By Grant Ervin
Pittsburgh Community Reinvestment Group
Pittsburgh, PA

Pittsburgh Community Reinvestment Group (PCRG), which pioneered the use of neighborhood lending data to force banks to invest in underserved communities in Pittsburgh, has begun to research and analyze the threat of predatory lending locally.

In February, PCRG released a study called, ‘Disparities in Lending’, which detailed the rate of subprime lending in Pittsburgh’s low-income and minority communities. PCRG’s Christine Arriola conducted the research for the study.

The study found that between 1996 and 2001 subprime lending increased from $124 million to over $364 million in Allegheny County, Pennsylvania, which includes the City of Pittsburgh.

Impact to minorities and the poor was particularly acute. The study found that 48.9 percent of borrowers living in predominantly minority communities received their mortgage credit from a subprime lender. That percentage fell to only 12.9% in non-minority communities. The patterns were very similar with income as the standard of measurement. The study found that 45.8 percent of borrowers in a low and moderate income census tract received sub-prime mortgages versus 8.3 percent of borrowers in upper-income tracts.

The study’s results mirrored those of similar research efforts conducted in other cities, but the PCRG study took the data through an additional step by looking at the rates of subprime lending in each of the more than 85 individual neighborhoods that comprise the city of Pittsburgh.

“It wasn’t enough to tell people that it was happening,” said Greg Simmons, Program Manager of PCRG’s Anti-Predatory Lending Initiative. “People really needed to see exactly what was happening in their own neighborhoods before they really understood the community impact.”

PCRG is using the data to build a new alliance of leaders in Pittsburgh that will join an existing statewide coalition pushing for a strong legislative agenda on predatory lending.

The impact of predatory lending has become particularly severe as foreclosures resulting from these loans skyrocket. Pennsylvania’s two largest cities, Philadelphia and Pittsburgh, are currently suffering through the worst foreclosure crisis in their history. Foreclosure filings in Pittsburgh jumped from 1,142 in 1995 to 4,112 in 2003. In Philadelphia, over 1,400 properties are to be foreclosed and sold in the April 2004 sheriff’s sale alone.

“It is important that this issue be addressed with diverse strength,” said PCRG leader Aggie Brose. “Unlike spikes in the 1980s, this foreclosure crisis is having a terrible impact on suburban areas as well. No area of the state is immune and the numbers are horrifying."
PCRG will be following the subprime lending study with a study on foreclosures. This study will detail the foreclosure impact on individual neighborhoods as well as determine which lenders have the highest default rates.

“Patterns are already emerging,” said Simmons, “There are blocks in certain neighborhoods where four and five houses in a row are being foreclosed on.”