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The St Louis Contrarian

Providing Independent and Intelligent Insight on St. Louis Public Policy Issues

Archive for the category “fannie mae”

Status of Housing Reform

nlihc.org/article/senate-committee-holds-hearing-need-housing-finance-reform

Mel Watt testified before Congress on FNMA, Freddie Mac reform. The most significant part of his testimony concerned the lack of overall housing and especially affordable units. He stated that construction has not kept pace with demand and that most new construction was at the high end of the spectrum. This has a great effect on the St. Louis region and the rest of the country. Written by Paul Dribin

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The Real Story Behind Racial Disparities in Mortgage Lending

There are numerous articles and discussions about the fact that African American borrowers are rejected at a higher rate that white borrowers. This disparity is present even when adjusting for income. On the face of it, this appears to be overt discrimination.

An important piece of the puzzle is missing from the discussion. That piece is the credit record and history of the borrower. This information is never made available in these studies and provides a more qualitative aspect of mortgage underwriting. Two other equally qualified borrowers will have different underwriting results if one has a negative credit record. Research I have conducted has shown that bad credit is the primary cause of a loan going bad.

Another factor shows this poor credit denies loans. Mortgage loan officers are extremely aggressive and make their fees off of closing loans. They would make a loan to anyone who would qualify. Race plays not factor in these decisions. Written by Paul Dribin

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