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Loan Denial Disparity Between White & African Americans Greatest In Chicago

Acorn Study Looks At Denial Rates

September 8, 2001


click here to read about racial disparity in government loan programs

click here to read about racial disparity in subprime loans

While 7.76% of whites were denied conventional loan approval in the Chicago metropolitan statistical area (MSA) during 2000, 35.77 percent of African-Americans were denied approval in the 'Windy City', according to a recent report from the Association of Community Organizations for Reform Now (ACORN). 'The Great Divide' is an analysis of racial and economic disparities in home purchase mortgage lending nationally and in sixty metropolitan areas.

The report analyzes data released by the Federal Financial Institutions Examination Council (FFIEC) about the lending activity of more than 7,800 institutions covered by the Home Mortgage Disclosure Act (HMDA). The reporting includes the number and type of loans correlated by the race, gender, income, and census tract of the applicants, and the disposition of those applications, in each MSA where loans are originated.

Washington D.C. is also among the top ten states in disparity between denials by race. Both Chicago and Washington D.C. have received publicity from anti-predatory lending legislation. Ironically, some subprime lenders have recently pulled out of Washington D.C. because of prohibitive anti-predatory legislation. It is possible that the denial rates could see an increase as a result.

Acorn also reported the following.

  • Nationally, there is a 25.7% difference between white and minority rates of homeownership, one percent better than 1994.
  • In 2000, 74% of white families owned their own homes, compared to 48 percent of African-Americans and 46% of Latinos.
  • The MSA with the lowest disparity between African-Americans and whites was Pine Bluff, Arkansas, followed by Jacksonville, Florida and Lake Charles, Louisiana.
  • While low-income African-Americans were 1.26 times more likely to be turned down than low-income whites, upper income African-Americans were 2.77 times more likely to be turned down than upper income whites.
  • Low-income Latinos were denied just 1.04 times more often than low-income whites, but upper-income Latinos were denied twice as often as upper-income Latinos.
  • Upper income African-Americans were also rejected more frequently than moderate income whites, while upper-income Latinos were more likely to be
    denied than middle income whites.
1999 Denial Rate
2000 Denial Rate

Sam Garcia has been in mortgage lending since 1980, and is managing editor of MortgageDaily.com. He also owns and operates CloseNow.com, a real estate portal site.

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