A study has found a link between mortgage denials and the racial identity of the homebuyer in at least one major market
A study by consumer advocacy group the National Community Reinvestment Coalition reveals “deep racial disparities” in mortgage lending in Baltimore.
“While many Americans take the ability to obtain a mortgage for granted, majority African American neighborhoods in Baltimore City are largely closed off from access to responsible credit and economic opportunity,” NCRC President and CEP John Taylor said in a release. “These neighborhoods are lending deserts. This is part of a sad legacy of racial discrimination and segregation that continues to afflict the city.”
The report found race matters most in Baltimore City, with lenders more willing to lend in predominantly white neighbourhoods.
It also found that it is very difficult for borrowers in low-to-moderate income neighbourhoods – regardless of personal income. A low-to-moderate income borrower is more likely to receive a loan in wealthier neighbourhoods, according to the study.
“In Baltimore City, 70% of census tracts are low-to-moderate income yet it is very difficult for borrowers of any income to be approved there, especially if they are African American,” the NCRC said in the study.
The disparity ratio of loans to percentage of population is 210% for white borrowers and 37% for African American borrowers, according to the study.
This lending bias is negatively impacting the growth of these neighbourhoods, according to the NCRC.
“Until our financial institutions make a full and genuine commitment that creditworthy borrowers, regardless of their skin color, will be able to access responsible credit, the economies in these neighborhoods will continue to deteriorate, and we will continue to have the circumstances you see in Baltimore, Ferguson, and elsewhere,” Taylor said.
“While many Americans take the ability to obtain a mortgage for granted, majority African American neighborhoods in Baltimore City are largely closed off from access to responsible credit and economic opportunity,” NCRC President and CEP John Taylor said in a release. “These neighborhoods are lending deserts. This is part of a sad legacy of racial discrimination and segregation that continues to afflict the city.”
The report found race matters most in Baltimore City, with lenders more willing to lend in predominantly white neighbourhoods.
It also found that it is very difficult for borrowers in low-to-moderate income neighbourhoods – regardless of personal income. A low-to-moderate income borrower is more likely to receive a loan in wealthier neighbourhoods, according to the study.
“In Baltimore City, 70% of census tracts are low-to-moderate income yet it is very difficult for borrowers of any income to be approved there, especially if they are African American,” the NCRC said in the study.
The disparity ratio of loans to percentage of population is 210% for white borrowers and 37% for African American borrowers, according to the study.
This lending bias is negatively impacting the growth of these neighbourhoods, according to the NCRC.
“Until our financial institutions make a full and genuine commitment that creditworthy borrowers, regardless of their skin color, will be able to access responsible credit, the economies in these neighborhoods will continue to deteriorate, and we will continue to have the circumstances you see in Baltimore, Ferguson, and elsewhere,” Taylor said.
