Low Income Neighborhoods, Families Getting Raw Deal
Report uncovers racial desparity, makes suggestions
by Jennifer Greenup
QCFMag.com
City Hall--Cincinnati City Council was presented with a report about the fair lending practices of local financial institutions, despite refusing to pay for the presentation last week by a 5-3 vote.
The National City Reinvestment Coalition (NCRC) report recommends that there is a key need for more home ownership and improvement loans, and that Cincinnati should include branch building in city development plans. The report also said that banks need to build branches in low income neighborhoods.
The report shows that poor neighborhoods in Cincinnati suffer from a lack of access to banking institutions.
Some communities do not have even one banking branch in their neighborhood forcing them to use high price check cashing businesses and loan institutions for their check cashing needs.
Councilwoman Laketa Cole agreed that something needs to be done to improve access to banking services in low income neighborhoods.
“It is easier to go to check cashing businesses than to a bank because there is no bank in their community,” said Cole. But Cole admitted that there is only so much the city can do.
“The city can’t force banks to do business in neighborhoods,” said Cole. “But I hope we can use our leverage to push them into working more in these neighborhoods.
However, Josh Silver, NCRC vice president of research and policy said, “Businesses are considering low income neighborhoods very attractive” although they offer different services then in high income neighborhoods.
The report also shows that Cincinnatians with low to moderate incomes have a hard time gaining loans for home ownership.
The report showed that people with low and moderate incomes are less likely to receive prime loans and are either denied loans or are forced into taking high cost, subprime loans.
Moreover, African-Americans were three times more likely to receive subprime loans than whites: 33.23% to 9.59%.
And as incomes increased, the percentage of African-American denied loans increased compared to white with the same income.
“As income increases, racial disparity also increases and was greater for higher income African-Americans,” said Silver. He continued that he was not surprised by the reports finding which are comparable with leaning practices across the nation.
Cole said that along with more banks in Cincinnati communities, they also need to offer financial education to help teach low income residents how to build their credit so they can obtain home and business loans.
Mary Anne McCord Berry, chair of the Community Reinvestment Act Oversight Committee said that now that they have the report, the next step is to sit down with the administration to come up with a plan to move the City forward in addressing the needs of the City’s residents.
Although the City paid $25,000 for the report by the NCRC, it cost over $100,000 according to the council. Council refused to pay the $3000 traveling expense, an action prompted by Councilwoman Leslie Ghiz who felt that the cost of the report should have included travel expenses for the presentation.
The National City Reinvestment Coalition (NCRC) report recommends that there is a key need for more home ownership and improvement loans, and that Cincinnati should include branch building in city development plans. The report also said that banks need to build branches in low income neighborhoods.
The report shows that poor neighborhoods in Cincinnati suffer from a lack of access to banking institutions.
Some communities do not have even one banking branch in their neighborhood forcing them to use high price check cashing businesses and loan institutions for their check cashing needs.
Councilwoman Laketa Cole agreed that something needs to be done to improve access to banking services in low income neighborhoods.
“It is easier to go to check cashing businesses than to a bank because there is no bank in their community,” said Cole. But Cole admitted that there is only so much the city can do.
“The city can’t force banks to do business in neighborhoods,” said Cole. “But I hope we can use our leverage to push them into working more in these neighborhoods.
However, Josh Silver, NCRC vice president of research and policy said, “Businesses are considering low income neighborhoods very attractive” although they offer different services then in high income neighborhoods.
The report also shows that Cincinnatians with low to moderate incomes have a hard time gaining loans for home ownership.
The report showed that people with low and moderate incomes are less likely to receive prime loans and are either denied loans or are forced into taking high cost, subprime loans.
Moreover, African-Americans were three times more likely to receive subprime loans than whites: 33.23% to 9.59%.
And as incomes increased, the percentage of African-American denied loans increased compared to white with the same income.
“As income increases, racial disparity also increases and was greater for higher income African-Americans,” said Silver. He continued that he was not surprised by the reports finding which are comparable with leaning practices across the nation.
Cole said that along with more banks in Cincinnati communities, they also need to offer financial education to help teach low income residents how to build their credit so they can obtain home and business loans.
Mary Anne McCord Berry, chair of the Community Reinvestment Act Oversight Committee said that now that they have the report, the next step is to sit down with the administration to come up with a plan to move the City forward in addressing the needs of the City’s residents.
Although the City paid $25,000 for the report by the NCRC, it cost over $100,000 according to the council. Council refused to pay the $3000 traveling expense, an action prompted by Councilwoman Leslie Ghiz who felt that the cost of the report should have included travel expenses for the presentation.
QCFMag reporter Jennifer Greenup covers local politics. The Greenup report appears each Thursday.
posted by Queen City Forum Mag @ 8:02 PM
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