Housing Finance Working Paper Series

This paper examines patterns in Home Mortgage Disclosure Act (HMDA) data in an effort to understand the types of neighborhoods with high concentrations of subprime refinance lending. The HMDA data clearly demonstrate the growth in subprime refinance lending and its disproportionate impact on low-income and predominantly black neighborhoods throughout the nation. Since home equity is typically the main source of wealth for borrowers in low-income and minority neighborhoods, it is essential that creditworthy borrowers in these neighborhoods have access to lower cost prime credit and weaker credit borrowers in these neighborhoods have access to subprime credit that is priced appropriately to their credit circumstances.

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