Documente Academic
Documente Profesional
Documente Cultură
April 2006
ACORN Report
The Association of Community Organizations for Reform Now and
The ACORN Financial Justice Center
Table of Contents
Introduction
Findings
Fifth Thirds African-American Rejection Ratio
10
12
14
16
About ACORN
17
Findings
Fifth Third Rejects Minority Applicants More Often Than Whites
In 10 of the 12 metropolitan areas in this study, Fifth Third rejected African-Americans
more than twice as often as white applicants. In none of the 12 metropolitan areas were
African-Americans less likely than whites to be turned down.
The highest rejection ratio for African-Americans was found in Nashville, where African-Americans
were 3.2 times more likely to be rejected than whites. In Nashville, more than 1 out of every 4 AfricanAmerican applicants was turned down compared to less than 1 in 12 white applicants.
MSA
African-American
Rejection Ratio
African-American
Denial Rate
Nashville, TN
Indianapolis, IN
Detroit, MI
Flint, MI
Cleveland, OH
Chicago, IL
Dayton, OH
Louisville, KY
Akron, OH
Cincinnati, OH
Columbus, OH
Lansing, MI
3.2
2.9
2.8
2.7
2.3
2.3
2.2
2.2
2.0
2.0
1.9
1.4
28.1%
25.6%
27.9%
28.6%
18.8%
20.3%
19.4%
15.0%
22.6%
15.1%
10.7%
15.8%
8.7%
9.0%
10.0%
10.6%
8.0%
8.7%
8.8%
6.8%
11.1%
7.5%
5.6%
11.1%
African-American
White
10.00%
Lansing
Columbus
Akron
Cincinnati
Dayton
Louisville
Chicago
Cleveland
Flint
Detroit
Nashville
0.00%
Indianapolis
5.00%
Fifth Third rejects minority applicants more often than white applicants in the same income
categories, and the disparity increases for borrowers with high incomes. Fifth Third also rejects
minorities with higher incomes more often than whites with lower incomes.
Minority applicants are consistently more likely to be denied loans at Fifth Third than are white
applicants at the same income level. This disparity grows for borrowers at higher income levels.
In all but one of the metropolitan areas below, upper income African-Americans were over two times
more likely to be turned down than upper-income whites. We have excluded from the below chart five
of the metropolitan areas due to their having fewer than forty applications from upper-income AfricanAmericans.
Disparity in Fifth Thirds Denial Rates Between African-Americans and Whites
MSA
Rejection Ratio
Upper Income
Upper Income
African-American
White Denial Rate
Denial Rate
Cleveland, OH
3.9
20.0%
5.1%
Detroit, MI
3.7
20.2%
5.5%
Indianapolis, IN
3.4
20.5%
6.0%
Chicago, IL
3.2
19.6%
6.1%
Dayton, OH
2.2
10.3%
4.8%
Columbus, OH
2.0
7.6%
3.9%
Cincinnati, OH
1.1
7.1%
6.5%
In 5 of the above 7 metropolitan areas, Fifth Third turned down upper-income African-Americans
(earning more than 120% of the median income) more often than low-income whites (earning less than
50% of the median income).
MSA
Cleveland, OH
Detroit, MI
Indianapolis, IN
Chicago, IL
Dayton, OH
Columbus, OH
Cincinnati
The largest disparities were in Flint, where African-Americans make up over 20% of the metropolitan
areas population but received just 3.6% of Fifth Thirds loans, and in Cleveland, where AfricanAmericans make up 27.5% of the metropolitan areas population but received a five times smaller share
of Fifth Thirds loans just 5.1%.
In 11 of the 12 metropolitan areas reviewed, African-Americans received a two times smaller share of
Fifth Thirds loans compared to their share of the metropolitan areas population. In only one of the 12
metropolitan areas, Detroit, did the share of Fifth Thirds loans made to African-Americans approach the
percentage of the population that African-Americans comprise.
Disparity Between African-American Share of Population and Share of Fifth
Thirds Loans
MSA
African-American
African-American
Disparity
Share of
Share of Fifth
Population
Thirds Loans
Flint, MI
20.3%
3.6%
5.6
Cleveland, OH
27.5%
5.1%
5.4
Indianapolis, IN
13.8%
3.7%
3.7
Nashville, TN
15.5%
4.5%
3.4
Louisville, KY
16.5%
4.8%
3.4
Akron, OH
10.9%
3.4%
3.2
Chicago, IL
18.6%
6.7%
2.8
Dayton, OH
14.2%
5.0%
2.8
Lansing, MI
7.9%
2.9%
2.7
Cincinnati, OH
12.9%
5.7%
2.3
Columbus, OH
13.3%
6.1%
2.2
Detroit, MI
22.8%
17.9%
1.2
Fifth Third also made a much smaller percentage of its loans to African-Americans than other lenders in
the same metropolitan areas did.
In 5 of the 12 metropolitan areas reviewed, the share of Fifth Thirds loans received by AfricanAmericans was at least twice as small as the share that African-Americans received from all lenders in
that metropolitan area.
The Association of Community Organizations for Reform Now ACORN Report 8
In all of the metropolitan areas examined, the percentage of Fifth Third loans made in
low or moderate-income neighborhoods was significantly less than the percentage of the metropolitan
areas that low and moderate-income neighborhoods comprise2.
In more than half of the 12 metropolitan areas, the share of Fifth Third loans received by low and
moderate-income neighborhoods was less than half the percentage that these neighborhoods made up of
the metropolitan area.
Disparity Between Percentage of the MSA Census Tracts that are Low or
Moderate Income and the Percentage of Fifth Thirds Loans Made In Low or
Moderate Income Neighborhoods
MSA
Percentage of Low
Percentage of Fifth
Disparity Between
and ModerateThird Loans Made
Percentage of
Income Census
in Low and
MSA and Share of
Tracts in MSA
Moderate Income
Loans
Census Tracts
Flint, MI
29.2%
7.4%
3.9
Louisville, KY
36.5%
10.8%
3.4
Chicago, IL
37.6%
12.8%
2.9
Nashville, TN
31.3%
11.6%
2.7
Cleveland, OH
35.6%
13.1%
2.7
Akron, OH
34.3%
13.4%
2.6
Lansing, MI
29.9%
12.1%
2.5
Cincinnati, OH
33.8%
16.5%
2.l
Indianapolis, IN
36.8%
17.3%
2.1
Dayton, OH
28.6%
14.54%
1.9
Detroit, MI
32.3%
19.30%
1.7
Columbus, OH
37.1%
21.5%
1.7
In 8 of the 12 metropolitan areas reviewed, the share of Fifth Thirds loans received by low and
moderate income neighborhoods was smaller than the share received by these neighborhoods from all
other lenders in that metropolitan area.
Low-income neighborhoods are census tracts which have a median family income below 50% of the area median family
income for the metropolitan area. Moderate-income neighborhoods are census tracts which have a median family income
between 50%-79% of the metropolitan are median.
Minority neighborhoods are census tracts in which minority residents make up more than half of the census tracts population.
Lansing, MI
Chicago, IL
Flint, MI
Louisville, KY
Cleveland, OH
Dayton, OH
Akron, OH
Detroit, MI
Indianapolis, IN
Cincinnati, OH
Nashville, TN
Columbus, OH
Percentage of All
Loans Made In
Minority
Neighborhoods
19.3%
28.0%
8.4%
6.4%
14.3%
10.1%
6.1%
35.3%
9.3%
6.0%
6.4%
6.3%
Percentage of Fifth
Third Loans Made
in Minority
Neighborhoods
3.3%
5.6%
1.9%
2.6%
5.9%
5.7%
3.7%
23.4%
8.2%
5.7%
6.6%
6.7%
Disparity
6.0
5.0
4.4
2.5
2.4
1.8
1.6
1.5
1.1
1.1
0.9
0.9
In response to the growing concern about predatory lending and discriminatory pricing, the Federal
Reserve Board issued new guidelines for the Home Mortgage Disclosure Act (HMDA). Starting in
2004, lenders had to report loans that had a high rate (and thus were subprime), making possible for the
first time a statistical analysis of the types of loans a lender originates. On average in 2004, high rate
loans were defined as first mortgages with Annual Percentage Rates (APRs) above 8%.
African-American borrowers are far more likely than whites to receive a high rate subprime loan at Fifth
Third. The greatest disparity was found in Dayton where high cost subprime loans accounted for 1 out of
every 10 mortgages made by Fifth Third to African-Americans, but just one out of every 73 mortgages
made to whites. In comparative terms, African-Americans were 7 times more likely than whites to
receive a high cost subprime loan from Fifth Third4.
As shown in the chart below, large disparities exist in most of the metropolitan areas reviewed,
especially in Detroit and Columbus where African-Americans were four times more likely than whites
to receive a subprime loan at Fifth Third.
The chart excludes three MSAs in which Fifth Third made a minimal number of high cost loans Flint,
12 high cost loans, Akron 10 loans, and Nashville 1 and African-American borrowers were not among
these high cost borrowers.
Disparity in Likelihood to Receive High-Cost Subprime Loan at Fifth Third
MSA
Subprime Loans as
Subprime Loans as
Disparity Between
a Percentage of
a Percentage of
African-American
Total Loans to
Total Loans to
and White
African-Americans
Whites
Customers
Dayton, OH
9.5%
1.4%
7.0
Detroit, MI
10.2%
2.4%
4.2
Columbus, OH
5.0%
1.2%
4.0
Indianapolis, IN
7.7%
2.3%
3.4
Chicago, IL
3.4%
1.3%
2.7
Louisville, KY
3.7%
1.8%
2.1
Cincinnati, OH
1.9%
1.3%
1.6
Cleveland, OH
0.9%
0.6%
1.6
Lansing, MI
2.0%
1.4%
1.5
Based on first lien conventional purchase and refinance loans originated by Fifth Third Bank, Fifth Third Mortgage, and
Home Equity of America, which is a subsidiary of Fifth Third.
While not all subprime loans are predatory, the overwhelming majority of predatory loans are subprime,
and the subprime industry is a fertile breeding ground for predatory practices. Subprime loans are
intended for people who are unable to obtain a conventional prime loan at the standard bank rate. The
loans have higher interest rates to compensate for the potentially greater risk that these borrowers
represent. There is a legitimate place for flexible loan products for people whose credit or other
circumstances will not permit them to get loans on A terms. Predatory lending occurs when loan
terms or conditions become abusive or when borrowers who would qualify for credit on better terms are
targeted instead for higher cost loans.
Predatory lending practices are even more insidious because they specifically target members of our
society who can least afford to be stripped of their equity or life savings, and have the fewest resources
to fight back when they have been cheated. Subprime lending is disproportionately concentrated among
minority, low-income, and elderly homeowners.
African-Americans received a much larger share of Fifth Thirds high rate loans than of their prime
loans. The greatest disparity was again found in Dayton where African-Americans received 1 out of
every 4 of Fifth Thirds subprime loans but just 1out of every 20 of their prime loans.
Disparity Between African-American Share of Prime and Subprime Loans at Fifth Third
MSA
Dayton, OH
Columbus, OH
Indianapolis, IN
Chicago, IL
Detroit, MI
Louisville, KY
Lansing, MI
Cincinnati, OH
Cleveland, OH
African-American
Share of Subprime
Loans
26.4%
20.6%
11.3%
16.3%
41.0%
10.8%
4.6%
9.2%
14.3%
African-American
Share of Prime
Loans
5.1%
6.0%
3.8%
6.4%
16.2%
5.5%
3.1%
6.2%
10.3%
Disparity Between
Share of Subprime
and Prime
5.2
3.4
3.0
2.5
2.5
2.0
1.5
1.5
1.4
Fifth Third Market Share Conventional First Lien Purchases and Refinances
MSA
Market Share
Cincinnati
9.4%
Dayton
8.1%
Lansing
6.6%
Columbus
5.5%
Indianapolis
3.9%
Louisville
3.5%
Cleveland
3.1%
Akron
2.2%
Flint
1.5%
Detroit
1.0%
Chicago
0.7%
Nashville
0.7%
About ACORN
ACORN, the Association of Community Organizations for Reform Now, is the nation's largest
community organization of low- and moderate-income families, with over 175,000 member families
organized into 750 neighborhood chapters in 80 cities across the country. Since 1970 ACORN has taken
action and won victories on issues of concern to our members. ACORNs priorities include: better
housing for first time homebuyers and tenants, living wages for low-wage workers, more investment in
our communities from banks and governments, and better public schools. ACORN achieve these goals by
building community organizations that have the power to win changes -- through direct action,
negotiation, legislation, and voter participation. ACORNs website is at www.acorn.org.