Each Monday evening, people with low and moderate incomes who want to get bank loans will stop in and ask for help from the Jersey City office of Association of Community Organizations for Reform Now (ACORN), a non-profit organization with a branch on Newark Avenue.
But a recently released study by the non-profit group shows that if these prospective borrowers are minorities, they may have a more difficult time getting a bank loan than caucasians.
Despite laws designed to make money-lending practices fairer for minority groups that have been historically denied an equal opportunity, recent data shows that there is still a long way to go.
According to a study released by ACORN, low- and moderate-income borrowers of minority status are being rejected more often than other borrowers of the same economic status. Even worse, the study reports that the gap has widened in the past year in several areas of New Jersey, including Jersey City.
Rejection for conventional loans increased somewhat for African-Americans, increased greatly for Latinos and increased only slightly for whites, according to the study.
In many instances, the issue seems to be purely about race. Comparing the year 2000 to 1999, the study stated that in Jersey City, “Upper-income African-Americans [earning more than $63,840] and upper-middle income African-Americans [earning more than $53,000] were more likely to be rejected than low-income whites [earning less than $26,000].”
ACORN Housing, a derivative but separate entity from ACORN, has tried to fix the racial disparity by serving as a link between the banks and the community. For one thing, they examine the statistics released each year. In compliance with the Home Mortgage Disclosure Act, each year the Financial Institutions Examinations Council (FIEC) releases statistics on the money-lending practices of 7,800 financial institutions. These statistics allow watchdog groups like ACORN Housing to examine whether or not certain groups are being discriminated against. The most recent report indicates that such discriminatory practices are taking place in Jersey City.
Chris Anderson, the local director for ACORN Housing, told the Hudson Reporter that progress has been made over the years, but the new numbers exhibit a discouraging trend.
One of the reasons, Anderson said, may be the weakened economy, as minorities may be disproportionately affected by a negative economy. African-American applicants were almost three times more likely to be rejected than white applicants in 2000, nearly a 17 percent increase from the previous year, according to the study.
“One of the depressing things is, while we have seen improvement, the gap is so big that it would take a long time to overcome the gap,” Anderson said.
Striving for change
ACORN is a non-profit organization that represents low to moderate-income families. In addition to reviewing the annual statistics, ACORN Housing tries to help these families by acting as a liaison between the community and the banks.
“Because of our links to the community, we will help low- to moderate-income families become aware of which banks are doing a good job,” Anderson said.
Every Monday at 6 p.m., ACORN Housing invites people interested in getting help with their loans to come to the headquarters on the second-floor office of 574 Newark Ave. in Jersey City to discuss what opportunities are available to them. People interested in attending the meeting are encouraged to call in advance at 222-7741.
After that meeting, people who want to take the next step are encouraged to meet with ACORN Housing representatives again on an individual basis. Approximately 10 to 15 people show up each week for the meeting, Anderson said.
“I see my job as a translator,” he said. “I translate the world of the banks into the world of the community.”
On a larger scale, ACORN Housing occasionally holds events like the upcoming Bank Fair on Oct. 20 in Patterson, N.J. This fair offers banks a chance to market their products to the community.
As far as Anderson is concerned, any improvements in the situation have come from banks who respond positively to federal laws that require them to invest money in communities that have many low-income residents. “A lot of lenders have taken interest that abide by the letter and the spirit,” Anderson said, citing Chase Manhattan, Fleet, and PNC Bank as places that have designed specific programs for lower- to moderate-income families. “That’s putting your money where your mouth is,” he said.
On the other hand, many banks have failed to live up to standards that the government has outlined. Anderson said that whatever progress has been made has been a result of the Community Reinvestment Acts passed in the mid-1980s that required lending institutions to spend money in lower income neighborhoods. “Real improvement comes when regulatory government takes a real interest,” he said.
As a result, many people find themselves borrowing money from what ACORN Housing refers to as predatory lenders. Financial institutions such as these purposely lend out money intending to eventually foreclose. In order to prevent such practices, ACORN Housing released recommendations along with its study that would narrow the racial disparity in money-lending practices. For the most part, these recommendations involve enforcing existing laws, especially the Community Reinvestment Acts.
But government regulation can only go so far, and ACORN Housing sees a need for aggressive changes to take place from within the banks to close a substantial gap, according to the report.