Blacks And Latinos Denied Mortgages At Rates Double Whites

a reply to: pavil


I am currently in the process of buying a home. Hopefully we will close next week. The process is excruciating. I had more fun when I had a kidney stone. Here are my insights.

1. Have a credit score of 750 or better. There are several ways to do this, one of which is to get a credit card with a very low maximum credit limit. Never have a balance of more than 50% of the maximum limit. This advice came from our mortgage broker.

2. Keep excellent records. They ask for so much paperwork it is amazing. Tax returns and W2s or 1099s for the last 3 years, one or two months worth of paystubs, several months worth of bank statements (checking and savings), investments such as 401K or 403B.

3. You will need approximately 3% down for an FHA loan on top of closing costs. USDA loans have no down payment but you still need the closing costs and certain areas of the country are not eligible for USDA. Urban areas will not qualify. Your income is also a factor for USDA loans. If you make too much, you will not qualify. We fell into a 'catch 22' on this issue. My partner worked a lot of overtime so we could come up with closing costs, which then put us over the allowable limit for USDA and we had to go FHA and come up with 3% down payment. You will also have to pay for home inspections and property appraisal but those costs should count toward your closing costs.

4. If a family member (or anyone for that matter) 'gifts' you part or all of the money for down payment and/or closing, they will have to provide banking statements proving they have the liquid assets to do so and sign an affidavit stating that they are gifting you the money.

5. If you sell something (like an old car you don't need) you need to provide a bill of sale to prove where the cash came from.

6. If you keep cash on hand for whatever reason (say maybe you had a garage sale and now have a wad of cash) do not deposit it in your bank account. They will want to know where that cash came from. Use it to pay bills, buy groceries, whatever you would normally swipe your debit card for.

There are sooooooooooooo many other things that I'm sure I'm forgetting it's not even funny. When you get started they will do a 'hard pull' on your credit and your score could possibly drop slightly so the higher your credit score the better.

originally posted by: Edumakated

originally posted by: AScrubWhoDied

originally posted by: Edumakated

originally posted by: pavil
Link

Disparities were exceptionally pronounced in 61 cities across the nation, including three in North Carolina. That was true even when controlling for applicants' income, loan amount and neighborhood. The findings come after a year-long study of millions of Home Mortgage Disclosure Act records analyzed by WUNC, The Center for Investigative Reporting's Reveal Show, and the Associated Press.

So I'm listening to NPR and they are talking about this, specifically how the Community Reinvestment Act has been a joke for Decades, not really allowing residents, mainly Black and Hispanic to get loans in the areas the CRA was designed to help.

Pretty messed up, especially since 99.9% of banks get a satisfactory record with the CRA.

Even when you factor in apples to apples comparison, there is a racially backed component to the results.

Complete and utter bovine feces...

I work in mortgages and have for the pass 15 years. There is ZERO, ZIP, NADA, racial discrimination in mortgages. Blacks on average have lower FICO scores and fewer assets which is why, not that there is any actual discrimination occurring.

Here is a good mortgage industry video/blog debunking the OP that explains how any disparate impact that actually occurs is because of Fannie policies that ALL banks have to follow when it comes to getting a conventional mortgage.

Did you miss this part?

In an April policy paper, the American Bankers Association said reporting credit scores would be expensive and "cloud any focus" the disclosure law has in identifying discrimination. America's largest bank, JPMorgan Chase & Co., has argued that the data should remain closed off even to academics, citing privacy concerns.

At the same time, studies have found proprietary credit score algorithms to have a discriminatory impact on borrowers of color.

Watch the video. I am black. I've also originated about $500 million in mortgage loans in my career.

First, practically all mortgages are run through an automated underwriting system from Freddie Mac and Fannie Mae (i.e., a computer). It looks at debt ratios, assets, credit scores, property type, etc and then makes a lending decision. The bank underwriters literally just check to make sure the documentation is correct - paystubs, bank statements, etc and look for any potential fraud.

It is true that blacks on average have higher rates and receive more denials but that is because blacks on average have lower FICO scores. Blacks with 700+ FICO score, low debt ratios, and down payments get the same great rates as everyone else.

Understand that statistical data showing one group on average having less favorable terms is not an indicator of discrimination.

I understand the underlying reasons why POC don't get mortgages as often ie net worth, credit scores ect. That being said, the article compared apples to apples :

Reveal's analysis included all records publicly available under the Home Mortgage Disclosure Act, covering nearly every time an American tried to buy a home with a conventional mortgage in 2015 and 2016. It controlled for nine economic and social factors, including an applicant's income, the amount of the loan, the ratio of the size of the loan to the applicant's income and the type of lender, as well as the racial makeup and median income of the neighborhood where the person wanted to buy property.

They looked at 3.1M applications for their analysis.
That seems to imply they took people with similar rankings and still found racial differences in approvals.

The only two criteria they couldn't compare were credit score and debt to income ratio. Both of those weren't disclosed by the lenders for the study. Granted those are huge criteria, but if all the other criteria were even, I would have thought the numbers would have been closer.

I'd be interested in seeing a study that has the two other huge factors and see if there is still a discrepancy.

a reply to: 3daysgone

Black Median Household income: $35,481
(all races $53,657)
All Black Workers 2015 weekly earnings:$624
(all races $803)
Black Men weekly earnings: $652
(All men $889)
Black Women weekly earnings: $608
(All women $721)
SOURCE: 2015 3rd Quarter: Bureau of Labor Statistics – 16 Years or Older & 2014 Census Bureau American Community Survey.



blackdemographics.com...


Those figures of yours are very wrong.

a reply to: neo96

Neo sit down...
I managed credit applications for many years. From when I worked in a store in the early nineties through my ownership of the rug shop until 2014 I took hundreds of applications for credit. From several different lenders/banks. None of them ask race.
I agree with you completely. Can you believe it!
It's against the law to consider race in any loan application and for sure in a mortgage loan. There are what is called fair lending laws.

Fair Lending

The Equal Credit Opportunity Act and the Fair Housing Act are designed to protect consumers from unfair or discriminatory lending practices. Two primary laws govern fair lending practices: 
Equal Credit Opportunity Act (ECOA)/Regulation B
ECOA, enacted in 1974, prohibits discrimination based on race, color, religion, national origin, sex, marital status, age, source of income or whether a person exercises rights granted under the Consumer Credit Protection Act for any credit transaction and through the life of the loan.Fair Housing Act (FHA)
The Fair Housing Act is part of the Civil Rights Act of 1968. The FHA makes it unlawful for any lender to discriminate in housing-related lending activities against any persons because of their race, color, religion, national origin, handicap, family status or sex

www.aba.com...

What lenders look at..
How much money you make and your willingness to give it away each month.
In other words your credit record. How you manage credit and your debt to income ratio.

originally posted by: Sillyolme
a reply to: 3daysgone

Black Median Household income: $35,481
(all races $53,657)
All Black Workers 2015 weekly earnings:$624
(all races $803)
Black Men weekly earnings: $652
(All men $889)
Black Women weekly earnings: $608
(All women $721)
SOURCE: 2015 3rd Quarter: Bureau of Labor Statistics – 16 Years or Older & 2014 Census Bureau American Community Survey.



blackdemographics.com...


Those figures of yours are very wrong.

To be fair , they were referring to net worth not incomes.

The white net worth is skewed because of the Uber rich whites at the very top.

A fair question to look at is do white households at the same income level, 35,000, get declined for mortgages at the same rate as black households at 35,000?

All things being equal, we should see similar rates.

originally posted by: Edumakated

originally posted by: Willtell
After the war in the 50’s blacks were totally excluded from the inexpensive houses the government were financing, in communities like Levittown LI, where a whole generation of people were left behind economically through this blatant and “legal” discrimination.


Many people who now own houses worth half a million dollars from this era do not realize this happened.

The government helped ONLY WHIITE PEOPLE buy these very cheap houses, that are today maybe worth half a million, and totally excluded black people from this program


Today that’s why many communities in America are still segregated



They wonder why black people are behind economically.


This is a horrible example of what is still happening.

source

The GI Bill (1944)[edit] At the end of World War II, the GI Bill furthered segregation practices by keeping African Americans out of European American neighborhoods, showing another side to African American housing discrimination. When millions of GIs returned home from overseas, they took advantage of the “Servicemen’s Readjustment Act,” or the GI Bill.[19] This important document was signed in 1944 by Franklin D. Roosevelt, and gave veterans education and training opportunities, guaranteed loans for home, farm, or business, job finding assistance, and unemployment pay of $20 a week for up to 52 weeks if a veteran could not find a job.[20] This law allowed millions of U.S. soldiers to purchase their first homes with inexpensive mortgages, which meant the huge growth of suburbs and the birth of the ideal of a suburban lifestyle. African Americans were met with discrimination when trying to purchase a home in the overwhelmingly European American neighborhoods. The realtors would not show these houses to African Americans, and when they did, they would try and talk them out of buying the home. This discrimination was based on the fact that realtors believed they would be losing future business by dealing or listing with African Americans, and that it would be unethical to sell a house in a European American neighborhood to African Americans because it would drive the property values of the surrounding houses down.[21] Both redlining and discrimination through the GI Bill relegated most African Americans to a concentrated area within the city, so the declining property values and the higher crime rates could be kept in a contained area. The relegation of African Americans to the neighborhoods that were receiving no support due to redlining practices was a self-fulfilling prophecy that created the high crime slums that the city was afraid of.[6]

Partially agree. Yes, prior discrimination really set the black community back in terms of family wealth building. However, I think that has little to do with current fiscal state of black community.

The black community in America spends like a $1.5 trillion a year. We have no problem buying jewelry, cars, rims, and expensive clothes... but black folks don't want to buy stocks or houses. It isn't discrimination but financial ignorance at this point.

The average wealth of a black person in America is 5000 dollar. The average wealth of a white person is 100,000 dollars

Draw your own conclusions

originally posted by: Willtell
Draw your own conclusions

My conclusion is that redistributive taxation and the welfare state have failed and we need to return to the sanity and proven methods of "life is what you make of it."

Lending rates are based on risk factors. I know that location is a risk factor, lots of lower income people pay more as do some people who live in areas where low income people live even if they are making decent money. There are many groups and rules governing risk assessment, and even factors where there is no history of a groups payment history, that can negatively effect things. They have insurance credit scores that take many things into consideration attached to insurance policies you have for house and car. That is legal, we have a pretty good score for that and that gives us affordible home insurance. I am sure there are charts for lenders.

originally posted by: pavil

originally posted by: Sillyolme
a reply to: 3daysgone

Black Median Household income: $35,481
(all races $53,657)
All Black Workers 2015 weekly earnings:$624
(all races $803)
Black Men weekly earnings: $652
(All men $889)
Black Women weekly earnings: $608
(All women $721)
SOURCE: 2015 3rd Quarter: Bureau of Labor Statistics – 16 Years or Older & 2014 Census Bureau American Community Survey.



blackdemographics.com...


Those figures of yours are very wrong.

To be fair , they were referring to net worth not incomes.

The white net worth is skewed because of the Uber rich whites at the very top.

A fair question to look at is do white households at the same income level, 35,000, get declined for mortgages at the same rate as black households at 35,000?

All things being equal, we should see similar rates.

You would have to include debt to income ratio for it to be a fair comparison.

originally posted by: Khaleesi

originally posted by: pavil

originally posted by: Sillyolme
a reply to: 3daysgone

Black Median Household income: $35,481
(all races $53,657)
All Black Workers 2015 weekly earnings:$624
(all races $803)
Black Men weekly earnings: $652
(All men $889)
Black Women weekly earnings: $608
(All women $721)
SOURCE: 2015 3rd Quarter: Bureau of Labor Statistics – 16 Years or Older & 2014 Census Bureau American Community Survey.



blackdemographics.com...


Those figures of yours are very wrong.

To be fair , they were referring to net worth not incomes.

The white net worth is skewed because of the Uber rich whites at the very top.

A fair question to look at is do white households at the same income level, 35,000, get declined for mortgages at the same rate as black households at 35,000?

All things being equal, we should see similar rates.

You would have to include debt to income ratio for it to be a fair comparison.

Yes, that and comparable Credit scores as well. You'd think we would already have done this experiment.

I'd like to think life is fair, but it sure doesn't seem like it sometimes

originally posted by: pavil

originally posted by: Edumakated

originally posted by: AScrubWhoDied

originally posted by: Edumakated

originally posted by: pavil
Link

Disparities were exceptionally pronounced in 61 cities across the nation, including three in North Carolina. That was true even when controlling for applicants' income, loan amount and neighborhood. The findings come after a year-long study of millions of Home Mortgage Disclosure Act records analyzed by WUNC, The Center for Investigative Reporting's Reveal Show, and the Associated Press.

So I'm listening to NPR and they are talking about this, specifically how the Community Reinvestment Act has been a joke for Decades, not really allowing residents, mainly Black and Hispanic to get loans in the areas the CRA was designed to help.

Pretty messed up, especially since 99.9% of banks get a satisfactory record with the CRA.

Even when you factor in apples to apples comparison, there is a racially backed component to the results.

Complete and utter bovine feces...

I work in mortgages and have for the pass 15 years. There is ZERO, ZIP, NADA, racial discrimination in mortgages. Blacks on average have lower FICO scores and fewer assets which is why, not that there is any actual discrimination occurring.

Here is a good mortgage industry video/blog debunking the OP that explains how any disparate impact that actually occurs is because of Fannie policies that ALL banks have to follow when it comes to getting a conventional mortgage.

Did you miss this part?

In an April policy paper, the American Bankers Association said reporting credit scores would be expensive and "cloud any focus" the disclosure law has in identifying discrimination. America's largest bank, JPMorgan Chase & Co., has argued that the data should remain closed off even to academics, citing privacy concerns.

At the same time, studies have found proprietary credit score algorithms to have a discriminatory impact on borrowers of color.

Watch the video. I am black. I've also originated about $500 million in mortgage loans in my career.

First, practically all mortgages are run through an automated underwriting system from Freddie Mac and Fannie Mae (i.e., a computer). It looks at debt ratios, assets, credit scores, property type, etc and then makes a lending decision. The bank underwriters literally just check to make sure the documentation is correct - paystubs, bank statements, etc and look for any potential fraud.

It is true that blacks on average have higher rates and receive more denials but that is because blacks on average have lower FICO scores. Blacks with 700+ FICO score, low debt ratios, and down payments get the same great rates as everyone else.

Understand that statistical data showing one group on average having less favorable terms is not an indicator of discrimination.

I understand the underlying reasons why POC don't get mortgages as often ie net worth, credit scores ect. That being said, the article compared apples to apples :

Reveal's analysis included all records publicly available under the Home Mortgage Disclosure Act, covering nearly every time an American tried to buy a home with a conventional mortgage in 2015 and 2016. It controlled for nine economic and social factors, including an applicant's income, the amount of the loan, the ratio of the size of the loan to the applicant's income and the type of lender, as well as the racial makeup and median income of the neighborhood where the person wanted to buy property.

They looked at 3.1M applications for their analysis.
That seems to imply they took people with similar rankings and still found racial differences in approvals.

The only two criteria they couldn't compare were credit score and debt to income ratio. Both of those weren't disclosed by the lenders for the study. Granted those are huge criteria, but if all the other criteria were even, I would have thought the numbers would have been closer.

I'd be interested in seeing a study that has the two other huge factors and see if there is still a discrepancy.

The data is there but it isn't HMDA data. Fannie/Freddie would have to pull the data. It isn't an apples to apples comparison unless you include:

Loan size
FICO score
Debt to Income Ratio
Income
Assets
Property Type (Single family vs condo)
Origination Channel: Broker vs Bank vs Correspondent
Fees paid

All of these things can affect rates.

What is ironic is that often times, any discrimination is done by loan officers of the same race. Mortgage lending is a relationship business. I've seen where ethnic groups get the no vaseline treatment from their own people. An eastern european mortgage broker would just take to the cleaners eastern european immigrants. Often times the immigrants have misplaced trust.

Higher rates is not as straight forward as it seems. There are a lot of factors at play, but I assure you it isn't because of intentional discrimination. Competition in the mortgage business is fierce. It only takes one or two phone calls to find out if you aren't getting a good deal. Minorities often times don't shop around as much.

Disparities were exceptionally pronounced in 61 cities across the nation, including three in North Carolina. That was true even when controlling for applicants' income, loan amount and neighborhood.

Even when everything is equal, black and latino folks are denied an application at twice the rate.

And at looking at the responses on this thread, they are the reason why disparities still exist. Folks won't believe anything until it happens to them.

originally posted by: cenpuppie

Disparities were exceptionally pronounced in 61 cities across the nation, including three in North Carolina. That was true even when controlling for applicants' income, loan amount and neighborhood.

Even when everything is equal, black and latino folks are denied an application at twice the rate.

And at looking at the responses on this thread, they are the reason why disparities still exist. Folks won't believe anything until it happens to them.

Just parroting something as being true does not make it true. Mortgage underwriting is very rigid. For the most part, computers approve mortgages. The underwriters literally check a box. There is very little nuance or out of the box thinking. People either qualify or they don't. Race has absolutely nothing to do with it.

I'm black. I originate mortgages for a living. I think I'd know if there were some nefarious bank plot to discriminate against minorities.

originally posted by: 3daysgone
a reply to: pavil

From your link.

The latest figures from the U.S. Census Bureau show the median net worth for an African-American family is now $9,000, compared with $132,000 for a white family. Latino families did not fare much better at $12,000.

That could be the reason why.

Yep , that pesky ratio of debt to income. Does it every time.

a reply to: pavil

Where's the info which includes credit scores and income, which heavily reflects what mortgage or loan one can get?

originally posted by: Edumakated

originally posted by: cenpuppie

Disparities were exceptionally pronounced in 61 cities across the nation, including three in North Carolina. That was true even when controlling for applicants' income, loan amount and neighborhood.

Even when everything is equal, black and latino folks are denied an application at twice the rate.

And at looking at the responses on this thread, they are the reason why disparities still exist. Folks won't believe anything until it happens to them.

Just parroting something as being true does not make it true. Mortgage underwriting is very rigid. For the most part, computers approve mortgages. The underwriters literally check a box. There is very little nuance or out of the box thinking. People either qualify or they don't. Race has absolutely nothing to do with it.

I'm black. I originate mortgages for a living. I think I'd know if there were some nefarious bank plot to discriminate against minorities.

a reply to: Edumakated

Thanks for the reply. I just would like to see it proven.

So there is data that could do a true apples to apples comparison?

I would like to see it. I want to hope that their isn't a difference because of someone's race, religion ect.

originally posted by: Blue Shift

originally posted by: bigfatfurrytexan
Were it not the right time to have said opportunity, my fate would have been much, much, much different than the bigfatfurrytexan you know today.

I think that transcends race or sex or cultural background. So much of life depends on an individual being in the right place at the right time and being ready for it.

Imagine you are in 5th ward houston....how often willl opportunity present itself?

More black folks live in areas without access to opportunity.

a reply to: Edumakated

Your retort is insufficient, because the "i'm doing it and i'm black and i know" is purely hearsay. You got any facts or data to backup your claim because these folks are bring data to the game. Let me guess, it's the cherry picked kind you don't like?

Interactive Redlining Map Zooms In On America's History Of Discrimination

Sorry it's not FOX, but they tend to think like good old conservatives, keeping the status quo.

Here some more, Redlining is Alive and Well—and Evolving. I can go back all the way to the FHA and further for cases of denied mortgages.

But here, the source. Interesting information to say the least, at least for those that wish to know and find out.

Struggle for black and Latino mortgage applicants suggests modern-day redlining.

I'm not playing the political game of smoke and mirrors. We both know what redlining be about.