![]() Last year Federal Reserve researchers found factors such as credit scores, property values, income and mortgage loan algorithms explain most of the racial gap in denial rates, but not entirely, “suggesting a possible role for discrimination.” And the Consumer Financial Protection Bureau analyzed 2019 HMDA data and found disparities weren’t eliminated when factoring in credit scores. Some of the data lenders say explains the gap, such as credit scores, is not made public. "Homeownership is one of the major drivers in the racial wealth gap." Tatjana Meschede "We believe the HMDA data that underlies your story can help identify potential lending disparities within the mortgage market but given limitations with the data the numbers are not sufficient on their own to explain why those disparities exist,” Blair Bernstein, director of public relations for the American Bankers Association, told WBUR in a statement. They attribute the higher denial rates for Black and Hispanic borrowers to differences in credit scores, debt, or loan size relative to the value of the home. Lending industry representatives say the data WBUR used in its analysis doesn’t tell the full story about denial rates. "Homeownership is one of the major drivers in the racial wealth gap," said Tatjana Meschede, associate director of the Institute for Economic and Racial Equity at Brandeis University.Īn often-cited study by the Boston Fed in 2015 found the median net worth of a white household in Greater Boston was approximately $250,000, while the median figure for a non-immigrant Black household was $8. So, when Black and Hispanic residents encounter more hurdles to financing a home, the ramifications are broad and lasting. It’s the primary way most Americans build wealth. Homeownership isn’t just about fulfilling a dream. WBUR found lenders denied loans for home purchases in majority-Black parts of Boston at 2.5 times the rate of majority-white areas. In addition to the higher denial rates for Hispanic homebuyers, the numbers were working against Bello in another way: It’s harder to secure home loans for properties in predominantly Black parts of the city, like where he was looking in Mattapan. WBUR’s analysis of publicly available federal data through the Home Mortgage Disclosure Act (HMDA) found 3,501 applications for loans to purchase homes were denied in Boston between 20, amounting to 6% of all such applications. Higher Denials For Boston’s Black Communities “I don't want to go through the process again and be denied at the last minute,” he said. So, Bello has put homeownership on pause. ![]() “I just said, ‘You know, if this is the reason and there's nothing I can do, well, thank you very much, and I guess I'll just stop looking for a property right now.’” In other words, the lender would only factor in one of his streams of income, which wasn’t enough to get the loan he needed for the home in Mattapan. “It was heartbreaking.”īello said the mortgage underwriter told him he was denied because his cleaning business was a few months short of two years old, so that income wouldn’t be considered for the application. “And then I got denied at the last minute,” Bello said. And his kids were even picking out their rooms. He went through a loan pre-approval process. "The loan officer told me that I have the perfect package." Manny Bello “The loan officer told me that I have the perfect package,” Bello said. He also built up his credit score, getting it to the 800s - the highest range. And he started his own cleaning business on the side, which increased his income. He worked his way up to become a manager at a janitorial company. He spent that time saving money and preparing for homeownership. It took Bello eight years to get to this point. And I was just in love with the house.” A "for sale" sign for a house on Ballou Avenue in Mattapan. “I thought I had hit the jackpot,” said 46-year-old Bello, who identifies as Hispanic. It also had a large garage and driveway that would be perfect for the vehicles from his cleaning business. ![]() It had enough space for him, his wife and three kids, and a finished basement where he could put a home office. Last spring, he found a great single-family house in Mattapan. Manny Bello knows that disappointment well. Hispanic applicants were twice as likely to be denied a loan compared with white applicants. But for Black and Hispanic Bostonians, it is more often a dream denied.Ī new WBUR analysis of mortgage lending in Boston from 2015-2020 found lenders denied mortgages to Black applicants at three times the rate of white applicants. Owning a home is considered part of the so-called American dream.
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