Las Vegas Sun

March 29, 2024

Study finds home-loan disparity

The Las Vegas Valley ranked second worst in the nation when it comes to lending money to low- and moderate-income people for buying homes, according to a recently released study.

The study of 115 metropolitan areas said that low- and moderate-income neighborhoods made up 23 percent of the Las Vegas metropolitan area in 2002, while only 4.3 percent of all conventional loans were made in those neighborhoods.

"This an alarming statistic ... especially considering that the area is among the most rapidly growing in the country," said Valerie Coffin, who authored the study for a Washington-based nonprofit organization called the Association of Community Organizations for Reform Now.

That statistic also spoke volumes to members of the private and nonprofit sectors working in housing and real estate locally.

"We should be ashamed of this," said Melody Luetkehans, general counsel for the Nevada Association of Realtors, a 14,000-member professional association. "Nevada in general hasn't been good ...@providing either government or government-guaranteed loans to low- and moderate-income people."

The annual study looks at lending patterns nationwide based on race, ethnicity and income level. It is based on Census data on income levels and loan application data that lenders are required to report by federal law.

ACORN has more than 150,000 families organized in 700 chapters nationwide and works on improving wages, housing and schools for people at the lower end of the economic spectrum.

The study's figures on income also showed that 30 percent of the low-income people in the valley who shopped for homes in 2002 had their loan applications turned down, compared to 12 percent of upper-income applicants. Nearly 24 percent of moderate-income applicants were rejected.

Low income in the Las Vegas metropolitan area in 2002 was anything less than $27,150; moderate income, from $27,150 to $43,440; and upper income, at or above $65,160.

According to the report, in 2002 there were 386 low-income applicants applying for home loans and 30 percent of those were denied. There were 3,357 moderate-income applicants, with 24 percent being denied. Of 37,332 upper-income applicants, 12 percent were denied.

Nationally Las Vegas was outranked only by Mobile, Ala., where 30 percent of the neighborhoods were classified as low and moderate income in 2002, but only 3.3 percent of all loans went to those neighborhoods.

Study author Coffin said that loan programs exist for the low- to moderate-income people, and that earning less money doesn't mean you can't own a home.

"Of course, the perception is that they can't buy a house because they're poor -- but lower-income people aren't necessarily worse credit risks, and being low income doesn't mean you can't afford a house," she said.

David Olshan, managing attorney for Nevada Fair Housing, a Las Vegas nonprofit, said that programs run by Freddie Mac and Fannie Mae have targeted minorities and low-income people with some success.

One problem for any loan program in Southern Nevada is the high numbers of people working in the service industry who earn part of their incomes in tips, said Felix Deherrera, immediate past president of the Nevada Association of Hispanic Real Estate Professionals.

"A lot of people can't verify their tips as part of their income, and then they need very high credit scores to qualify for a loan," he said.

Olshan also said the practice known as redlining -- where loans aren't given to people of certain areas or backgrounds -- should be curbed, as should so-called predatory lending.

"You see more of this in lower-income communities, where people seem more vulnerable," Olshan said.

"It would help to have greater enforcement of laws that exist (to stop this), like the Equal Credit Opportunity Act and the Fair Housing Act," he said.

Luetkehans said that educating potential homeowners and having more professionals who speak Spanish would help target the low-income population in Southern Nevada. About one of four people in the valley is Hispanic, according to 2002 Census estimates. Nearly two of 10 Hispanics were denied a homeowner loan in 2002, compared to 1 in 10 whites, according to the report.

Another aggravating factor for the one of four people on the low to moderate end of the economic ladder is the lack of affordable housing, she said.

"How can you give loans to low-income people if there's no housing, or if the housing stock is on the high end?" she said.

Deherrera said that 10 to 15 percent of the valley's housing stock might be accessible to people with lower incomes.

In August, he said, less than 7 percent of all homes listed and sold by the board of realtors were priced at $125,000 or less -- a price within reach of a lower-income person.

But even if obstacles such as the lack of education and affordable housing were removed, a shift in lending practices would still be necessary for the Las Vegas metropolitan area to change its standing nationwide when it comes to making housing accessible to more people, Luetkehans said.

"It would take lenders being willing to take off their blinders and work with the population that actually lives here," she said.

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