Home Borrower Getting a home loan – Racial bias makes it almost impossible for many black people

Getting a home loan – Racial bias makes it almost impossible for many black people

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A creeping bias persists in the real estate sector according to a new report which found that on average, 18% of black buyers are denied a mortgage. (Photograph courtesy of Tierra Mallorca/Unsplash.)

By Stacy M. Brown, Washington informant

In data released earlier this year by the federal Home Mortgage Disclosure Act, significant disparities exist in home loan approval rates between African Americans and whites.

Nationally, the mortgage purchase rejection rate for Black homebuyers is twice as high as the rejection rate for the entire population of mortgage borrowers in each of the 50 largest metropolises. from the country.

In DC, approximately 32,238 loan applications were made or issued by mortgage lenders. About 16,227 mortgages were approved for white applicants and only 4,945 for black applicants.

Census data collected by Prosperity Now found the homeownership rate for blacks in the District of Columbia was 35.2%, compared to 50.3% for white Americans.

A new report from Lending Tree found that on average, 18% of black buyers are denied a mortgage.

This is 9 percentage points higher than the average refusal rate for the entire population of 9%.

“Racial barriers to homeownership in the United States are undeniable to many, with black Americans often facing the most hurdles in the home buying process,” wrote the Lending Tree researchers. .

“One obstacle that black Americans face disproportionately is having their mortgage applications denied by lenders.”

The new report comes as African Americans continue to face discrimination in the real estate appraisal market.

More recently, a black Baltimore couple filed a lawsuit against an appraiser and mortgage lender, alleging they received a grossly undervalued appraisal for their four-bedroom home.

Following an initial appraisal of $450,000, which was already lower than the government assessed value of $622,000, the house received an appraisal of $750,000 from another appraiser.

“The housing industry in the United States has a long history of racial discrimination — one that helped widen the racial wealth gap and one that continues today,” CBS Mornings reported.

In 2021, on the 100th anniversary of the Tulsa Race Massacre, President Joe Biden announced the launch of an interagency initiative to address bias in home appraisals.

But the mortgage itself remains a problem.

The company analyzed purchase mortgage application records from the Federal Financial Institutions Examination Council’s Home Mortgage Disclosure Act 2020 dataset – the most recent comprehensive dataset available.

“Metros with the largest gap between mortgage denial rates for black borrowers and the overall borrower population,” Lending Tree researchers found.

Among the main results:

St. Louis, Boston, and Jacksonville, Fla., have the largest percentage point differences between black borrower rejection rates and the overall borrower population.

In these metros, the refusal rate for black borrowers is on average 13.36 percentage points higher than the refusal rate for the general population of mortgage borrowers.

San Francisco, Sacramento, California, and Seattle have the smallest percentage point differences between black borrower rejection rates and the overall borrower population.

Although black borrowers are more likely to be refused a mortgage in each of these metros, the average gap between their refusal rate and the refusal rate for the general population is relatively small at 3.94 points percentage.

The report found that rejection rates for black borrowers are highest in Detroit, Miami and Jacksonville, while they are lowest in San Francisco, Seattle and Sacramento.

In Detroit, Miami and Jacksonville, the average rejection rate for black borrowers is 25.52%, more than double the average rejection rate of 12.55% in San Francisco, Seattle and Sacramento.

While they may vary by metro, rejection rates for black borrowers are above 10% in each of the nation’s 50 largest metros, according to the report.

“While it may be more difficult for some Black homebuyers to get approved for a loan, there are still ways for Black borrowers to help make their dream of homeownership a reality. reality,” insisted the Lending Tree researchers.

The researchers listed three tips that could make it easier to find a lender and get a loan:

  • Shop around to find a lender. If you’ve been turned down for a mortgage by one lender, it doesn’t necessarily mean there aren’t others. By shopping around for a mortgage, you can potentially increase your chances of finding a lender and maybe even get a lower rate on your loan.
  • Consider different types of loans. Certain types of mortgages, such as those backed by the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA), may be easier to obtain than other types of mortgages, especially for low-income borrowers . If you’re having trouble getting approved for a standard mortgage, these options could help you access the funds you need to buy a home.
  • Speak up if you feel discriminated against. It is illegal in the United States to discriminate against borrowers based on their race. If you feel you have been discriminated against, consider contacting your local housing authority or the Attorney General’s Office or the Department of Housing and Urban Development (HUD) to file a complaint. Talking openly about discrimination can help you and others who may be going through something similar.

Click here for the full report.

This post originally appeared on The Washington Informer.