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Distribution Analysis Of 2006 Subprime Rate Loans
Subprime Rate Loans By Race And Census Tract
Percent minority
The incidence of higher-cost subprime rate loans is more
prevalent in census tracts with a higher percentage of
minorities. The frequency and magnitude of higher-cost
subprime rate loans increase as the proportion of minorities
in a community increase.
The frequency/average spread range from a low of
22.25%/5.10% in census tracts < 10% minority to a high
of 47.51%/5.36% in census tracts 90 to100% minority.
Throughout the range of census tract strata, the pattern of the
incidence and magnitude of subprime rate loans is linear.
The overall volume of loans and the volume of subprime rate
loans however, are clearly skewed towards largely White
areas. Census tracts that are less than 30% minority account
for 55.61 % of higher price subprime rate loans. Census
tracts < 10% minority had the largest share of subprime
rate loans at 26.47%. By contrast, despite the fact that high
minority census tracts had a higher incidence and higher
average spread, census tracts >70% minority accounted
for only 18.87% of the 2006 subprime rate loans. (Table 8,
Figure 13, and Figure 14).
If the incidence of higher-priced lending is a predictor of
future delinquencies, then the subprime rate loan distribution
by census tract percent minority is an indication that the
mortgage meltdown might be a hurricane in predominately
White census tracts, but it will be a tsunami in predominately
minority census tracts, especially for Blacks and Hispanics.
TABLE 8: TRACT PERCENT MINORITY AND LOANS WITH A SPREAD
Page 24 of 27 The Demographic Impact of the
Subprime Mortgage Meltdown