Callahan’s Cleveland Diary

So here’s why we need that Reinvestment Review thingie…

Two of the biggest depositories for City funds are Key Bank and National City. They also used to be two of the biggest home mortgage lenders in city neighborhoods. Most people would assume that they still are.

But look at what I found in the Home Mortgage Disclosure Act reports for NCB and Key:

Frankly, I’m flabbergasted. I had to go through the annual pdf reports for each bank, and count up the numbers in all the city census tracts for each year, so I’ve only had time to do the four years shown above — and my counts could be off by a loan or two — but the pattern is very clear: Both National City and Key Bank seem to have cut their home purchase mortgage lending in the city from hundreds of loans a year to a few dozen.

This is not a symptom of a general collapse in home sales or even conventional mortgage lending in Cleveland. While the notorious sub-prime lenders, especially Argent, have become a much bigger factor in the last few years, the number of conventional “non sub-prime” mortgages in city neighborhoods has held relatively steady at around 3,000 a year. (”Conventional” means not government insured.) From overall HMDA data available at NEOCANDO, here’s a chart of those annual loan numbers from 1999 to 2004, with the NCB/Key total inserted for perspective:

Cleveland’s conventional mortage market has not shrunk. But National City and Key’s combined share of it has shrunk from 20% to less than 5% in the past six years.

So… what’s going on? Are the city’s two biggest regional banks — holders of many millions of dollars in City deposits — deliberately pulling out of the local home mortgage market?

This is exactly the kind of question the Reinvestment Review Committee, created by the Bank On Cleveland Ordinance, was supposed to raise and investigate on an annual basis.

But despite the law, there is no Reinvestment Review Committee.

This entry was posted on Thursday, September 28th, 2006 at 11:09 am and is filed under Economics, Poor Cleveland. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.