Community Forum on Lending – Why do African Americans pay more in Central Virginia? Part 2 of 4

I set up the overview on this report, some potential causes and the fact that PHA had invited leaders in the field to a conference on Friday afternoon.  Who participated?  In addition to about ten mortgage loan officers in the audience and dozens of community members, PHA’s entire staff attended.  The panelists all prepared well for the panel and, not surprisingly, provided different perspectives:

First up, Josh Silver from NCRC provided background on the study.  Unfortunately, under examination and questioning, it was apparent that the data was only evaluated nationwide, and not specifically for his Charlottesville appearance.  I think there was an anticipation in the room that the paper trail would lead to the violators. He theorized that Charlottesville, given its mid-sized market, is ignored by the big banks, which are required by the Community Reinvestment Act to reach out to their underserved communities.  I think this argument falls flat when you see large nationals or regionals like BB&T, Bank of America, SunTrust, Wachovia, etc, who have mortgage operations here.  Also, his universal support for reforms in Congress lacks critical analysis of the actual bills.  (I’ll provide background on these bills in a later post)

The panelists then provided local or state perspective.  Peggy Deane, VP of Mortgage Services at UVA Community Credit Union and Member Options, LLC (plus CVaMP’s secretary) suggested, correctly I believe, that we have an awareness problem, that community programs are needed and an informed borrower is a powerful borrower.  More on that later.

Alex Gulotta, Executive Director, Legal Aid Justice Center is PASSIONATE!  Agree or disagree with him, he cares deeply.  Much I agree with him, including that loan officers will “be judged by the least among you.”  He did discuss targeting brokers.  I have a strong argument against this, as brokers (full disclosure: I co-own a brokerage) MUST fully disclose on the HUD-1 settlement statement our compensation.  Lenders do not have this transparency.

Dave Norris, Charlottesville City Councilor suggested that we put African Americans too quickly into homeownership.  He asserts that loan officers should tell clients that they aren’t ready yet.  Valid point and that should be presented to a client, but a potential home buyer should make that decision, not the loan officer.

Phil d’Ornozio, President of Pilot Mortgage and President of CVaMP was invited as a local loan officer and one who actually originates high cost loans on a daily basis.  He correctly stated that loan officers do not make one loan to a home buyer.  You make two, three, four loans due to refinances, new home purchases and referrals to friends and family.  I argue that that multiplier is much higher.  Nonetheless, why take advantage of a local family as a local loan officer if you want future business?  We are in the relationship business, not transaction business.

Delegate David Toscano, Virginia House of Delegates, 57th District (D)  is a real estate attorney and has been re-endorsed by CAAR www.caar.com in his re-election bid this November.  (Full disclosure: I sat on the CAAR funding panel which allocated funds and voted on endorsements)  “It is legitimate for states to regulate.”  But, he feels that the US Congress should act instead.  I disagree.  If there are issues that are specific to Virginia, like Charlottesville, Lynchburg, Tidewater and Richmond landing in the top 30 MSAs in this study, we need to act in Virginia.

Finally Dana Wiggins, Responsible Lending Coordinator for VaPerl/Virginia Poverty Law Center presented.  I think her thunder was stolen and she stated that the previous panelists addressed the issues well.

Final thought, where was the NAACP, Del Bell 58th District (R) or a County of Albemarle Supervisor?  I believe that NAACP was invited, but I do not know whether Del. Bell or a supervisor was asked.

Next up, I will provide the perspectives from our table, during the roundtable discussions.

Ed Note: This is part two of a multi-part series of guest posts authored by Matt Hodges, a mortgage broker in Charlottesville. This matter is of vital importance to the Charlottesville area real estate market, and all citizens and real estate professionals should know as much as possible about it. That so many members of the community are talking is surely a positive sign.

The first post is here.

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2 Comments

  1. DaveNorris October 7, 2007 at 10:38

    Matt-thanks for this helpful recap. Just to clarify one point, I did indeed remark that we set some people up for failure by pushing them into homeownership before they’re ready, but I don’t believe this applies just to African-Americans — I think it’s a pretty color-blind phenomenon.

    As to why whites are getting better loans than blacks (regardless of income), moreso in the Charlottesville region than EVERYWHERE ELSE IN THE COUNTRY, I don’t know that I came out of the forum with any clearer answers than I went into it. One of the mortgage lenders in the audience said that savvy homebuyers will shop around for the best loan and I wonder if “shopping around” is easier when you already have a number of people in your professional/social network who are lending professionals, or who are acquainted with lending professionals. Whereas (as one of the forum panelists admitted) there are very few African-American lending professionals in our community, which perhaps makes it more challenging for local African-Americans to “shop around” for the best deal. I don’t know if there’s any truth to this or not, it’s just speculation on my part. I do know that we have a big problem on our hands here, and it’s good to see our community working together to find some solutions.

    Dave Norris

  2. Matt Hodges October 7, 2007 at 11:21

    Dave:

    Thank you for the clarification and your participation in the panel. Keep reading the final two posts (later today and on Monday) for additional thoughts on how we can all help resolve this problem.