The Last Time Minorities Got This Small of a Chunk of the Mortgage Lending Market, Pokemon Cards Were Cool

Minorities haven't had this small a slice of the mortgage-lending pie since "All Star" was on the radio and school kids were fighting over Pokemon cards.

Image via Sara Zizza / flickr

As Bloomberg reported Wednesday:

The share of mortgage lending to minority borrowers fell to at least a 14-year low as U.S. regulators struggle to ease credit to blacks and Hispanics shut out of the housing recovery.

These borrowers, whose share of the purchase mortgage market has been shrinking since the collapse of subprime lending, continued to lose ground to white borrowers through 2013, according to federal data released this week. Blacks and Hispanics were a smaller portion of borrowers last year than they were in 2000, before the housing bubble.

Minorities, who tend to have less savings and lower credit scores than whites, have been hit hardest by lenders who are giving mortgages only to the strongest borrowers. Fair-lending advocates and civil-rights groups are urging the government to create new loan products and change how creditworthiness is determined to give blacks and Hispanics greater access to one of the best vehicles for building wealth.

“These numbers are a wake-up call that the housing market is a major driver of the economy and it can’t be a vibrant market when so many new households are excluded from it,” said Jim Carr, a former Fannie Mae executive who is now a scholar at the Opportunity Agenda, a New York-based organization that works on racial equity issues.

Photo credit: Shutterstock

Of course, many have argued that government pressure on lenders to increase lending to financially under-qualified minorities — led by Fannie Mae — was a primary inflator of the housing market bubble that caused the financial crisis in the first place.

The picture for minorities is even bleaker considering the fact that they accounted for nearly all of the total U.S. population growth in the past decade, meaning that their total share of mortgage lending activity has declined even as their share of the population has grown.

Minorities may be taking a smaller piece of the pie, but the pie itself is shrinking as well, as the Federal Reserve mortgage market data released this week noted that total mortgage originations fell 11 percent between 2012 and 2013.

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