Study: Black Mortgage Applicants Get Rejected 80% More Than Whites With Similar Application Data

Study: Black Mortgage Applicants Get Rejected 80% More Than Whites With Similar Application Data


Study: Black Mortgage Applicants Get Rejected 80% More Than Whites With Similar Application Data Credit:dragana991 / istock/ https://www.istockphoto.com/portfolio/dragana991?mediatype=photography

Two mortgage applicants can appear alike on paper with similar data, so why would one get rejected over the other? Race. A new study reports that Black mortgage applicants get rejected 80 percent more than whites.

Nationally, Black loan applicants and applicants of color were 40 percent-to-80 percent more likely to be denied than their white peers. In some metro areas, the disparity was greater than 250 percent, according to an investigation by The Markup, a nonprofit organization that covers the ethics and impact of technology on society with a focus on data-driven journalism.

Lenders in 2019 denied home loans to Black people and people of color more than to white people with similar financial data. Lenders were 80 percent more apt to reject Black applicants than similar white applicants.

In every case, the Black borrowers seemed almost exactly the same on paper as the white applicants, except for their race, according to The Markup.

Income wasn’t the issue. Lenders gave fewer loans to Black applicants than white applicants even when their incomes were high—$100,000 a year or more—and had the same debt ratios. Whites with higher debt were more likely to get accepted than Blacks. High-earning Black applicants with less debt were rejected more often than high-earning white applicants with more debt.

Social media respondents were underwhelmed with the results of the study.

“Black folks could have told you this a long time ago without you wasting time and money on a lengthy investigation,” tweeted Wellzy12000 @wellzy12000.

“Redlining is a fact of life for most Black Folks. When we do get loans the rates are often higher and the conditions stricter,” tweeted Kamala is the VP . #LetsWinThis.

Progressica @theworldsbernin tweeted, “White People-THIS is what we mean when we say the US is systemically racist. Critically think it through. This is a prime example.”

In certain cities, the denial rate for Black mortgage loan applicants is higher than others. Black applicants in Chicago were 150 percent more likely to have their mortgage applications rejected than similar white applicants.

“It’s something that we have a very painful history with,” said Alderman Matt Martin, who represents Chicago’s 47th Ward.

Redlining, the now-outlawed practice of branding certain Black and immigrant neighborhoods too risky for financial investments that began in the 1930s, can be traced back to Chicago. Chicago activists exposed banks that were still redlining in the 1970s, leading to the establishment of the Home Mortgage Disclosure Act, the law mandating the collection of data used for this story.

“When you see that maybe the tactics are different now, but the outcomes are substantially similar, it’s just not something we can continue to tolerate,” Alderman Martin added said.

Image credit: dragana991 / istock 

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