In data released earlier this year from the Federal Home Mortgage Disclosure Act, major
disparities exist in home loan approval rates between African Americans and Whites.
Nationally, the purchase mortgage denial rate for Black homebuyers is twice as high as the
denial rate for the overall mortgage borrower population in each of the nation’s 50 largest
metros.
In D.C., approximately 32,238 loan applications were made or originated by mortgage lenders.
About 16,227 mortgages were approved for White applicants and just 4,945 for Black
applicants.
Census data collected by Prosperity Now revealed that the Black homeownership rate in the
District of Columbia stood at 35.2 percent compared to 50.3 percent for White Americans.
A new report from Lending Tree found that, on average, 18 percent of Black homebuyers are
denied a mortgage.
That counts as nine percentage points higher than the average denial rate for the overall
population of nine percent.
“Racial barriers to homeownership in the U.S. are undeniable for many, with Black Americans
often facing the most obstacles during the home buying process,” Lending Tree researchers
wrote.
“One obstacle Black Americans disproportionately face is getting their mortgage requests
denied by lenders.”
The new report comes as African Americans continue to experience discrimination in the real
estate appraisal market.
Most recently, a Black couple in Baltimore filed a lawsuit against an appraiser and a mortgage
lender, alleging they received a severely undervalued appraisal for their four-bedroom home.
Following an initial appraisal of $450,000 – which already was less than the $622,000
government-assessed value, the home received a $750,000 appraisal from a different
appraiser.
“The U.S. housing industry has a long history of racial discrimination – one that helped build the
racial wealth gap and one that carries through 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 combat bias in home appraisals.
But real estate lending itself remains an issue.
The company analyzed purchase mortgage application records from the Federal Financial
Institutions Examination Council’s Home Mortgage Disclosure Act 2020 data set — the most
recent full data set available.
“Metros with the largest spread between mortgage denial rates for Black borrowers and the
overall borrower population,” Lending Tree researchers found.
Among the key findings:
St. Louis, Boston and Jacksonville, Fla., see the largest percentage point differences between
the denial rates for Black borrowers and the overall borrower population.
Across these metros, the denial rate for Black borrowers is an average of 13.36 percentage
points higher than the denial rate for the overall mortgage borrower population.
San Francisco, Sacramento, Calif., and Seattle see the smallest percentage point differences
between the denial rates for Black borrowers and the overall borrower population.
Though Black borrowers are more likely to be denied a mortgage in each of these metros, the
average spread between their denial rate and the denial rate for the overall population is a
relatively low 3.94 percentage points.
The report found that denial rates for Black borrowers are highest in Detroit, Miami, and
Jacksonville, while they’re lowest in San Francisco, Seattle, and Sacramento.
Across Detroit, Miami and Jacksonville, the average denial rate for Black borrowers is 25.52
percent — more than double the average denial rate of 12.55 percent across San Francisco,
Seattle, and Sacramento.
Though they can vary by metro, denial rates for Black borrowers are higher than 10% in each of
the nation’s 50 largest metros, according to the report.
“Though 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,”
Lending Tree researchers insisted.
The researchers listed three tips that could make finding a lender and getting a loan easier:
Shop around for a lender. If you’ve been denied a mortgage from one lender, that doesn’t
necessarily mean there aren’t any others. By shopping around for a mortgage, you can
potentially increase your odds of finding a lender and possibly even getting a lower rate on your
loan.
Consider different types of loans. Some types of mortgages, like those backed by the Federal
Housing Administration (FHA) or the Department of Veterans Affairs (VA), can be easier to
qualify for than other types of mortgages — especially for lower-income borrowers. If you’re
having trouble getting approved for a standard mortgage, these options might help you access
the funds you need to buy a home.
Speak up if you feel discriminated against. It’s illegal in the U.S. to discriminate against
borrowers based on race. If you feel like you’ve been the victim of discrimination, consider
contacting your local housing authority or attorney general’s office or the Department of Housing
and Urban Development (HUD) to file a complaint. Speaking out about discrimination can help
yourself and others who may be going through something similar.