In a recent report from the Associated Press, black and Hispanic people are routinely denied mortgage loans at higher rates compared to whites.
The recent claim is based on the millions of Home Mortgage Disclosure Act records analyzed by Reveal from The Center for Investigative Reporting. Even after the passing of the Fair Housing Act 50 years ago, this issue still persists.
Results from various records from the Federal Reserve and Department of Justice showed that people of color in major metropolitan areas like Atlanta, Detroit, Philadelphia, St. Louis and San Antonio had troubling patterns of lending discrimination. No surprise to some, black people seeking loans faced the most resistance in southern cities like Mobile, Alabama; Greenville, North Carolina; and Gainesville, Florida, where segregation was commonplace decades ago.
According to the AP report, black people seeking loans shared similar stories of lenders fishing for reasons to deny them loans. Many of the claims presented are reminiscent of redlining in the major cities.
Since the Great Migration, black people moving north had to deal with racial and housing discrimination because whites feared that they would take their jobs.
By the 1930s, as the nation began to recover from the Great Depression, redlining was used to keep black people from attaining homes because banks were warned that blacks and eastern Europeans were dangerous and "hazardous."
“It’s not acceptable from the standpoint of what we want as a nation: to make sure that everyone shares in economic prosperity,” said Thomas Curry, who served as America’s top bank regulator, the Comptroller of the currency, from 2012 until he stepped down in May.
AP data shows that black loan applicants were turned away at higher rates than whites in 48 cities. For Latinos, many were turned away compared to whites in 25 cities, Asians in nine and Native Americans in three. Lending institutions have confirmed many of the results. In fact, they do not deny that there are disparities. Factors like the prospective borrowers’ credit history and overall debt-to-income ratio have been used to justify the damning stats.
“While quite informative regarding the state of the lending market,” the records analyzed by Reveal do “not include sufficient data to make a determination regarding fair lending,” the Mortgage Bankers Association’s chief economist, Mike Fratantoni, said in a statement.
For example, Philadelphia is indicative of a major city with mostly black and brown residents who are turned down at higher rates than whites.
Data from 2015 and 2016 show that whites received 10 times as many conventional mortgage loans than black and brown loan seekers. Reveal’s report also shows that if a community had a greater number of African Americans or Latinos in a neighborhood, loan applications are more likely to be turned down.
The “decades-old credit scoring model” currently used “does not take into account consumer data on rent, utility, and cell phone bill payments,” Republican Sen. Tim Scott of South Carolina wrote in August when he unveiled a bill to require the federal government to vet credit standards used for residential mortgages. “This exclusion disproportionately hurts African-Americans, Latinos and young people who are otherwise creditworthy.”
