Loya on Racial Disparities in Mortgage Approval Rates

Assistant Professor of Urban Planning José Loya spoke to Markup about new data regarding ethnic and racial disparities in mortgage approval rates. For years, the mortgage industry has said financial factors, such as credit score and debt as a percentage of income, explain any racial disparities in loan approval rates. However, Markup investigated more than 2 million mortgage applications and found that lenders in 2019 were more likely to deny home loans to people of color than to white people with similar financial characteristics, even after controlling for 17 financial factors. “Lenders used to tell us, ‘It’s because you don’t have the lending profiles; the ethno-racial differences would go away if you had them,’” Loya said. Now that these financial factors have been made public through the Home Mortgage Disclosure Act, Loya concluded, “Your work shows that’s not true.” The report found that, nationwide, lenders were 80% more likely to reject Black applicants than white applicants with similar qualifications.


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