Denying Loans and Locking Families into Debt

Bank of America’s pattern of denying loans to working families and communities of color raises serious questions about its banking and lending practices:

• Bank of America has disproportionately low mortgage lending rates to African-Americans and Latinos, according to research by the Woodstock Institute. 
  
  When minority and low-income families cannot get access to market-rate mortgages, they often must seek risky loans in the high-rate sub-prime market. In Chicago, for example, 10,000 families who were forced into the sub-prime market lost their homes last year.
  
  
• MBNA—Bank of America’s new credit card arm—led the lobbying in Congress to pass the 2005 bankruptcy law that made it easier for banks to lock families into debt. 
  
  Bank of America’s credit card arm replaced Enron as President Bush’s largest contributor in the last presidential race.
  

Lion’s Share of the Market—Mouse’s Share of Loans for Communities of Color

Buying a home for your family is a pillar of the American Dream. But that Dream can be significantly more difficult to achieve for communities of color—especially without access to regulated lending institutions like Bank of America. In fact, Bank of America has a troubling record of trailing the market in providing loans to African-American and Latino families despite dominating the financial market in major cities around the country.

In Chicago for example, the Woodstock Institute describes the problem:

“Borrowing money for a new home is hard enough without having to worry about predatory lenders and unregulated, unscrupulous mortgage brokers. That’s why borrowers look to regulated financial institutions to provide safe and affordable credit. Unfortunately, for a variety of reasons, regulated lenders do not reach African-American and Latino markets as effectively as they reach white markets.
 
“As the largest bank in the Chicago region (after its acquisition of LaSalle), we expect Bank of America to lead the way in lending to underserved markets. But based on our research of the bank’s past lending, there is no guarantee that it is up to the challenge. In the Chicago region, Bank of America is currently the ninth largest mortgage lender to white borrowers, but only the 23rd and 25th largest lender to African-American and Latino borrowers, respectively.
 
“Even taking into account the ups and downs of the mortgage market, this pattern persists. Bank of America’s share of the African-American market was just 43 percent that of its share of white market in 2005. Its share of the Latino market is no better. Bank of America’s presence in the Latino market is just 36 percent that of its presence in the white market that same year. These figures show an appalling absence of lending outreach to minority borrowers and communities which, in the absence of the adequate presence of regulated financial institutions, are prey to unregulated and unscrupulous mortgage lenders.”