Blacks in Los Angeles 87% more likely to be turned down for a loan – Daily News
Blacks hear “No” from mortgage lenders twice as often as a typical American borrower.
A report from LendingTree shows a huge racial gap in rejection rates for loans to buy a home. Statistics compiled by the online loan market reveal that 12.64% of black mortgage applications were rejected in 2019 compared to 6.15% for all loan-to-buy applications.
Yes, this analysis of the latest data from the Federal Home Mortgage Disclosure Act tells you that black people are 105% more likely to be denied a home loan.
I am well aware of the logic suggested that attempts to explain this long-standing racial disparity. Those words have been quoted for decades when housing inequality data like this comes out – loan approval imbalances can be largely linked to varying levels of income, career, and credit history.
But I won’t forget either The nation’s shameful history of housing discrimination, some of which is sadly endorsed by government agencies and regulators. Conclusion: 56% of blacks are renters compared to 35% of all Americans.
When I threw in my trusty spreadsheet LendingTree statistics detailing the trends in purchase loans for 50 major metropolitan areas, some ugly patterns were leaked.
Milwaukee led the nation in black rejection rate at 17.7%. But for all applicants, it was a 29th hardest place to borrow with an overall rejection rate of 5.6%. This translates to a higher black rejection rate of 218%, the largest nationwide gap among the 50 major metropolises.
Compare that to Miami, the second toughest mortgage location for blacks with a 17.3% rejection rate. But that Florida subway is also the hardest place for anyone to borrow with an 11.1% overall rejection rate – so Miami Blacks are “rejected” “only” 56% more often. It is the second best score in this sad racial criterion.
Just to let you know, Southern California looks relatively color blind by this calculation. This is relative, not correct.
The Los Angeles-Orange County metro area was the 13th hardest place for blacks to borrow, with 14% of loan applications rejected. But the region is the eighth hardest place to borrow among these subways: 7.5% of all loan applications are turned down. Thus, the LA-OC Blacks have an 87% higher rejection rate, number 35 out of the 50 metros studied.
In the Inland Empire, 12.1% of black applications were rejected – No. 29 nationally. But Riverside and San Bernardino counties were the 14th hardest place to borrow overall, with 6.8% of unsuccessful applications. This means the Inland Empire Blacks had a 79% higher rejection rate, only 10 subways did better.
Who is the best ? Blacks had the lowest rejection rate among those 50 subways in Seattle at 8.5%. Compare that pace with this Northwest subway being the ninth easiest place to borrow (5% rejection rate) and black people in Seattle had a 72% higher rejection rate. Only six subways did better.
In Sacramento, the 9% black refusal rate ranked third nationally in a metropolitan area with a ranking of No. 23 for all loan refusals of 5.9%. This resulted in blacks in Sacramento being rejected 52% more frequently, the highest score in the country.
I found the results for Minneapolis quite revealing. This is the town where George Floyd, a black man, died while being held by a white policeman, sparking local protests and unrest that magnified in a national debate on social and economic injustice.
This Minnesota subway had a 9.4% rejection rate for blacks, the fourth lowest among major subways. But Minneapolis is the easiest place in the country to get a mortgage for everyone, with just a rejection rate of 3.6%. Thus, its black population is 161% more likely to hear “No” for a mortgage loan. Only four cities have a larger gap between mortgage applications.
These mortgage gaps call into question hopes of any sense of economic equality, especially as housing advocates present homeownership as a stepping stone to personal wealth.
Yes, I know we have tried to boost homeownership with disastrous results. Like making crazy loans that hurt everyone involved. So let’s say the system isn’t fair. Then do something.
Please note what has happened in this era of pandemic. See how much help homeownership has received. The market is supported by unprecedented aid to the mortgage industry and historically low interest rates.
Compare this housing rescue with the rental market. In some cases, tenants have been given a few months of “deferral” to pay their rents. And homeowners, unlike mortgage agents, haven’t received much help either.
The national bias towards home ownership also includes generous long-standing tax assistance: from deductions for mortgage interest paid to property tax write-offs to the protection of gains created by home appreciation.
So remember: Blacks are 60% more likely to rent than the typical American. Even blacks who can afford a home have a harder time borrowing afterwards.
Analysis of Lending Tree refinancing data tells us that black people have been denied a mortgage 77% more frequently than the typical American. Locally, a black in Los Angeles County-Orange was 104% more often turned down for a home loan refinance; and it was 86% more likely in the Inland Empire.
When researchers at Northwestern University recently looked at long-term housing discrimination, access to home loans emerged as a major challenge.
“It was appalling to find no evidence of a reduction in discrimination in the mortgage market over the past 35 years,” said Professor Lincoln Quillian. “Discrimination in the mortgage market makes it harder for minority households to build wealth through housing, which contributes to racial wealth gaps. Discrimination in the housing market increases housing insecurity for minority households and contributes to the persistent segregation of neighborhoods. These findings help explain why black property has not increased over the past 35 years. “