Black borrowers' mortgage applications denied twice as often as whites', report shows

[BumRushDaShow]

Source: USA Today

Published 5:07 a.m. ET Sept. 8, 2024 | Updated 5:08 a.m. ET Sept. 8, 2024


Mortgage applications from borrowers of color are denied significantly more frequently than those from white borrowers, a recent analysis shows.

In 2023, 27.2% of Black applicants were denied a mortgage, more than double the 13.4% of white borrowers. That's a full 10 percentage points higher than borrowers of all races, according to the analysis of the Home Mortgage Disclosure Act from the Urban Institute’s Housing Finance Policy Center.

The application data confirms deep disparities in mortgage financing that show up elsewhere in the housing market: Black borrowers accounted for only 8.5% of all purchase mortgage borrowers in 2023, for example - also according to HMDA. Meanwhile, in 2024, the Black homeownership rate is 45.3%, a whopping 30 percentage points below that of white households, at 74.4%. For Latinx households, it’s 48.5%.

Urban Institute researchers Michael Neal and Amalie Zinn were motivated to dig into the HMDA data, which many housing industry participants consider the most comprehensive data available to the public, when they saw overall denial rates shifting with recent changes in borrowing costs.

Read more: https://www.usatoday.com/story/money/personalfinance/real-estate/2024/09/08/black-latinx-mortgage-application-denials/75103741007/

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Link to Urban Institute REPORT site - Housing Finance: At A Glance Monthly Chartbook, August 2024

Link to Urban Institute REPORT (PDF) - https://www.urban.org/sites/default/files/2024-08/Housing_Finance_At_A_Glance_Monthly_Chartbook_August_2024.pdf

[Lonestarblue]

1. Not surprising. Racism has only increased since 2016.

[Jk23]

2. Serious question in most cases how would the lender know the race of the applicant?

Outside of perhaps mandatory government reporting? It is not as if most borrowers ever meet a lender physically nowadays.

[hueymahl]

3. I hate USA Today

Its articles are the most superficial of superficial. Basically extended clickbait.

[BumRushDaShow]

4. So you think that even in 2024

pointing out the fact that race is STILL a factor in approving mortgages, is just nonsense "clickbait" news?

'Mkay.

[hueymahl]

5. It cheapens the issue when it is used to sell papers

Turns it into some weird commercial anger-baiting.

Racism is one of the top issues in this country that needs to be addressed. This type of reporting diminishes it by not going into even the basics underlying the statistics. Also opens it up to attack from Republicans.

[BumRushDaShow]

7. An organization, not associated with the news source

released a report. I even linked to it in the OP comments. The site's report is here - https://www.urban.org/research/publication/housing-finance-glance-monthly-chartbook-august-2024

The Urban Institute is a product of the LBJ administration and has conducted a myriad of research initiatives over the past 56 years - https://www.presidency.ucsb.edu/documents/remarks-meeting-with-the-board-trustees-the-urban-institute

Here is their "About" - https://www.urban.org/about/our-story

About Urban

Our Story

Introduction Our History Next50

President Lyndon B. Johnson founded the Urban Institute in 1968 to provide “power through knowledge” to help solve the problems that weighed heavily on the nation’s hearts and minds. Our organization was born at a tumultuous moment in American history, defined by severe political polarization, racial violence and segregation, and stark economic inequity. Early attempts to tackle discrimination and poverty were often shots in the dark without a clear understanding of whether new policies were working—or for whom.

Johnson believed Urban’s work could offer direction. He envisioned Urban as an independent social and economic policy institution strengthening the War on Poverty and other programs. Johnson urged Urban researchers to engage with decisionmakers at every level. And he stressed the value of using insights from research to help leaders pursue relevant, timely solutions to the problems families and communities were navigating across the country.

Today, many of the challenges and divisions of the 1960s persist. So does Urban’s focus on developing data and evidence that offer a more nuanced understanding of today’s pressing issues—and illuminate promising ways to address them. Now, as Urban looks to the decades ahead, we see how powerful shifts in technology, climate, demographics, and the global economy threaten to exacerbate inequalities and block opportunities for people to thrive. Unease about these disruptions has fueled a new level of polarization in our country. It has also endangered progress on racial and economic injustices so long at the center of the American story.

(snip)

USA Today merely reported on the release of one of UI's recent reports. They didn't create the report nor are they a part of the Urban Institute.

So fuck LBJ's "Great Society" creation and the entities that even bother to cover what they do?

[Aussie105]

6. Perhaps banks remember NINJA loans . . .

and what those resulted in?

NINJA - no income, no job, no assets.

Perhaps banks are doing their due diligence without knowing or caring about other factors, like skin color?

[DeepWinter]

8. Agree

I'm an Underwriter. I have no idea what the client's race is from the application. I just apply the financial rules across the board. If I were to loosen them for any certain group, it's a setup for putting them in a position to buy something they really can't afford. The budget gets too tight, missed payments, credit scores lower, possibly default completely. The desire to purchase something more than what you can handle isn't a race thing, it's a people thing. I see it all the time.

[atreides1]

10. Interesting article.

https://themarkup.org/show-your-work/2021/08/25/how-we-investigated-racial-disparities-in-federal-mortgage-data


"We found that nationwide, Black applicants are nearly twice as likely to be denied conventional mortgages as similarly qualified White applicants."

"We found lending disparities vary not only by location but also by racial and ethnic demographic. We found 89 metropolitan areas, spanning every region of the country, where lenders were more likely to deny people of color conventional mortgages than White people with similar financial characteristics."

[DeepWinter]

11. Interesting

The thing is, I never know the client's race. There's no question on the application. I might guess based on the name, like a Japanese or Spanish name, but the overwhelming majority of the time I'm clueless.

Plus I'm audited quarterly. If I deviate outside the guidelines, I need to explain myself in detail. I'm handling 75-100 million dollars a quarter. You better believe my job is at risk if I'm found financially or ethically questionable. The company is not going to risk lawsuits or their reputation allowing me to make decisions based on personal bias.

So I'm genuinely curious as to the findings there. What's going on we're not seeing.

[LeftInTX]

12. Much of it is due to other factors (like credit scores) but race is contributing to those factors.

It's a long term thing.

If someone is black and in the military, I doubt that they will have much of a problem.

However, if someone is black and stuck in an area like Ferguson, you see the problem. They would get tickets and then couldn't pay them, then it hurts their credit score etc etc etc....

So instead of the lender denying based on skin color, they're denied on other factors, but race contributes to those factors.

[atreides1]

9. I don't think so...

In the current financial landscape, NINJA loans are a rarity, if not entirely non-existent in the United States. Stricter lending standards, imposed in the wake of the 2008 financial crisis, have made it exceedingly difficult for borrowers to obtain loans without providing comprehensive documentation of their financial stability.