Mortgage denials for Native Americans
In light of all the subprime lending mess, in which “No Doc loan” credit applications were often based on largely fictional income, and brokers and banks where playing all sorts of games to get people into high interest subprime loans, the Fargo Forum analysis of home loan applications for 2006 found that lenders denied one out of every three applications made by American Indians in North Dakota and more than one out of every four in Minnesota.
According to the story, Credit history was cited as the primary reason for denial in 26 of the 59 applications where a reason was listed. Seven applications were denied because of collateral, five because the application was incomplete, three because of debt-to-income ratio and two each because of employment history, unverifiable information and insufficient cash. Nine listed “other” reasons, and 67 gave no reason.
Makes you wonder just a bit how all those Native American applying for loans were somehow denied when a disabled vet living in North Minneapolis on social security and VA disability of $1,333 a month was able to qualify for a $215,000, 2 year ARM with a monthly P&I payment of $1,834 per month. Almost as amazing as the loan was the appraisal for $305,000 in the near northside of Minneapolis.
Tags: denials, fictional income, liar loans, loan applications, loans, mortgage, no doc loans, subprime
Filed under: Coping With Credit & Debt
Your second paragraph implicitly makes a very important point — denials of mortgage loan applications are not always a bad thing! I’ve no doubt that there is discrimination against Native Americans by mortgage lenders, but how to think about denials has become more complicated now that the issue is not just whether or not a borrower gets a loan, but whether he or she gets a fair, affordable loan. The disabled vet who got the toxic mortgage that you describe surely would have been better off if his application had been denied.