Minorities were far more likely than whites to be given high-cost subprime mortgages last year, according to a study to be released today by the Association of Community Organizations for Reform Now, an advocacy group.

In the Bay Area, the disparity between high-cost home loans made to minorities and whites was particularly pronounced, even among borrowers with similar incomes, the study found.

“This is a problem with risky loans, not risky people,” said Lindsay Gebhart, development associate at ACORN in San Francisco. “A vast majority of these loans were given to people who do not have bad credit. Especially minorities were given loans far worse than what they qualified for.”

Nationwide, the study found that African American home purchasers were 2.7 times more likely to receive a high-cost loan than white borrowers, while Latinos were 2.3 times more likely to receive subprime loans than whites. (The report uses a federal definition of high-cost loans as those with an annual percentage rate at least three points above the rate for comparable U.S. Treasury securities.)

For home refinances, high-cost loans were made to African Americans 1.8 times more often and to Latinos 1.4 times more often.

The racial disparities were even more noticeable among homeowners of similar incomes. Among upper-income borrowers - defined as those with incomes 120 percent or greater than their area medians - African Americans were 3.3 times more likely than whites to receive high-cost loans, and Latinos were three times more likely than whites.

High-cost loans were most common in the South and Midwest. In Detroit, 63.7 percent of all home loans in 2006 were high cost. In Laredo, Texas, the figure was 52.4 percent; in Flint, Mich., half of all loans were high cost. In the San Francisco metropolitan area, 13 percent of home loans were high cost, among the lowest rates in the nation.

Similarly, Brownsville-Harlingen, Texas, led the nation with 63.4 percent of refinance loans being high cost, while San Francisco-San Mateo-Redwood City had the lowest incidence, with 10.3 percent of all refis being high cost.

Although the incidence of high-cost loans in the Bay Area was lower than in other parts of the country, the disparities between minorities and whites was particularly high.

Among refinances in the San Francisco-San Mateo-Redwood City area, 23.8 percent of African Americans and 18.1 percent of Latinos were given high-cost refinance loans compared with 6.6 percent of whites. In the Oakland-Fremont-Hayward area, 37.8 percent of African Americans and 27.2 percent of Latinos received high-cost refinances versus 12.3 percent of whites. In San Jose-Sunnyvale-Santa Clara, the disparity was 22.6 percent of African Americans and 23.5 percent of Latinos compared with 9.4 percent of whites receiving high-cost refis.

The disparities persisted among groups with similar incomes. In the San Francisco area, among upper-income people, 27.1 percent of African Americans and 22.1 percent of Latinos received high-cost refinance loans, compared with 6.9 percent of whites.

What accounts for the difference?

“The first reason is outright discrimination,” Gebhart said. “When someone meets with a mortgage broker, the broker is more likely to immediately offer the white borrowers a better loan. We can only guesstimate whether it is prejudice, thinking (minority) people are ignorant. A lot is focused marketing. In Latino and African American areas, there is marketing that goes out to people (urging them to) refi their homes, with direct mailers and calls.”

ACORN is urging federal banking regulators to conduct stringent fair-lending exams to determine causes of the racial disparities. It also wants the statute of limitations for Fair Housing Act violations - now one year for federal Housing and Urban Development complaints and two years for civil cases - to be extended.

Subprime loans, made to people with tarnished credit, charge higher interest because there is more risk of default. In recent years, the United States saw an explosion of these loans, particularly adjustable-rate mortgages that started with an initial low introductory period of two or three years, then reset to much higher rates.

This year, as homes prices have stagnated or fallen, many people with such loans have been unable to make their payments once they reset, and unable to refinance, resulting in a wave of defaults and delinquencies. As many as 1.7 million people could lose their homes to foreclosure over the next few years, according to the Center for Responsible Lending.

ACORN looked at mortgages in 172 metropolitan areas, both for home purchases and refinancing, originated in 2006 by 19 of the largest U.S. lenders, using data required by the Home Mortgage Disclosure Act. Collectively, those lenders accounted for 68 percent of all home loans and half of all subprime loans made that year, it said.

A copy of the report is available by calling ACORN at (415) 587-9080 or (510) 436-6532.