Some groups have accused the Federal Housing Administration of discriminatory lending in Baltimore, MD. Legally, a Federal Housing Administration mortgage is supposed to fall within narrow boundaries. The rates paid are supposed to be consistent. One group’s research says that minority neighborhood Federal Housing Administration financial loans may have had a higher rate.
In Baltimore you can get Federal Housing Administration loans
In Baltimore there was a study released by a community-organizing group. Supposedly, it proves that Federal Housing Administration loans use discrimination. For all loans that are FHA secured, the interest rate should be close to the exact same. They aren't like traditional house loans. In fact, the rate isn't determined at all by the amount of the mortgage or the credit score. Veteran’s Administration loans have a similar structure. In a study of the FHA financial loans offered to Baltimore, Maryland, residents, however, it was found that homes in minority and low-income neighborhoods tended to have higher interest rates.
About overages
For more than a decade, the Justice Department has identified “overages” as a place of possible abuse in Federal Housing Administration financial loans. Some employees are able to make decisions on things like "overages" on financial loans. This includes processing fees. These mortgage overages help determine the commission the salesperson is paid for the GHA mortgage they help set up. Overage charges are typically higher in low-income or minority neighborhoods. This ends up showing discrimination that happens.
Federal Reserve analysis counters discrimination charge
The offense of discrimination was countered by the Federal Reserve during 2008 in an evaluation of Federal Housing Administration financial loans, which was the very same year Communities United studied. The Federal Reserve studied these exact same Baltimore FHA loans, using data that is not readily accessible to the public. 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
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