UPDATED: The Seattle Post-Intelligencer and numerous other newspapers nationwide today carry an Associated Press story by reporter Jeannine Aversa which pointedly highlights race as a factor in home mortgage costs. The Federal Reserve's just-released Home Mortgage Disclosure Act 2005 data show - among many things - that a higher percentage of blacks (54.7 percent) and Hispanics (46.1 percent) paid "higher than typical" rates for their mortgages, than did whites (17.2 percent). The P-I's version of the story does note the percentages are up markedly for all three racial groups for '05 versus '04, but cites as the primary explanatory factors: higher mortgage rates in general; higher-cost adjustable-rate mortgages; and greater prevalence of higher-priced "piggyback" loans. There is a passing mention near the end of the P-I's version of the AP story that blacks are turned down for loans more often than other groups; but no explanation of why.

Another version of the same story at the MSNBC site includes an important warning from the study that credit histories of borrowers are not factored into the data but are an important loan cost factor. But there's quite a bit more to it than that. Here is the Federal Reserve report upon which the AP story is based. The nub of the matter is stated on page 32:

Higher-priced lending is most common in Census tracts with lower incomes, a high percentage of minorities, depreciating real home values, low educational attainment, low credit scores and high application denial rates.

On page five of the report, the Federal Reserve pointedly warns: "Elevated credit risk for loans in the higher-priced mortgage market results in substantially higher default and foreclosure rates and costs and, consequently in higher price levels....Lenders focused on the higher-priced market segment may face steeper funding costs, may incur higher marketing expenses" and may end up granting many more loan extensions "than...lenders that deal primarily with borrowers with few credit problems or the ability to make large down payments."

Yet here is the AP lede by Aversa, repeated in papers across the nation:

WASHINGTON -- Black and Hispanic home buyers pay more for their mortgages than do whites, according to a Federal Reserve report released Friday.

And this hed in the P-I, repeated verbatim elsewhere: "Blacks, Hispanics Pay More For Mortgages."

This might be almost tolerable if the story spelled out the Fed study's above declarations regarding census tract factors, default risks and loan cost impacts. But it does not. Do Blackness and Hispanicity serve as convenient proxies - in AP's defacto political style book - for necessarily impecunious and disadvantaged? Are we to suppose that living in poor neighborhoods with declining property values and low educational acheivement, and having a poor credit history is a largely unavoidable, societally-driven outcome of being Black or Hispanic? In the post-millenial United States? I can think of no other reason for AP lazily leading with a racial explanation of the mortgage cost data.

Next time, Ms. Aversa, read the report more thoroughly, and say what it says, not what you want it to say. This is shoddy work. And online editors: ALWAYS include a link to the report in such instances. Unless of course you don't want to make a closer look at the source document too easy for your readers.

TECHNORATI TAGS: ASSOCIATED PRESS, HOME LOANS, COST, RACE, MEDIA BIAS, SEATTLE POST-INTELLIGENCER

Posted by Matt Rosenberg at September 8, 2006 02:02 PM

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