Thanks to the assistance of our summer research assistants, the Foreclosure Project looked at two sets of data made publicly available by the Consumer Finance Protection Bureau. The first set is made up of consumer complaints filed with the CFPB. We tallied complaints from North Carolina by zip code and mapped them. Click on any zip code to get a more detailed break down of the type of complaint.
The seven zip codes with the largest number of complaints are clustered around Charlotte - no doubt due in part to their large populations. But the number of complaints and zip code population are not perfectly matched. Zip codes #8 and 9 on the complaint list (28212 and 28226 - also Charlotte) are relatively far down the population list.
Complaints about mortgages make up the single largest category, and most zip codes with large total amounts also have a large number of mortgage complaints. But the type of complaints reported vary a great deal between zip codes. Zip code 28278 (Charlotte again) has one of the highest number of credit reporting complaints yet doesn't rank at the top for other complaint types.
Percent of complaints from NC reported to CFPB by type
The second dataset we looked at is information on mortgage applications that the Home Mortgage Disclosure Act requires lenders to disclose. The CFPB collects this information and publishes it online. Here, we focused on home loan origination rates by race.
The interactive map below shows the percentage point difference between the home loan origination rate for white and African American applicants. A positive number means the percentage of originated loans is higher for whites than for blacks. For example, in Orange County, whites receive home loan originations at a rate 18 percentage points higher than African Americans, but at a rate 3 percentage points lower than Asians.
For almost every county in North Carolina, home loans are originated at a far higher rate for white applicants. This could happen for many reasons including variations in income, creditworthiness, indebtedness, and property value.
Yet the sheer consistency of the data is overwhelming. In only four counties are home loans for African Americans originated at a higher rate than whites - and in two of those counties (Graham and Swain) the number of black applicants is extremely low, making those results unreliable. In comparison, the home loan origination rate for American Indians is higher than whites in 19 counties and is higher for Asians in 41 counties.
Whatever the reason for the discrepancy, the relatively low origination rate for black home loan applicants has powerful consequences. Since a home is the largest source of wealth for most people, being denied access to this key asset can have a debilitating effect on household assets for generations.
The chart below shows home loan origination rates for five counties from different parts of the state over a five year period. (Looking at a longer time period gives us a larger pool of applicants to analyze.) Here again, white applicants have the highest home loan origination rate, followed closely by Asian applicants. American Indians have the lowest rate in three counties; African Americans in two.
Foreclosures by Census Tract
The Foreclosure Project is examining foreclosure files at county courthouses in order to discern patterns of foreclosure on the census tract level. By identifying where foreclosures are occurring, we can see if they are concentrated in specific neighborhoods. By matching foreclosure activity with tract demographic and socioeconomic data, we can tell who is most affected by foreclosure. And by analyzing mortgage terms, we can determine who the most active lenders were and how many loans contained unfavorable terms.
We have collected and analyzed the first round of data and summarized our findings in three reports that focus on Durham County.
Foreclosures are clustered. Most of the tracts with high numbers of foreclosures, and all the tracts with the highest rate of foreclosure, are predominantly minority. African Americans make up the largest portion of the minority population in most of these tracts, but some contain relatively large percentages of Hispanic residents as well.
Poor neighborhoods are especially vulnerable to foreclosure. In comparison with county figures, tracts with high foreclosure rates are very poor, with high unemployment, low median household incomes and low rates of homeownership. These include some of Durham's most distressed tracts.
Foreclosure is expensive for neighbors as well as the homeowners directly affected. The foreclosures in our sample alone have drained over $13 million in "spillover costs"--the amount of value neighboring homes lose due to their proximity to a foreclosed home. The spillover costs for majority minority tracts is almost twice the amount for primarily white tracts.
High cost loan terms were common. Especially in the tracts with the highest numbers of rates of foreclosure, questionable terms such as balloon payments, interest only mortgages and the like appear often. In some tracts, 100% of mortgages have these unfavorable terms.
Mapping our Results
The interactive map below shows the number of foreclosures from our sample and the foreclosure rate by census tract. Visit our Story Map site to get more information about foreclosure locations and tract characteristics.
Map 1: Number of Foreclosures in Sample by Census Tract