After gathering a sample of over 1.7 million mortgage applicants from 2016 who were either approved or denied, we were able to show racial discrepancies still exist when controlling for income. Read the full study here or learn about the key insights below.

Key insights:

● Racial discrimination still exists in mortgage lending: African Americans are twice as likely to be denied a mortgage when controlling for income
● Disparity between white and black mortgage approval rates is most pronounced in the South: 89% of white applicants are approved in Southern states, compared to 76% of black applicants when controlling for income
● The West has the least racial disparity between white and black applicants, but the difference between approval rates is still statistically significant, indicating racial discrimination in the mortgage industry is a nationwide issue
● Mortgage applicants are overwhelmingly white: Of the 1.7 million applicants sampled, 1,482,248 mortgage applicants were white, compared to 80,442 African Americans, 93,762 Asian Americans, 29,293 American Indians, and 15,645 Native Hawaiian or Pacific Islanders
● The Home Mortgage Disclosure Act (HMDA) grew out of public concern over credit shortages in urban neighborhoods, but the data is alarmingly sparse: 52% of black applicants had no reason listed for their mortgage being denied — i.e., the data set is incomplete in important areas needed for careful scrutiny
● African-American and Hispanic home buyers are respectively 105% and 78% more likely to use high-cost mortgages for home purchases, putting them at greater risk of foreclosure

While this study helps shed light on important discriminatory issues in lending, the HMDA’s database is missing key pieces of information about applicants, such as credit score and debt-to-income ratios, that would help assess how much disparity can be attributed to race.

We hope this study will inspire researchers with greater resources to investigate these issues further. For now, the exact link between race and mortgage disapproval rates remains opaque, but hard the discrepancies are impossible to ignore.

You can view the full study here: https://listwithclever.com/real-estate-blog/racial-discrimination-in-mortgage-lending/

Contact This email address is being protected from spambots. You need JavaScript enabled to view it. for questions about the study or for specific metrics about your city.