By JULIANA BARBASSA
Associated Press Writer

March 6, 2008 (AP): Subprime lenders that went out of business with the industry’s collapse had targeted minority neighborhoods, leaving them to struggle disproportionately with foreclosures and crumbling home values, according to a new survey that includes Charlotte, N.C.

These companies’ high-risk loans made up 20 percent of all loans in predominantly minority communities, compared to 4 percent of total loans in mostly white areas, according to the report released Thursday by an alliance of policy, research and advocacy organizations.

``These high risk lenders were targeting their loans to particular neighborhoods—to communities of color,'' said Saara Nifici of the Neighborhood Economic Development Advocacy Project in New York, one of the organizations participating in the study. ``That's where they focused their marketing practices.''

The study analyzed the geographic operating patterns of 35 high-risk lenders that were very active in 2006, but that went bankrupt, were closed or sold in 2007 as the industry imploded.

Chief among them were New Century Mortgage Corporation, WMC Mortgage Corporation, Fremont Investment & Loan, and Argent Mortgage Company.

In addition to Charlotte, the survey focused on lending to minority urban markets in New York, Los Angeles, Chicago, Boston, Cleveland, and Rochester, N.Y.

In six of these seven urban areas, high-risk lenders' market share in minority neighborhoods was at least three times the share in white neighborhoods. In Los Angeles, these subprime lenders had a market share in communities of color that was 9.5 times larger than their hold on mostly white areas, the report stated.

Part of their growth in those areas can be explained by the lack of other available resources _ simply not having another lender in the neighborhood, Nifici said. But researchers believe there's more to the issue.

``It's a question of access and a question of steering,'' Nifici said. ``If you walk into the local subprime office, there's no incentive for them to send you to a different lender where you can qualify for a prime loan. People are steered downward, not upward.''

This concentration of risky loans happened in low-income areas, but also in middle-class minority communities like the predominantly African- and Caribbean-American areas of southeast Queens in New York, said Nifici.

In these cases, ``race and ethnicity played a bigger part'' in lending decisions than income, she said.

This concentration means these minority communities will shoulder most of the negative impacts of the subprime crisis—foreclosures, sinking property values, lower tax bases, abandoned homes and higher crime.

Recommendations from the report to policy makers interested in protecting the stability of these neighborhoods included protecting borrowers and tenants from foreclosures and passing mortgage reform legislation.

On the Net: Neighborhood Economic Development Advocacy Project: http://www.nedap.org/