A analysis of the rate some minorities are turned down for a home loan versus their white counterparts reflects badly on lenders. So one trade group has retorted.
Black and Latino loan applicants are routinely denied by banks for mortgages at far higher rates than their white counterparts, the Center for Investigative Reporting says in the article Kept Out published on its Reveal news website.
The report says that Census Bureau data indicate that while the average net worth for a white family is $132,000, the average drops to $9,000 for black families and $12,000 for Latino families.
Since homes are often the biggest component of net worth, wealth is less likely to grow among black and Latino families because they are denied home loans more often.
The center says it based its findings on a year-long analysis of 31 million Home Mortgage Disclosure Act records in 61 metropolitan areas.
The analysis was reportedly
independently reviewed and confirmed by The Associated Press.
Anecdotal accounts discuss individual discrimination from around the country.
But the Mortgage Bankers Association says
the report is “deeply flawed” and fails to consider key credit factors such as credit history, debt-to-income ratio and loan-to-value ratio.
The analysis also excluded data on residential loans insured by the Federal Housing Administration.
“The FHA program is designed specifically to help borrowers with lower credit scores and small down payments,” the trade group said. “By excluding FHA loans from its analysis, the authors purposefully ignored a sizable share of the home lending market that provides homeownership opportunities for lower income and traditionally under-served borrowers.”
The story said that lenders and mortgage trade groups
maintain that the disparity can be explained by factors the industry has fought to keep hidden.
“While Reveal acknowledges these factors were not included in their analysis, it suggests it is because banks won’t disclose this information,” the mortgage bankers said. “The fact is that federal privacy laws explicitly prevent banks from doing so.”