S.C. lawmakers work to ensure fair mortgage interest
COLUMBIA — State Sen. Robert Ford wants to make sure blacks are paying the same as whites for mortgage loans. In South Carolina, that's not always the case.
A study released this summer found the difference between what minorities and whites pay is larger in the Charleston-North Charleston area than anywhere else in the nation. Since then, Ford has crisscrossed the state, attending more than a dozen meetings and helping roughly 100 homeowners sort through the issue.
"They are really taking advantage of what people don't know," Ford, D-Charleston, said of the lending industry. "People should not feel embarrassed or intimidated because of the fact that someone took advantage of them."
He cited examples of blacks with near perfect credit scores paying interest rates as high as 8 percent or 9 percent on home loans at a time when whites were paying a rate several percentage points lower.
"That is unconscionable for people to do to other people, and they do it every day," Ford said.
Among potential legislative fixes, Ford said real estate agents should serve more as advocates for buyers and help educate them about what to look for in a loan.
Sen. David Thomas, a Seneca Republican and chairman of the S.C. Senate Banking and Insurance Committee, said the report by Washington-based National Community Reinvestment Coalition only uncovers a problem. Lawmakers must find the root to come up with solutions.
The report, based on 2005 numbers, showed black borrowers in 171 cities were at least twice as likely as whites to have expensive loans. Greenville ranked 10th.
Thomas said that during public meetings, mortgage brokers testified that rates are increased by underwriters based on neighborhood profiling. Certain places have a history of higher foreclosure rates with home values harder to recoup in resales.
Thomas said he also wants to make sure blacks and other minority groups aren't being steered to higher-cost loans, which is illegal.
"That's the kind of big picture items we can't afford to make a mistake on," he said. "If you make an error legislatively, you can make it more difficult for minorities to get loans."
The senators will continue to study the issue in preparation for potential action when the Legislature reconvenes in January. The solution also might include building on the state's 2003 predatory lending law.
Sue Berkowitz with South Carolina Appleseed Legal Justice Center, an advocacy group for low- income residents, said the difference between 6 percent and 8 percent might not seem like a lot. But it could mean close to $50,000 more over a 30-year loan, or about $130 more a month.
"It's just such a shame," she said. "What's ending up happening is we're seeing people who have relatively good credit reach out for that dream of having a home but because they get that problem loan, suddenly they get behind and find themselves in foreclosure."
Following the release of a national study, some officials, including state Sen. Robert Ford, D-Charleston, are concerned that blacks in the Charleston-North Charleston area might be paying more for their mortgages than whites.For help, call the state Department of Consumer Affairs at 800-922-1594.The Consumer Affairs Department and the S.C. Appleseed Legal Justice Center offer these tips:--If you're going to be behind on a payment, contact your lender first to see what options are available.--About 5 percent or more in points and fees on a loan qualify it as a high-cost loan.--"Yield Spread Premium" on loan documents can mean you did not receive the lowest interest rate available to you.--Social services agencies can help you negotiate a lower-interest loan. Ask to speak to a consumer credit counselor.