Credit and Finance: A Critical Ingredient
 for Community Development

William J. Milczarski
Department of Urban Affairs and Planning
Hunter College - CUNY

 
Community revitalization cannot occur without an adequate supply of capital so that households can purchase homes.  In addition to the direct asset-building benefits that home ownership confers, it also provides households with a stake in the community.  When people own homes, they not only take pride in their own property, but also in the entire community.

Unfortunately, many people find home ownership an unattainable goal.  Over the past several years research on the mortgage lending industry has revealed patterns of discrimination.  This discrimination is usually based on a mortgage applicant’s race, or on the racial and income characteristics of the neighborhood where an applicant wishes to purchase a home.  A federal law, the Community Reinvestment Act (CRA), states that banks have an affirmative obligation to meet the credit needs of their local communities, including low and moderate income neighborhoods.  Another law, the Home Mortgage Disclosure Act (HMDA), requires lenders to disclose information regarding the number of applications received, the race and income of applicants, the location of the property for which the loan was sought, and whether or not the application was approved or denied.

This paper will look at the availability of credit for home purchase, refinancing, and home improvement in Queens, NY.  Queens is one of the most ethnically diverse counties in the United States.  It also has a varied housing stock.  After a brief overview of the demographic characteristics of Queens and its neighborhoods, the HMDA data from 1995 and 1996 will be analyzed.  The analyses will focus on the two types of discrimination mentioned above.  That is, are applicants for loans discriminated against because of their race?; and are particular neighborhoods discriminated against?  These questions will be answered by looking at all financial institutions doing business in Queens aggregated together.  In addition, selected individual institutions will be analyzed.