There’s a troubling pattern of low- and moderate-income communities and communities of color being dialed out of housing opportunities, the National Community Reinvestment Coalition said Tuesday.

That came in response to the release on Monday of 2013 Home Mortgage Disclosure Act data.

“This troubling trend shows the dire need for action on several fronts. Financial institutions clearly need to do a much better job serving underserved communities,” NCRC President and CEO John Taylor said. “Government leaders need to embrace federal housing policies that are going to promote homeownership opportunities for all creditworthy borrowers, and encourage responsible investment in all communities.

“Federal regulators need to pay close attention to the disparities this data shows, and step up enforcement of fair lending laws. Overall, we need to sound the alarm that homeownership, which is the number one mechanism for entering the middle class, is becoming increasingly exclusionary, and creditworthy borrowers are being shut out,” Taylor said.

Taylor mentioned the rise of REO-to-rental and the heavy slate of investor housing purchases seen throughout 2013.

“A new America is being created where homeownership is being replaced with higher-cost rentals. Our housing industry suffers from this model and working-class Americans are stopped from building wealth. None of this bodes well for our economy or American families,” he said.

NCRC highlighted the following as issues in the 2013 HMDA data they say need to be addressed:

  • The volume of home lending declined 11%, to 8.7 million from 9.8 million in 2012, according to the Federal Reserve Board.
  • African Americans experienced a denial rate of 29% for conventional home purchase lending in contrast to a denial rate of 11% for whites. African Americans were 2.6 times more likely to be denied a conventional home mortgage loan than whites. When controlling for income, the racial disparities remain. Upper-income African Americans and Hispanics were 2.3 times and 1.8 times more likely than whites to be denied conventional mortgage loans, respectively.
  • Home purchase lending across the country increased 13% from 2012 to 2013. However, home purchase lending to low- and moderate-income borrowers declined from 33.4% in 2012 to 28.4% in 2013.
  • In contrast to the increase in home purchase activity, refinance lending for one- to four-family properties dropped by 23% in 2013.
  • Reliance on government-backed Federal Housing Administration lending for home purchase lending was reduced; the share of FHA home purchase lending declined from 31% in 2012 to 24% in 2013, according to the Consumer Financial Protection Bureau.