Secondary Mortgage Market:

Home Loans in the Atlanta Area

T-RCED-91-13, Feb 28, 1991

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GAO discussed the secondary home loan mortgage market in Atlanta, Georgia, focusing on racial discrimination in home mortgage lending. GAO noted that: (1) the combined secondary mortgage market purchases made or insured in Atlanta by the Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac), and Department of Housing and Urban Development (HUD) generally declined as neighborhoods' average income decreased and minority composition increased; (2) between July 1, 1987 and June 30, 1989, Fannie Mae, Freddie Mac, and HUD purchased or insured 52,227 home loans in Atlanta; (3) Fannie Mae, Freddie Mac, and HUD purchased or insured almost twice as many home mortgage loans per 100 homeowners in predominantly white areas as in predominantly minority areas; (4) Fannie Mae, Freddie Mac, and HUD purchased or insured the greatest number of loans per homeowners in areas with higher income levels; (5) home prices were generally higher in predominantly white and higher income areas; (6) the average and median loan amounts purchased or insured by the three agencies increased as the percentage of white population increased; and (7) it could not make a conclusion about the possibility of racial discrimination in the loan activities, since the limited data did not reflect the demand for loans.