PrintHomebuyers of every racial minority from African-Americans to Pacific Islanders were more likely to be denied a mortgage last year than white Americans, according to data from lenders released yesterday by the Federal Reserve.
More than a third?36.1 percent?of African-Americans who applied for a mortgage were denied financing to buy a home last year, compared to 29.9 percent for Hispanics and 13.2 percent for whites. Denial rates for African-Americans rose .8 percent and for Hispanics .2 percent from 2007, according to the report based upon information obtained under the Home Mortgage Disclosure Act of 1975 (HMDA).
Denial rates were even higher for refinancings. Among African-Americans, 61.2 percent were denied a loan compared to 50.6 percent among Hispanics and 31.7 percent among whites.
”Analyses of the HMDA data from earlier years have consistently found that denial rates vary across applicants grouped by race or ethnicity. In 2008, for both home-purchase and refinance conventional lending, blacks and Hispanic whites had notably higher gross denial rates than non-Hispanic whites,” the report said.
African-Americans and Hispanic borrowers who do obtain a mortgage are also more likely to pay more than whites for both loans to purchase homes and to refinance. Black and Hispanic white borrowers are more likely, and Asian borrowers less likely, to obtain conventional loans with prices above the HMDA price-reporting thresholds than are non-Hispanic white borrowers
All ethnic groups showed significant increases in their use of FHA and VA programs from 2006 through 2008. Black and Hispanic-white borrowers, however, relied particularly heavily on these government programs. In 2008, more than 60 percent of home purchase loans and almost 40 percent of refinance loans to blacks were from either the FHA or VA. For Hispanic-white borrowers, nearly 50 percent of their 2008 home-purchase loans and 21 percent of their refinance loans were from the FHA or VA.
The HMDA data are regularly used to facilitate the fair lending examination and enforcement processes. When examiners for the federal banking agencies evaluate an institution’s fair lending risk, they analyze HMDA price data in conjunction with other information and risk factors.
For a copy of the report, click on the link at the top of the story.
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