans % Higher-Cost Loans
American Indian                        17621              2925             14.24%
Asian                                108395               4532               4.01%
African American                       47353              9916             17.31%
Pacific Islander                       13013              1731             11.74%
White                                676082              58215               7.93%
Latino                               212196              31557             12.95%
White Non Hispanic                   464590              31899               6.42%
<10% Minority Tracts                   19913               909               4.37%
80-100% Minority Tracts              168873              27215             13.88%
Low Income Tracts                      20980              4148             16.51%
Upper Income Tracts                  484341              25525               5.01%
TOTAL                               1145622            106321                8.49%




                                                                                     29
Lending by Agency: Office of the Comptroller of the Currency

State of California
Conventional First Lien Loans for 1-4 Unit Owner Occupied Properties
OCC

Home Purchase Lending
Borrowers and                   Lower Cost        Higher-Cost          % Higher-Cost         Disparit
Neighborhoods                   Loans             Loans                Loans                 y
American Indian                            2004                   45                   2.20%     2.31
Asian                                     20504                   95                   0.46%     0.49
African American                           3237                  112                   3.34%     3.52
Pacific Islander                           1169                   17                   1.43%     1.51
White                                     75276                  722                   0.95%     1.00
Latino                                    17585                  504                   2.79%     4.26
White Non Hispanic                        54200                  357                   0.65%     1.00
<10% Minority Tracts                       2437                   16                   0.65%     1.00
80-100% Minority Tracts                   10630                  272                   2.49%     3.83
Low Income Tracts                          2513                   55                   2.14%     3.65
Upper Income Tracts                       60147                  355                   0.59%     1.00
TOTAL                                    126072                 1400                   1.10%

Refinance Lending
Borrowers and                   Lower Cost        Higher-Cost          % Higher-Cost         Disparit
Neighborhoods                   Loans             Loans                Loans                 y
American Indian                            4632                  192                   3.98%     3.64
Asian                                     36860                  117                   0.32%     0.29
African American                           7301                  347                   4.54%     4.15
Pacific Islander                           2276                   48                   2.07%     1.89
White                                    169943                 1880                   1.09%     1.00
Latino                                    38511                  981                   2.48%     2.85
White Non Hispanic                       128038                 1126                   0.87%     1.00
<10% Minority Tracts                       5993                   35                   0.58%     1.00
80-100% Minority Tracts                   30336                  784                   2.52%     4.34
Low Income Tracts                          3627                  120                   3.20%     5.04
Upper Income Tracts                      135538                  866                   0.63%     1.00
TOTAL                                    270454                 3703                   1.35%

Top Higher-Cost Lenders                 # Loans $ Amount (+000) Higher-Cost Market Share
National City Bank of Indiana              7352         873804                56.56
Wells Fargo Bank, NA                       1732         275018                13.33




                                                                                                  30
Lending by Agency: Federal Reserve Board

State of California
Conventional First Lien Loans for 1-4 Unit Owner Occupied Properties
FRB

Home Purchase Lending
Borrowers and             Lower Cost       Higher-Cost                              Disparit
Neighborhoods             Loans            Loans                % Higher-Cost Loans y
American Indian                     3039                  120                 3.80%     1.02
Asian                               8356                  174                 2.04%     0.55
African American                    1875                  198                 9.55%     2.58
Pacific Islander                     670                   29                 4.15%     1.12
White                              40891                 1574                 3.71%     1.00
Latino                             15015                 1121                 6.95%     2.80
White Non Hispanic                 26111                  664                 2.48%     1.00
<10% Minority Tracts                 989                   12                 1.20%     1.00
80-100% Minority Tracts             7973                  543                 6.38%     5.32
Low Income Tracts                   1483                  110                 6.91%     3.13
Upper Income Tracts                30198                  682                 2.21%     1.00
TOTAL                              68463                 2611                 3.67%

Refinance Lending
Borrowers and             Lower Cost       Higher-Cost                                Disparit
Neighborhoods             Loans            Loans                % Higher-Cost Loans         y
American Indian                     3033                  421               12.19%       1.54
Asian                               6635                  314                 4.52%      0.57
African American                    4839                 1033               17.59%       2.23
Pacific Islander                     969                  185               16.03%       2.03
White                              62016                 5312                 7.89%      1.00
Latino                             19572                 2960               13.14%       1.89
White Non Hispanic                 41365                 3086                 6.94%      1.00
<10% Minority Tracts                1458                   72                 4.71%      1.00
80-100% Minority Tracts            14179                 2461               14.79%       3.14
Low Income Tracts                   1590                  322               16.84%       3.10
Upper Income Tracts                41068                 2357                 5.43%      1.00
TOTAL                              97124                 9870                 9.22%

                                                                 Higher-Cost Market
Top Higher-Cost Lenders           # Loans $ Amount (+000)                     Share
Countrywide Home Loans              15497       2554750                       63.41
Wells Fargo Financial                3732         540389                      15.27
Citifinancial Services               2455         146709                      10.05




                                                                                           31
Lending by Agency: Federal Deposit Insurance Corporation

State of California
Conventional First Lien Loans for 1-4 Unit Owner Occupied Properties
FDIC
Home Purchase Lending
Borrowers and             Lower Cost        Higher-Cost                          Disparit
Neighborhoods             Loans             Loans            % Higher-Cost Loans y
American Indian                        356               163             31.41%      1.18
Asian                                 2391               483             16.81%      0.63
African American                       659               805             54.99%      2.07
Pacific Islander                       233               133             36.34%      1.37
White                                11882              4287             26.51%      1.00
Latino                                3690              2604             41.37%      2.18
White Non Hispanic                    8015              1878             18.98%      1.00
<10% Minority Tracts                   484                58             10.70%      1.00
80-100% Minority Tracts               1802              1303             41.96%      3.92
Low Income Tracts                      446               331             42.60%      2.22
Upper Income Tracts                   7380              1750             19.17%      1.00
TOTAL                                18240              6873             27.37%

Refinance Lending
Borrowers and               Lower Cost         Higher-Cost                           Disparit
Neighborhoods               Loans              Loans             % Higher-Cost Loans y
American Indian                        454                 135               22.92%      1.12
Asian                                 4055                 506               11.09%      0.54
African American                      1331                1247               48.37%      2.36
Pacific Islander                       465                 175               27.34%      1.34
White                                22014                5670               20.48%      1.00
Latino                                5427                2929               35.05%      2.29
White Non Hispanic                   15889                2869               15.29%      1.00
<10% Minority Tracts                   721                  71                 8.96%     1.00
80-100% Minority Tracts               4265                2439               36.38%      4.06
Low Income Tracts                      548                 418               43.27%      2.86
Upper Income Tracts                  14685                2614               15.11%      1.00
TOTAL                                35109               10014               22.19%

                                                                  Higher-Cost Market
Top Higher-Cost Lenders            # Loans $ Amount (+000)                     Share
Fremont Investment & Loan            22094       4973816                       94.89
Bank of the West                       313          19826                       1.34
Greenpoint Mortgage
Funding                                  305             48262                  1.31




                                                                                          32
Lending by Agency: Office of Thrift Supervision

State of California
Conventional First Lien Loans for 1-4 Unit Owner Occupied Properties
OTS
Home Purchase Lending
Borrowers and             Lower Cost        Higher-Cost                          Disparit
Neighborhoods             Loans             Loans            % Higher-Cost Loans y
American Indian                        852                77               8.29%     3.50
Asian                                17285               311               1.77%     0.75
African American                      2805               221               7.30%     3.09
Pacific Islander                      1078                47               4.18%     1.76
White                                60340              1463               2.37%     1.00
Latino                               18914              1617               7.88%     4.85
White Non Hispanic                   41299               682               1.62%     1.00
<10% Minority Tracts                  2209                19               0.85%     1.00
80-100% Minority Tracts              11137               839               7.01%     8.22
Low Income Tracts                     2065               164               7.36%     4.27
Upper Income Tracts                  48893               858               1.72%     1.00
TOTAL                               106117              3444               3.14%

Refinance Lending
Borrowers and              Lower Cost       Higher-Cost                              Disparit
Neighborhoods              Loans            Loans                % Higher-Cost Loans y
American Indian                      3245                  219                 6.32%     2.64
Asian                               32779                  517                 1.55%     0.65
African American                    13604                  770                 5.36%     2.24
Pacific Islander                     3384                  130                 3.70%     1.54
White                              176123                 4324                 2.40%     1.00
Latino                              62253                 3385                 5.16%     2.75
White Non Hispanic                 117115                 2238                 1.88%     1.00
<10% Minority                        5454                   76                 1.37%     1.00
80-100% Minority                    50440                 2388                 4.52%     3.29
Low Income Tracts                    6323                  372                 5.56%     3.37
Upper Income Tracts                132969                 2232                 1.65%     1.00
TOTAL                              314802                 9036                 2.79%

                                                   $ Amount Higher-Cost Market
Top Higher-Cost Lenders           # Loans            (+000s) Share
Lehman Brothers Bank                 8968           2105470                  51.42
Citicorp Trust Bank, FSB             2135            368962                  12.24
AIG FSB                              1666            297813                    9.55
ING Direct                           1599            530958                    9.17




                                                                                          33
Lending by Agency: National Credit Union Administration

State of California
Conventional First Lien Loans for 1-4 Unit Owner Occupied Properties
NCUA
Home Purchase Lending
Borrowers and             Lower Cost        Higher-Cost                          Disparit
Neighborhoods             Loans             Loans            % Higher-Cost Loans y
American Indian                         60               0                 0.00%     0.00
Asian                                  484               3                 0.62%     0.38
African American                       228               5                 2.15%     1.33
Pacific Islander                        65               0                 0.00%     0.00
White                                 3355              55                 1.61%     1.00
Latino                                 564               6                 1.05%     0.64
White Non Hispanic                    2522              42                 1.64%     1.00
<10% Minority Tracts                   105               2                 1.87%     1.00
80-100% Minority Tracts                368               2                 0.54%     0.29
Low Income Tracts                       91               0                 0.00%     0.00
Upper Income Tracts                   2872              38                 1.31%     1.00
TOTAL                                 6171              77                 1.23%

Refinance Lending
Borrowers and              Lower Cost       Higher-Cost                             Disparit
Neighborhoods              Loans            Loans               % Higher-Cost Loans y
American Indian                       438                   3                 0.68%     0.62
Asian                                1539                   7                 0.45%     0.41
African American                     1435                  35                 2.38%     2.18
Pacific Islander                      355                   5                 1.39%     1.27
White                               15637                 173                 1.09%     1.00
Latino                               3488                  39                 1.11%     0.89
White Non Hispanic                  11321                 143                 1.25%     1.00
<10% Minority Tracts                  379                   6                 1.56%     1.00
80-100% Minority Tracts              2872                  35                 1.20%     0.77
Low Income Tracts                     393                   4                 1.01%     1.21
Upper Income Tracts                 12109                 102                 0.84%     1.00
TOTAL                               28460                 290                 1.01%

                                                   $ Amount Higher-Cost Market
Top Higher-Cost Lenders           # Loans            (+000s) Share
CU Factory Built Lending              216              14954                 18.48
Educational Employees CU              121               3805                 10.35




                                                                                         34
Lending by Agency: Housing and Urban Development

State of California
Conventional First Lien Loans for 1-4 Unit Owner Occupied Properties
HUD
Home Purchase Lending
Borrowers and Neighborhoods Lower Cost Loans Higher-Cost Loans       % Higher-Cost Loans Disparity
American Indian                             3196             939                 22.71%      1.93
Asian                                      21495            2092                   8.87%     0.75
African American                            8065            1941                 19.40%      1.65
Pacific Islander                            3612             604                 14.33%      1.22
White                                    118338            15798                 11.78%      1.00
Latino                                     57229           12594                 18.04%      2.15
White Non Hispanic                         67665            6207                   8.40%     1.00
<10% Minority Tracts                        2761             220                   7.38%     1.00
80-100% Minority Tracts                    30689            6883                 18.32%      2.48
Low Income Tracts                           5741            1461                 20.29%      2.47
Upper Income Tracts                        73808            6614                   8.22%     1.00
TOTAL                                    204404            28632                 12.29%

Refinance Lending
Borrowers and Neighborhoods      Lower Cost Loans Higher-Cost Loans    % Higher-Cost Loans Disparity
American Indian                              5819              1955                25.15%      1.67
Asian                                       26527              3071                10.38%      0.69
African American                            18843              6484                25.60%      1.70
Pacific Islander                             5564              1188                17.59%      1.17
White                                     230349              40856                15.06%      1.00
Latino                                      82945             21263                20.40%      1.58
White Non Hispanic                        150862              22437                12.95%      1.00
<10% Minority Tracts                         5908               649                  9.90%     1.00
80-100% Minority Tracts                     66781             19108                22.25%      2.25
Low Income Tracts                            8499              2912                25.52%      2.43
Upper Income Tracts                       147972              17354                10.50%      1.00
TOTAL                                     399673              73408                15.52%

Top Higher-Cost Lenders                   # Loans $ Amount (+000s) Higher-Cost Market Share
Ameriquest and Argent Mortgage              26687          5965822                    14.42
WMC Mortgage Corp                           18937          3294060                    10.23
New Century Mortgage                        17888          3100483                     9.67
Long Beach Mortgage                          8574          1073939                     4.63




                                                                                        35
DELANO

Higher-Cost Lending - Single Family and Manufactured Housing Loans to Owner Occupants
Lower Cost Loans   Higher-Cost Loans                           % Higher-Cost Loans in City
1151               384                                         25.02%

Top Higher-Cost Lenders           # Higher-Cost Loans $ Amount (+000)   Higher-Cost Market Share
Ameriquest/Argent/Olympus                          73            7992                      19.01
Accredited Home Lenders                            29            2236                       7.55
Countrywide Home Loans                             24            2415                       6.25
H&R Block/Option One                               23            2180                       5.99
New Century Mortgage                               22            2252                       5.73
WMC Mortgage Corp                                  18            1297                       4.69
Fremont Investment & Loan                          17            1413                       4.43
HSBC/Beneficial/Decision One                       16            1177                       4.16
Washington Mutual/Long Beach                       15            1022                        3.9
Wells Fargo/Wells Fargo Financial                  11            1015                       2.86

Conventional First Lien Loans for 1-4 Unit Owner Occupied Properties
Home Purchase Lending
Borrowers and               Lower Cost        Higher-Cost     % Higher-Cost       Disparit
Neighborhoods               Loans             Loans           Loans               y
American Indian                            15               3             16.67%      1.04
Asian                                      17               4             19.05%      1.19
African American                            5               1             16.67%      1.04
Pacific Islander                            6               1             14.29%      0.89
White                                     121              23             15.97%      1.00
Latino                                    151              35             18.82%      3.76
White Non Hispanic                         19               1               5.00%     1.00
<20% Minority Tracts                        0               0               0.00%     0.00
50-100% Minority Tracts                   214              45             17.37%      0.00
Low Moderate Income Tracts                174              33             15.94%      0.69
Middle Upper Income Tracts                 40              12             23.08%      1.00
TOTAL                                     214              45             17.37%
Refinance Lending
Borrowers and               Lower Cost        Higher-Cost     % Higher-Cost       Disparit
Neighborhoods               Loans             Loans           Loans               y
American Indian                            46               7             13.21%      0.39
Asian                                      51              19             27.14%      0.81
African American                            8               1             11.11%      0.33
Pacific Islander                           14               8             36.36%      1.08
White                                     232             117             33.52%      1.00
Latino                                    348             120             25.64%      0.76
White Non Hispanic                         37              19             33.93%      1.00
<20% Minority Tracts                        0               0               0.00%     0.00
50-100% Minority Tracts                   562             242             30.10%      0.00
Low Moderate Income Tracts                390             174             30.85%      1.09



                                                                                        36
Middle Upper Income Tracts                172                68              28.33%     1.00
TOTAL                                     562               243              30.19%
EL CENTRO

Higher-Cost Lending - Single Family and Manufactured Housing Loans to Owner
Occupants
Lower Cost Loans       Higher-Cost Loans       % Higher-Cost Loans in City
1705                   482                     22.04%

Top Higher-Cost Lenders          # Higher-Cost Loans $ Amount (+000) Higher-Cost Market Share
Ameriquest/Argent/Olympus                         68            9220                 14.11
Fremont Investment & Loan                         53            6579                     11
Accredited Home Lenders, Inc.                     51            4814                 10.58
Countrywide Home Loans                            33            3045                   6.85
National City Bank, Indiana                       21            2070                   4.36
New Century Mortgage Corp                         20            2123                   4.15
Wells Fargo Financial California                  16            2216                   3.32
WMC Mortgage                                      14            1546                    2.9
American Home Mortgage                            12             550                   2.49
Encore Credit Corp                                10            1335                   2.07

Conventional First lien Loans for 1-4 Unit Owner Occupied Properties
Home Purchase Lending
Borrowers and Neighborhoods Lower Cost Loans Higher-Cost Loans % Higher-Cost Loans              Disparity
American Indian                             17               1               5.56%                  0.55
Asian                                       25               0               0.00%                  0.00
African American                             7               0               0.00%                  0.00
Pacific Islander                             6               1             14.29%                   1.42
White                                      295              33             10.06%                   1.00
Latino                                     226              33             12.74%                   2.24
White Non Hispanic                         116               7               5.69%                  1.00
<20% Minority Tracts                         0               0               0.00%                  1.00
50-100% Minority Tracts                    443              41               8.47%                  0.00
Low Moderate Income Tracts                  24              10             29.41%                   4.27
Middle Upper Income Tracts                 419              31               6.89%                  1.00
TOTAL                                      451              50               9.98%
Refinance Lending
Borrowers and Neighborhoods Lower Cost Loans Higher-Cost Loans % Higher-Cost Loans              Disparity
American Indian                             27              14             34.15%                   1.50
Asian                                        9               3             25.00%                   1.10
African American                            15               3             16.67%                   0.73
Pacific Islander                             8               1             11.11%                   0.49
White                                      474             140             22.80%                   1.00
Latino                                     441             148             25.13%                   1.56
White Non Hispanic                         156              30             16.13%                   1.00
<20% Minority Tracts                         0               0               0.00%                  1.00
50-100% Minority Tracts                    792             215             21.35%                   0.00



                                                                                          37
Low Moderate Income Tracts                115                53              31.55%             1.63
Middle Upper Income Tracts                677               162              19.31%             1.00
TOTAL                                     804               233              22.47%
FRESNO

Higher-Cost Lending - Single Family and Manufactured Housing Loans to Owner Occupants
Lower Cost Loans                   Higher-Cost Loans                 % Higher-Cost Loans in City
28103                              6057                              17.73%

Top Higher-Cost Lenders                    # Higher-Cost Loans $ Amount (+000) Higher-Cost Market Share
Ameriquest/Argent/Olympus                                 1002         141874                  16.54
Fremont Investment & Loan                                  440           62242                   7.26
Countrywide Home Loans                                     434           53176                   7.17
Citicorp Trust Bank/Citifinancial                          420           45302                   6.93
Wells Fargo Financial/Wells Fargo Bank, NA                 355           44668                   5.87
New Century Mortgage                                       308           40538                   5.09
HSBC/Decision One Mortgage                                 290           33376                   4.79
Accredited Home Lenders                                    231           23359                   3.81
Washington Mutual/Long Beach Mortgage                      178           18019                   2.94
WMC Mortgage Corp                                          168           18622                   2.77

Conventional First Lien Loans for 1-4 Unit Owner Occupied Properties
Home Purchase Lending
Borrowers and Neighborhoods Lower Cost Loans Higher-Cost Loans % Higher-Cost Loans Disparity
American Indian                              118              27           18.62%      2.00
Asian                                       1036              97             8.56%     0.92
African American                             217              63           22.50%      2.41
Pacific Islander                              89               7             7.29%     0.78
White                                       4985             513             9.33%     1.00
Latino                                      1819             376           17.13%      2.61
White Non Hispanic                          3064             215             6.56%     1.00
<20% Minority Tracts                         645              27             4.02%     1.00
50-100% Minority Tracts                     2827             538           15.99%      3.98
Low Moderate Income Tracts                  1345             293           17.89%      2.16
Middle Upper Income Tracts                  6522             590             8.30%     1.00
TOTAL                                       7890             889           10.13%
Refinance Lending
Borrowers and Neighborhoods Lower Cost Loans Higher-Cost Loans % Higher-Cost Loans Disparity
American Indian                              307             122           28.44%      1.90
Asian                                        810             122           13.09%      0.88
African American                             533             206           27.88%      1.87
Pacific Islander                             146              45           23.56%      1.58
White                                       9941            1746           14.94%      1.00
Latino                                      3553            1083           23.36%      1.90
White Non Hispanic                          6598             924           12.28%      1.00
<20% Minority Tracts                         992              52             4.98%     1.00
50-100% Minority Tracts                     6415            2073           24.42%      4.90



                                                                                         38
Low Moderate Income Tracts                2984               1106              27.04%        1.91
Middle Upper Income Tracts               12412               2051              14.18%        1.00
TOTAL                                    15430               3173              17.06%
LOS ANGELES

Higher-Cost Lending - Single Family and Manufactured Housing Loans to Owner Occupants
Lower Cost Loans        Higher-Cost Loans       % Higher-Cost Loans in City
164389                  23855                   12.67%

Top Higher-Cost Lenders               # Higher-Cost Loans $ Amount (+000) Higher-Cost Market Share
WMC Mortgage Corp                                    3362         627595                     14.09
Ameriquest/Argent/Olympus                            2806         707180                     11.77
New Century Mortgage Corp                            1666         317140                      6.98
Fremont Investment & Loan                            1494         383267                      6.26
Countrywide Home Loans                               1450         271154                      6.08
Lehman Brothers Bank/Finance America                 1103         282633                      4.62
Encore Credit Corp                                   1036         244409                      4.34
Washington Mutual/Long Beach Mortgage                 579           74960                     2.43
Accredited Home Lenders                               485           81191                     2.03
National City Bank, Indiana                           469           68091                     1.97

Conventional First Lien Loans for 1-4 Unit Owner Occupied Properties
Home Purchase Lending
Borrowers and Neighborhoods Lower Cost Loans Higher-Cost Loans % Higher-Cost Loans           Disparity
American Indian                            672             129             16.10%                2.18
Asian                                    4088              291               6.65%               0.90
African American                         2105              426             16.83%                2.28
Pacific Islander                           429              57             11.73%                1.59
White                                   24560             1955               7.37%               1.00
Latino                                  10158             1899             15.75%                4.28
White Non Hispanic                      15552              594               3.68%               1.00
<20% Minority Tracts                     6794              136               1.96%               1.00
50-100% Minority Tracts                 21468             3058             12.47%                6.35
Low Moderate Income Tracts              10673             1916             15.22%                2.63
Middle Upper Income Tracts              30159             1854               5.79%               1.00
TOTAL                                   40838             3770               8.45%
Refinance Lending
Borrowers and Neighborhoods Lower Cost Loans Higher-Cost Loans % Higher-Cost Loans           Disparity
American Indian                          2046              311             13.19%                1.80
Asian                                    6760              475               6.57%               0.89
African American                         7729             1624             17.36%                2.36
Pacific Islander                         1100              150             12.00%                1.63
White                                   59624             4730               7.35%               1.00
Latino                                  24790             3594             12.66%                2.63
White Non Hispanic                      37288             1889               4.82%               1.00
<20% Minority Tracts                    17125              290               1.67%               1.00
50-100% Minority Tracts                 55660             7957             12.51%                7.51



                                                                                        39
Low Moderate Income Tracts             26322              4750              15.29%              2.59
Middle Upper Income Tracts             76542              4794               5.89%              1.00
TOTAL                                 102872              9545               8.49%
MODESTO

Higher-Cost Lending - Single Family and Manufactured Housing Loans to Owner Occupants
Lower Cost Loans        Higher-Cost Loans       % Higher-Cost Loans in City
19643                   3904                    16.58%

Top Higher-Cost Lenders              # Higher-Cost Loans $ Amount (+000) Higher-Cost Market Share
Ameriquest/Argent/Olympus                            488          86166                  12.49
New Century Mortgage                                 313          42827                    8.02
Fremont Investment & Loan                            304          53492                    7.79
Washington Mutual/Long Beach                         265          22106                    6.79
Lehman Brothers Bank/Finance America                 210          39384                    5.37
Countrywide Home Loans                               200          26895                    5.12
WMC Mortgage Corp                                    160          23801                     4.1
HSBC/Decision One                                    138          18475                    3.53
First NLC Financial Services                         105          12889                    2.69
National City Bank, Indiana                           91            9758                   2.33

Conventional First Lien Loans for 1-4 Unit Owner Occupied Properties
Home Purchase Lending
Borrowers and               Lower Cost        Higher-Cost     % Higher-Cost       Disparit
Neighborhoods               Loans             Loans           Loans               y
American Indian                           166              25             13.09%      1.42
Asian                                     396              29               6.82%     0.74
African American                          130              25             16.13%      1.75
Pacific Islander                          131              21             13.82%      1.50
White                                   3709              377               9.23%     1.00
Latino                                  2042              272             11.75%      1.47
White Non Hispanic                      1995              174               8.02%     1.00
<20% Minority Tracts                      244              17               6.51%     1.00
50-100% Minority Tracts                 1309              206             13.60%      2.09
Low Moderate Income Tracts                948             157             14.21%      1.74
Middle Upper Income Tracts              4973              442               8.16%     1.00
TOTAL                                   5927              601               9.21%
Refinance Lending
Borrowers and               Lower Cost        Higher-Cost     % Higher-Cost       Disparit
Neighborhoods               Loans             Loans           Loans               y
American Indian                           257              61             19.18%      1.66
Asian                                     382              41               9.69%     0.84
African American                          254              85             25.07%      2.17
Pacific Islander                          156              18             10.34%      0.89
White                                   6555              858             11.57%      1.00
Latino                                  2741              417             13.20%      1.21
White Non Hispanic                      4170              511             10.92%      1.00



                                                                                       40
<20% Minority Tracts                     444                35               7.31%     1.00
50-100% Minority Tracts                 2651               549              17.16%     2.35
Low Moderate Income Tracts              2100               443              17.42%     1.49
Middle Upper Income Tracts              8251              1090              11.67%     1.00
TOTAL                                  10371              1542              12.94%
OAKLAND

Higher-Cost Lending - Single Family and Manufactured Housing Loans to Owner Occupants
Lower Cost Loans         Higher-Cost Loans         % Higher-Cost Loans in City
21697                    2432                      10.08%

Top Higher-Cost Lenders                    # Higher-Cost Loans $ Amount (+000) Higher-Cost Market Share
Fremont Investment & Loan                                  551         135242                     22.66
Washington Mutual/Long Beach                               381           47911                    15.67
Countrywide Home Loans                                     184           35075                     7.57
Lehman Brothers Bank/Finance America                       121           47481                     4.98
Encore Credit Corp                                         116           26342                     4.77
Argent Mortgage Co                                          82           31913                     3.37
MortageIt, Inc                                              78           23638                     3.21
WMC Mortgage Corp                                           65           22915                     2.67
Wells Fargo Financial/Wells Fargo Bank, NA                  65           10109                     2.67
Aames Funding Corp                                          63           10211                     2.59

Conventional First Lien Loans for 1-4 Unit Owner Occupied Properties
Home Purchase Lending
Borrowers and Neighborhoods Lower Cost Loans Higher-Cost Loans % Higher-Cost Loans            Disparity
American Indian                            117              14             10.69%                 2.45
Asian                                    1112               47               4.06%                0.93
African American                           716             141             16.45%                 3.78
Pacific Islander                            62               8             11.43%                 2.62
White                                    2987              136               4.35%                1.00
Latino                                   1057              112               9.58%                3.33
White Non Hispanic                       2025               60               2.88%                1.00
<20% Minority Tracts                       127               1               0.78%                1.00
50-100% Minority Tracts                  4153              386               8.50%               10.89
Low Moderate Income Tracts               3184              336               9.55%                3.19
Middle Upper Tracts                      2983               92               2.99%                1.00
TOTAL                                    6169              428               6.49%
Refinance Lending
Borrowers and Neighborhoods Lower Cost Loans Higher-Cost Loans % Higher-Cost Loans            Disparity
American Indian                            150              10               6.25%                1.27
Asian                                    1642               70               4.09%                0.83
African American                         2563              431             14.40%                 2.93
Pacific Islander                           111              17             13.28%                 2.71
White                                    5346              276               4.91%                1.00
Latino                                   1564              160               9.28%                2.62
White Non Hispanic                       3888              143               3.55%                1.00



                                                                                         41
<20% Minority Tracts                     275                 6               2.14%             1.00
50-100% Minority Tracts                 8047               954              10.60%             4.96
Low Moderate Income Tracts              5746               803              12.26%             3.55
Middle Upper Income Tracts              7156               256               3.45%             1.00
TOTAL                                  12902              1059               7.59%
OXNARD

Higher-Cost Lending - Single Family and Manufactured Housing Loans to Owner Occupants
Lower Cost Loans          Higher-Cost Loans         % Higher-Cost Loans in City
10739                     1521                      12.41%

Top Higher-Cost Lenders            # Higher-Cost Loans $ Amount (+000)     Higher-Cost Market Share
WMC Mortgage Corp                                  145          30215                          9.53
Bank of America/Ownit Mortgage                     134          31243                          8.81
Ameriquest/Argent Mortgage                         123          34974                          8.09
Countrywide Home Loans                             108          18778                           7.1
Fremont Investment & Loan                          105          30753                           6.9
New Century Mortgage Corp                           76          16192                             5
Encore Credit Corp                                  63          16426                          4.14
Washington Mutual/Long Beach                        48            5947                         3.16
Wells Fargo Financial California                    48            5888                         3.16
HSBC/Decision One                                   39          10434                          2.56

Conventional First Lien Loans for 1-4 Unit Owner Occupied Properties
Home Purchase Lending
Borrowers and Neighborhoods Lower Cost Loans Higher-Cost Loans % Higher-Cost Loans     Disparity
American Indian                            178              13               6.81%          0.85
Asian                                      115               3               2.54%          0.32
African American                            28              11             28.21%           3.52
Pacific Islander                            60               3               4.76%          0.59
White                                    1402              122               8.01%          1.00
Latino                                   1300              176             11.92%           3.31
White Non Hispanic                         535              20               3.60%          1.00
<20% Minority Tracts                       232               6               2.52%          1.00
50-100% Minority Tracts                  2079              221               9.61%          3.81
Low Moderate Income Tracts               1316              149             10.17%           1.45
Middle Upper Income Tracts               1193               90               7.01%          1.00
TOTAL                                    2512              239               8.69%
Refinance Lending
Borrowers and Neighborhoods Lower Cost Loans Higher-Cost Loans % Higher-Cost Loans Disparity
American Indian                            242              28             10.37%           1.39
Asian                                      335              14               4.01%          0.54
African American                           161              17               9.55%          1.28
Pacific Islander                           146               9               5.81%          0.78
White                                    3750              303               7.48%          1.00
Latino                                   2857              277               8.84%          1.49
White Non Hispanic                       1551               98               5.94%          1.00



                                                                                        42
<20% Minority Tracts                     388                7               1.77%           1.00
50-100% Minority Tracts                 5645              487               7.94%           4.48
Low Moderate Income Tracts              3423              334               8.89%           1.56
Middle Upper Income Tracts              3090              187               5.71%           1.00
TOTAL                                   6517              522               7.42%
SACRAMENTO

Higher-Cost Lending - Single Family and Manufactured Housing Loans to Owner Occupants
Lower Cost Loans         Higher-Cost Loans        % Higher-Cost Loans in City
78364                    13170                    14.39%

                                      # Higher-Cost      $ Amount     Higher-Cost Market
Top Higher-Cost Lenders                      Loans          (+000)                 Share
Fremont Investment & Loan                      1254        232549                   9.52
Ameriquest/Argent Mortgage                     1250        246270                   9.49
New Century Mortgage                            951        138628                   7.22
Countrywide Home Loans                          912        131521                   6.92
WMC Mortgage Corp                               715        103152                   5.43
Lehman Brothers Bank/Finance
America                                        696         134752                    5.29
MortgageIt, Inc                                622         121789                    4.72
Washington Mutual/Long Beach                   518          58736                    3.93
Accredited Home Lenders                        345          40737                    2.62
National City Bank, Indiana                    338          38673                    2.57

Conventional First Lien Loans for 1-4 Unit Owner Occupied Properties
Home Purchase Lending
Borrowers and Neighborhoods Lower Cost Loans Higher-Cost Loans % Higher-Cost Loans          Disparity
American Indian                            303              58             16.07%               2.04
Asian                                    3768              227               5.68%              0.72
African American                         1122              256             18.58%               2.35
Pacific Islander                           449              54             10.74%               1.36
White                                   12049             1032               7.89%              1.00
Latino                                   2885              492             14.57%               2.24
White Non Hispanic                       8688              605               6.51%              1.00
<20% Minority Tracts                     3849              290               7.01%              1.00
50-100% Minority Tracts                  6519              898             12.11%               1.73
Low Moderate Income Tracts               5778              918             13.71%               2.06
Middle Upper Income Tracts              16833             1203               6.67%              1.00
TOTAL                                   22655             2126               8.58%
Refinance Lending
Borrowers and Neighborhoods Lower Cost Loans Higher-Cost Loans % Higher-Cost Loans          Disparity
American Indian                            483             135             21.84%               2.06
Asian                                    3160              263               7.68%              0.73
African American                         2797              749             21.12%               2.00
Pacific Islander                           589              81             12.09%               1.14
White                                   23205             2747             10.58%               1.00



                                                                                       43
Latino                                  4359              777              15.13%             1.50
White Non Hispanic                     17904             2004              10.07%             1.00
<20% Minority Tracts                    9070              755               7.68%             1.00
50-100% Minority Tracts                13150             2510              16.03%             2.09
Low Moderate Income Tracts             11911             2514              17.43%             1.87
Middle Upper Income Tracts             28441             2919               9.31%             1.00
TOTAL                                  40452             5460              11.89%
SALINAS

Higher-cost Lending - Single Family and Manufactured Housing Loans to Owner
Occupants
Lower Cost Loans       Higher-Cost Loans      % Higher-Cost Loans in City
7826                   1157                   12.88%

Top Higher-Cost Lenders         # Higher Cost Loans $ Amount (+000)    Higher-Cost Market Share
Lehman Brothers/Finance America                  148          44223                       12.79
New Century Mortgage                             141          29703                       12.19
People's Choice Home Loans                        85          11410                        7.35
Fremont Investment & Loan                         79          21911                        6.83
Lime Financial Services                           61          14461                        5.27
Washington Mutual/Long Beach                      60           8007                        5.19
Ameriquest/Argent Mortgage                        58          16234                        5.02
MortgageIt, Inc                                   54          11952                        4.67
Countrywide Home Loans                            44           8839                         3.8
Encore Credit Corp                                43          11535                        3.72

Conventional First Lien Loans for 1-4 Unit Owner Occupied Properties
Home Purchase Lending
Borrowers and Neighborhoods Lower Cost Loans Higher-Cost Loans % Higher-Cost Loans        Disparity
American Indian                            102               5               4.67%            0.47
Asian                                      119              16             11.85%             1.20
African American                            21               6             22.22%             2.25
Pacific Islander                            65              12             15.58%             1.58
White                                    1188              130               9.86%            1.00
Latino                                   1172              159             11.95%             2.14
White Non Hispanic                         389              23               5.58%            1.00
<20% Minority Tracts                         0               0               0.00%            1.00
50-100% Minority Tracts                  1770              221             11.10%             0.00
Low Moderate Income Tracts                 449              65             12.65%             1.35
Middle Upper Income Tracts               1624              168               9.38%            1.00
TOTAL                                    2074              233             10.10%
Refinance Lending
Borrowers and Neighborhoods Lower Cost Loans Higher-Cost Loans % Higher-Cost Loans        Disparity
American Indian                            215              29             11.89%             1.69
Asian                                      301              11               3.53%            0.50
African American                            59               6               9.23%            1.31
Pacific Islander                           113              20             15.04%             2.14



                                                                                     44
White                                   2529               191               7.02%              1.00
Latino                                  2137               214               9.10%              1.68
White Non Hispanic                      1080                62               5.43%              1.00
<20% Minority Tracts                       0                 0               0.00%              1.00
50-100% Minority Tracts                 4020               360               8.22%              0.00
Low Moderate Income Tracts               992               110               9.98%              1.35
Middle Upper Income Tracts              3656               291               7.37%              1.00
TOTAL                                   4656               401               7.93%
SAN DIEGO

Higher-Cost Lending - Single Family and Manufactured Housing Loans to Owner Occupants
Lower Cost Loans         Higher-Cost Loans         % Higher-Cost Loans in City
127874                   11046                     7.95%

Top Higher-Cost Lenders              # Higher Cost Loans $ Amount (+000) Higher-Cost Market Share
Ameriquest/Argent/Town & Country                    1112         318385                     10.07
WMC Mortgage Corp                                    723         140448                      6.55
Fremont Investment & Loan                            692         197258                      6.26
Countrywide Home Loans                               672         125487                      6.08
Accredited Home Lenders                              670          87339                      6.07
New Century Mortgage                                 659         146732                      5.97
Lehman Brothers Bank/Finance America                 587         170291                      5.31
National City, Indiana                               440          58726                      3.98
Fieldstone Mortgage Co                               414          90629                      3.75
First Capital Group                                  280          68510                      2.53

Conventional First Lien Loans for 1-4 Unit Owner Occupied Properties
Home Purchase Lending
Borrowers and Neighborhoods Lower Cost Loans Higher-Cost Loans % Higher-Cost Loans          Disparity
American Indian                            415              44                9.59%             2.25
Asian                                    3812              168                4.22%             0.99
African American                           758              76                9.11%             2.14
Pacific Islander                           478              33                6.46%             1.52
White                                   22030              979                4.25%             1.00
Latino                                   6189              667                9.73%             3.12
White Non Hispanic                      14870              479                3.12%             1.00
<20% Minority Tracts                     7836              225                2.79%             1.00
50-100% Minority Tracts                 13097             1031                7.30%             2.61
Low Moderate Income Tracts               6429              588                8.38%             2.07
Middle Upper Income Tracts              29252             1237                4.06%             1.00
TOTAL                                   35697             1827                4.87%
Refinance Lending
Borrowers and Neighborhoods Lower Cost Loans Higher-Cost Loans % Higher-Cost Loans          Disparity
American Indian                            770              96               11.09%             2.59
Asian                                    5979              242                3.89%             0.91
African American                         2274              306               11.86%             2.77
Pacific Islander                           941              86                8.37%             1.96



                                                                                       45
White                                  45169             2021                4.28%            1.00
Latino                                 10247              947                8.46%            2.35
White Non Hispanic                     33027             1236                3.61%            1.00
<20% Minority Tracts                   19095              526                2.68%            1.00
50-100% Minority Tracts                26182             2222                7.82%            2.92
Low Moderate Income Tracts             11551             1069                8.47%            2.03
Middle Upper Income Tracts             61712             2682                4.16%            1.00
TOTAL                                  73318             3761                4.88%
SAN FRANCISCO

Higher-Cost Lending - Single Family and Manufactured Housing Loans to Owner Occupants
Lower Cost Loans         Higher-Cost Loans         % Higher-Cost Loans in City
26796                    875                       3.16%

Top Higher-Cost Lenders           # Higher- Cost Loans $ Amount (+000) Higher-Cost Market Share
Lehman Brothers/Finance America                     93           32375                    10.63
Fremont Investment & Loan                           88           30111                    10.06
Ameriquest/Argent Mortgage                          84           32295                      9.6
WMC Mortgage                                        78           23049                     8.91
New Century Mortgage                                54           12567                     6.17
Washington Mutual/Long Beach                        53            8392                     6.06
MortgageIt, Inc                                     51           23992                     5.83
ING Direct                                          44           17913                     5.03
Accredited Home Lenders                             24            5041                     2.74
Countrywide Home Loans                              22            4724                     2.51

Conventional First Lien Loans for 1-4 Unit Owner Occupied Properties
Home Purchase Lending
Borrowers and Neighborhoods Lower Cost Loans Higher-Cost Loans % Higher-Cost Loans        Disparity
American Indian                             43               2               4.44%            3.49
Asian                                    2017               30               1.47%            1.15
African American                           104               7               6.31%            4.95
Pacific Islander                            55               2               3.51%            2.75
White                                    4723               61               1.28%            1.00
Latino                                     476              32               6.30%            6.42
White Non Hispanic                       3933               39               0.98%            1.00
<20% Minority Tracts                       766               2               0.26%            1.00
50-100% Minority Tracts                  4194              101               2.35%            9.03
Low Moderate Income Tracts               2715               52               1.88%            1.22
Middle Upper Income Tracts               5608               88               1.54%            1.00
TOTAL                                    8323              140               1.65%
Refinance Lending
Borrowers and Neighborhoods Lower Cost Loans Higher-Cost Loans % Higher-Cost Loans        Disparity
American Indian                             89              12             11.88%             6.17
Asian                                    4378               47               1.06%            0.55
African American                           586              46               7.28%            3.78
Pacific Islander                           143               3               2.05%            1.07



                                                                                     46
White                         7889   155   1.93%        1.00
Latino                        1089    52   4.56%        2.72
White Non Hispanic            6329   108   1.68%        1.00
<20% Minority Tracts          1351     7   0.52%        1.00
50-100% Minority Tracts       8956   297   3.21%        6.23
Low Moderate Income Tracts    4671   178   3.67%        2.16
Middle Upper Income Tracts   11507   199   1.70%        1.00
TOTAL                        16179   377   2.28%




                                                   47
YUBA CITY

Higher-Cost Lending - Single Family and Manufactured Housing Loans to Owner Occupants
Lower Cost Loans           Higher-Cost Loans          % Higher-Cost Loans in City
4435                       763                        14.68%

Top Higher-Cost Lenders      # Higher-Cost Loans $ Amount (+000) Higher-Cost Market Share
Ameriquest/Argent                             77          12091                     10.09
Countrywide Home Loans                        74            8190                      9.7
New Century Mortgage                          60            7566                     7.86
Lehman Brothers Bank                          56            9879                     7.34
Fremont Investment & Loan                     45            7611                      5.9
HSBC/Decision One/Beneficial                  41            5148                     5.37
Accredited Home Lenders                       27            2747                     3.54
MortgageIt, Inc                               22            3482                     2.88
National City Bank, Indiana                   20            2655                     2.62
Washington Mutual/Long
Beach                                         20            1507                     2.62

Conventional First Lien Loans for 1-4 Unit Owner Occupied Properties
Home Purchase Lending
Borrowers and Neighborhoods Lower Cost Loans Higher-Cost Loans % Higher-Cost Loans          Disparity
American Indian                             34               4             10.53%                1.3
Asian                                      256              18               6.57%               0.8
African American                            22               4             15.38%                1.8
Pacific Islander                            10               4             28.57%                3.4
White                                      853              78               8.38%               1.0
Latino                                     209              43             17.06%                2.3
White Non Hispanic                         625              49               7.27%               1.0
<20% Minority Tracts                         0               0               0.00%               1.0
50-100% Minority Tracts                    384              46             10.70%                0.0
Low Moderate Income Tracts                 100              13             11.50%                1.2
Middle Upper Income Tracts               1402              144               9.31%               1.0
TOTAL                                    1503              157               9.46%
Refinance Lending
Borrowers and Neighborhoods Lower Cost Loans Higher-Cost Loans % Higher-Cost Loans          Disparity
American Indian                             35               6             14.63%                1.2
Asian                                      149              10               6.29%               0.5
African American                            42               9             17.65%               1.41
Pacific Islander                            17               6             26.09%               2.09
White                                    1301              186             12.51%               1.00
Latino                                     240              54             18.37%               1.46
White Non Hispanic                       1000              144             12.59%               1.00
<20% Minority Tracts                         0               0               0.00%              1.00
50-100% Minority Tracts                    538              82             13.23%               0.00
Low Moderate Income Tracts                 153              51             25.00%               2.20
Middle Upper Income Tracts               1854              238             11.38%               1.00



                                                                                       48
TOTAL                                     2009                290              12.61%
METHODOLOGY

The California Reinvestment Coalition’s (CRC) twelfth annual home mortgage lending
report, Who Really Gets Higher-Cost Home Loans? explores the relationship between
higher-cost lending, race and ethnicity and income. The report analyzes Home Mortgage
Disclosure Act (HMDA) data for 2004, the most recent year for which data is publicly
available. CRC uses CRA Wiz, PCI software to analyze the HMDA data.

Much of the report focuses on loans that are “higher-cost loans” under the new HMDA
data requirements, either because they were first lien loans with Annual Percentage Rates
(APRs) that exceed the rate for a comparable Treasury by 3%, or because they are second
lien loans that exceed the comparable Treasury rate by 5%.

Listings of the largest higher-cost and highest cost lenders in the state are based on single
family and manufactured housing loans to owner occupants. Lending by affiliated
companies that are owned by the same holding company was aggregated together.

Discussions of lending by race and ethnicity of borrower and race and income of
neighborhood focused on first lien home purchase and first lien refinance lending to
owner occupants.

Analysis of statewide lending focused on lending to neighborhoods that were
predominantly white (census tracts less than 10% minority), minority (census tracts more
than 80% minority), low-income, and upper-income.

In comparison, analysis of lending disparities within each of the 12 cities aggregated
certain census tracts. Specifically, census tracts characterized as being less than 20%
minority (“white”) were compared to tracts that are over 50% minority (“minority”); and
low and moderate-income tracts were considered together (LMI), as were middle and
upper income census tracts. This was a result of certain cities not having any census tracts
that met the narrower categories.

In general, lending to African American borrowers is compared to lending to White
borrowers. Lending to Latino borrowers is compared to lending to White non-Hispanic
borrowers. Lending to low (or, for city analysis, low-mod) neighborhoods is compared to
lending to upper (or, for city analysis, middle-upper) income neighborhoods. Lending to
minority neighborhoods (over 80% minority for state analysis, or over 50% minority for
city analysis) is compared to lending to non-minority neighborhoods (under 10% for state
analysis, or under 20% for city analysis).

Geography. This report looks at lending patterns in twelve California cities: Delano, El
Centro, Fresno, Los Angeles, Modesto, Oakland, Oxnard, Sacramento, Salinas, San
Diego, San Francisco, and Yuba City. Past CRC reports have analyzed lending in Fresno,
Los Angeles, Oakland, Sacramento and San Diego. San Francisco was added given its




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size, and the remaining six cities were added to provide a greater representation of rural
communities.

Data. The analysis relies on Home Mortgage Disclosure Act (HMDA) data that are
collected by the Federal Financial Institutions Examination Council. Additionally, the
Federal Deposit Insurance Corporation website was used to calculate the number of
branches in survey cities. These data are current as of June 2005. The data on check
cashing establishments were provided by the California Department of Corporation, and
reflects DOC licensee data as of the beginning of 2005.

Limitations. This study is subject to the limitations of publicly available data,
specifically the Home Mortgage Disclosure Act (HMDA) data.

HMDA data is limited in that certain elements of conventional underwriting – such as
credit scores, loan to value ratios, and debt to income ratios – are not available. While
CRC and other community groups continue to call for HMDA reporting requirements to
be strengthened, the industry continues to fight adamantly against any and all expansions
of HMDA.




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