Abstract
Purpose. The purpose of the study was to evaluate the impact of the Community Reinvestment Act on the disparity level that exists between Caucasian home mortgage applicants and applicants of selected other races (Black and Hispanic) in Los Angeles County (MSA 4480). Theoretical framework. One segment of the United States population cannot prosper and grow, while other segments of the population are unable to participate in the same system, divided only by race or income. Based on Jeffersonian democratic ideals, the concept of private property is as fundamental to the structure of the United States as the belief in individual rights. Methodology. The nine years of data collected for this study were analyzed by comparing the aggregate HMDA data for each year by each selected population (i.e., Caucasian, Black, Hispanic, Race Not Available) and/or by income level (income equal to or less than 80 percent of LMI or income greater than 120 percent of LMI) to determine if the factors of race or income are significant when determining the rate of home mortgage loan approvals. Findings and conclusions. This study, in support of other studies before it, has illustrated that certain races of people, notably but not limited to, Blacks, are being systematically denied access to home mortgage capital in Los Angeles County. Those who have helped to support this discriminatory system of denial through their enforced participation in a tax system which encourages and rewards homeownership had a median net wealth of only $4,750 compared to a median net wealth of $102,170 for homeowners. Recommendations. The CRA, instead of being diluted, must be strengthened and real penalties imposed for failing to make a real effort toward treating all applicants fairly and consistently. As has been demonstrated by the lack of progress here in Los Angeles County, lenders are not taking the CRA as it is currently written and enforced seriously. The policy must be rewritten to provide for substantial penalties for failure to achieve measurable gains. And in the meantime, the regulators charged with this mission must enforce the policies as written.