[ Pobierz całość w formacie PDF ]
.13And while Philadelphia remains the core of the region, its role as a cen-tral organizing economic force has diminished.Total full- and part-timeemployment dropped from 1.05 million in 1970 to 792,000 in 2000,14 andone ZIP code in Montgomery County, Pennsylvania King of Prussia, thehome of the King of Prussia Mall has at least as many retail jobs as theentirety of downtown Philadelphia.15 Manufacturing, once the economiclocus of Philadelphia s strength, has declined consistently and significantly(e.g., the percentage of the region s manufacturing jobs in the city ofPhiladelphia declined from over 77 percent at the turn of the twentieth cen-tury to just over 50 percent in 1950 to the current figure of under 20 per-cent).Between 1970 and 2000 alone, employment in the manufacturingsector fell from nearly 242,000 to 58,000.16Racially, Philadelphia s African American and Latino populations havegrown steadily.Today, African Americans constitute 43.2 percent of allPhiladelphians, and Latinos, 8.5 percent.Yet Philadelphia remains ahighly segregated city (with an Index of Dissimilarity score of 76.4 forAfrican Americans).The Philadelphia region, although showing somesmall signs of improvement, remains the twelfth most segregated region(having more than 1 million residents in 1980) in the country, with a Dvalue of 72.17Philadelphia s banking community has historically invested more heavilyin certain communities, leaving the others to rely upon smaller banking in-stitutions and other outlets for housing capital.18 Patterns of lending thatavoided areas of racial concentration many decades ago can be found toimpact racial segregation patterns for many years into the future.19 With-out several significant Community Reinvestment Act (CRA) settlements andspecial programs like the Philadelphia Mortgage Plan (and its successor, theDelaware Valley Mortgage Plan), many of Philadelphia s lower-income andminority communities would have been without reasonable access to thecity s mainstream financial institutions.Founded in 1975 in response tocommunity-based charges of redlining and disinvestment, the DelawareValley Mortgage Plan has provided nearly 28,000 loans totaling $763 mil-lion the vast majority of which are in the City of Philadelphia.As muchas that sounds, it is important to recognize that in a typical year, more than46 Why the Poor Pay More15,000 loans are made for the purchase of homes or refinance of mort-gages in Philadelphia.20 So the Delaware Valley Mortgage Plan has clearlybeen a help, but it hasn t fundamentally altered access to credit for the ma-jority of Philadelphia s lower-income people and places.Lending in Lower-Income Areas of PhiladelphiaData from the 2001 (HMDA) reports for the City of Philadelphia revealthat 14 percent of all home purchase mortgage loans were originated bysubprime lenders, as were 24 percent of refinances.21 The proportions ofprime and subprime vary dramatically by the average income level in cen-sus tracts.Specifically, as incomes increase, so does the percent of loansthat are prime.In low-income tracts (i.e., those with income below 50 per-cent of the Metropolitan Statistical Area [MSA] average), the percent ofhome purchase mortgage loans that are subprime is 21.0 percent; inmoderate-income areas (i.e., those with incomes between 50 percent and79 percent of the MSA average), the percent of home purchase mortgageloans that are subprime is 21.2 percent; in middle-income areas (i.e., thosewith incomes between 80 percent and 119 percent of the MSA average),the percent of home purchase mortgage loans that are subprime is 11.1percent; in high-income areas (i.e., those with incomes greater than 120percent of the MSA average), the percent of home purchase mortgage loansthat are subprime is 5.4 percent (see Figure 3.2).22Subprime activity in Philadelphia is generally more prevalent amongmortgage refinances.And, as with home purchase mortgage loans, theshares of prime and subprime vary by income level of census tracts suchthat lower-income areas have higher rates of subprime lending.In low-income tracts, the percent of refinance mortgages that are subprime is 46.6percent; in moderate-income areas, the percent of refinance mortgages thatare subprime is 28.1 percent; in middle-income areas, the percent of refi-nance mortgages that are subprime is 17.8 percent; in high-income areas,the percent of refinance mortgages that are subprime is 10.8 percent.The presence of subprime loans in and of itself does not necessarily meanthat borrowers are getting a less appropriate product.To the extent thatdifferences in credit, income, and collateral justify the subprime loans, theyare entirely appropriate.On the other hand, to the extent that there arenot such differences, subprime loans are disadvantageous.23HMDA data show that the array of institutions most active in the lower-and moderate- income communities is substantially different from those inthe middle- and higher-income places (see Appendix 3.1).The substantialmarket penetration of subprime lenders into lower- and moderate-incomecommunities represents a double-edged sword.While lenders are makingcredit available, they are doing so at a price.Richard Williams, ReynoldNesiba, and Eileen McConnell said it well:The Economic Consequences of Predatory Lending 47Figure 3.2Percent of Loans That Are Subprime by Census Tract Income Level:Philadelphia, 2001As classical economic theory would predict, a deregulated marketplace has made itpossible for low income and minority groups to get credit like never before.Thishas helped them to achieve record rates of home ownership and to also get loansfor any number of other purposes.But, as sociological network theories suggest,the new lenders are quite unlike the old ones.As a result, the gains made by un-derserved markets have come in very different ways than those made by the rest ofAmerican society.For better or for worse, as the old inequalities have slowly di-minished, new inequalities have replaced them.24Extent of GSE Benefit in Lower-Income CommunitiesWhen Fannie Mae Corporation (and later Freddie Mac) were established,Congress had several intentions, among which was to create liquidity inthe home mortgage market.Beyond that, the congressional intention wasto provide for standardization and, along with that, market efficiencies thatwould translate into advantageous pricing for borrowers.Generally, sub-prime loans are not purchased by the nation s GSEs.The logical inference,then, is that communities of lower income tend not to have the economicadvantages afforded by the GSEs to higher-income communities.Kenneth48 Why the Poor Pay MoreFigure 3.3Percent of Conventional Loans Purchased by GSEs: Philadelphia, 2001Temkin, Jennifer Johnson, and Diana Levy25 and Brent Ambrose, ThomasThibodeau, and Kenneth Temkin26 suggest that were the GSEs to get moreactively involved in the market, the price differential (rates, points and fees)between prime and subprime rates that borrowers with subprime credit paywould be reduced
[ Pobierz całość w formacie PDF ]