Low-income financial loans in Baltimore might have been much more expensive

Some groups have accused the Federal Housing Administration of discriminatory lending in Baltimore, MD. Legally, a Federal Housing Administration loan is intended to fall within narrow boundaries. The rates paid are intended to be consistent. Minority-neighborhood borrowers in Baltimore may not have gotten a fair shake in 2008, though. One study states that these borrowers paid higher rates during that year. Source of article – Discriminatory FHA loans could have cost Baltimore borrowers by MoneyBlogNewz.

In Baltimore you are able to get FHA financial loans

In Baltimore there was a study released by a community-organizing group. Supposedly, it proves that Federal Housing Administration financial loans use discrimination. For all loans that are FHA secured, the rate of interest should be close to the same. They aren't like traditional house loans. In fact, the rate is not determined at all by the amount of the loan or the credit score. Veteran’s Administration financial loans have a comparable structure. In Baltimore, Maryland, something about FHA loans was discovered in the study. It showed that there were higher interest rates for homes in minority and low-income neighborhoods.

Overages

For much more than a decade, the Justice Department has identified “overages” as a place of possible abuse in FHA financial loans. Some employees are able to make decisions on things like "overages" on financial loans. This includes processing fees. These loan overages help determine the commission that the salesperson is paid for the GHA mortgage they help set up. By charging low-income or minority neighborhood consumers much more in overages, purposefully or not, the financial loans could end up discriminatory.

Exactly what Federal Reserve was to say about this

In an examination of the FHA loans during 2008, the very same year that Communities United studied, the Federal Reserve counters the charge of discrimination. Info not yet accessible to the public was used as the Federal Reserve studied the same Baltimore Federal Housing Administration financial loans. In order to preserve privacy, the exact dates mortgages are offered are not published. The anomaly in mortgage costs is blamed on something else though. The Federal Reserve said the dive in home prices in 2008 brought on it. If the Baltimore Federal Housing Administration mortgages were discriminatory, then the data from 2009 and later years needs to be researched to determine the truth.

Citations

Baltimore Sun

weblogs.baltimoresun.com/business/realestate/blog/2010/11/study_raises_questions_about_disparities_in_fha_loans.html