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Handout: “Mortgage Lending Shows
Race Disparity,”
Boston Globe, Sept. 2000
The racial disparity in home-mortgage
lending worsened in the Boston area between 1998 and 1999,
with black and Hispanic applicants denied loans at 2 to
2.5 times the denial rate for whites, according to a study
released yesterday.
Of the 50 metropolitan areas studied,
the Boston area was one of five in which upper-income blacks
were more likely than low-income whites to be denied home
mortgages and in which upper-income Hispanics were more
likely than moderate-income whites to be denied mortgages.
While the disparity grew in metropolitan
Boston, it declined nationally.
The study was based on data gathered under
the federal Home Mortgage Disclosure Act. It was released
by the Association of Community Organization for Reform
Now (ACORN), a national grassroots association that seeks
access to credit for
low-income and minority neighborhoods. The group has chapters
around the country, including Massachusetts.
“We keep hearing these big boom stories,
(that) people are doing much better,” said Maude Hurd,
national president of ACORN and a Dorchester resident. But
this study shows “the gap is just widening more and
more,” Hurd said. “It really troubles me.”
In 1999, black applicants for conventional
loans in metropolitan Boston were denied 2.45 times more
often than whites, and Hispanic applicants 1.84 times more
often according to the study. In 1998, Boston-area blacks
had 2.26 times the denial rate of whites, and Hispanics
had a denial rate 1.82 times that of whites.
Nationally, blacks were denied at 1.96
times the rate of whites in 1999, and Hispanics were denied
at 1.41 times the rate of whites, an improvement over 1998.
In 1998, blacks were turned down at 2.09 times the rate
of whites, and Hispanics were denied at 1.51 times the rate
for whites.
Officials from the Massachusetts Bankers
Association and the state Division of Banks cautioned that
the federal data used in the ACORN study do not include
the credit histories and overall assets of applicants, and
those factors may explain some of the disparity in the Boston
area. The federal data consist of mortgages for home purchases
made by banks, mortgage companies, and other lenders.
“One of the concerns I have about
the study—I don’t know if I’d say it’s
a flaw—it’s only focusing on income levels,”
said Daniel Forte, president of the bankers association,
which represents about 210 of the 230 banks in Massachusetts,
ranging from big commercial banks to small community institutions.
Tanya Duncan, director of federal policy
for the bankers association, said, “You can have a
high income and not have accumulated wealth.”
Steven Antonakes, senior deputy commissioner
for the Massachusetts Division of Banks, said to get a truer
picture of denial rates, “you also need information
about credit history, property values, and other things,”
which are not available through the federal mortgage disclosure
data.
But ACORN’s Hurd said while differences
in credit history and overall wealth accumulation may explain
some of the racial disparity, “I don’t think it
would make a great big deal of difference.” She pointed
to the study’s finding that Boston-area blacks earning
more than $78,600 were denied mortgages more often than
whites earning less than $32,750. Twenty percent of high-income
blacks were denied conventional mortgages, while only 18
percent of low-income whites were.
“It’s certainly a statistic
that’s alarming and bears review,” agreed the
state’s Antonakes.
But Forte of the bankers’ association
disagreed. “Unfortunately, from a statistical standpoint,
African-Americans and other minorities have not had the
benefit of building up capital in general, as whites have
in general,” he said. “They almost start in a
tougher position, and that’s why you get some of the
higher denials.”
He said the recent increase in real estate
values in the Boston area may have something to do with
the higher denial rates among minorities.
The ACORN study also found that in the
Boston metropolitan area, high-income blacks were denied
mortgages 3.44 times more often than high-income whites,
and high-income Hispanics 2.57 times more often than high-income
whites.
In August, the Federal Financial Institutions
Examination Council, which compiles mortgage numbers, announced
that the racial disparity in denial of conventional mortgages
had lessened or stayed the same nationally, across all minority
groups.
Between 1998 and 1999, denial rates for
black applicants dropped from 53.7 percent to 49 percent;
for Native Americans, from 52.9 percent to 42.1 percent;
and for Hispanics, from 38.7 percent to 35 percent. For
Asian-American applicants, the denial rates stayed the same,
at 11.8 percent.
Nationally, white applicants also saw
their denial rates drop between 1998 and 1999, from 26 percent
to 25.5 percent, according to the data.
While differences in income may have accounted
for some of the disparity, the agency noted that the disparity
occurred even if blacks, Native Americans, and Hispanics
had the same income as white applicants.
Suggestions for Adapting the Boston
Globe Article to the Classroom
1. Discuss the word “disparity”
and what it means.
2. As a class, read the headline and ask
students to predict what the article will be about.
3. Break students into pairs or small
groups and assign a small amount of reading (two to three
paragraphs) to each pair or group.
4. Have students read their assignments
silently, then discuss them in their pairs or group. Have
each group select a recorder to summarize the main idea
of the group’s reading in one or two sentences. (Students
may need modeling in this skill before you assign the task
to avoid having them simply rewrite the entire paragraph.)
Students can discuss unfamiliar vocabulary and try guessing
the meaning. They can also consult dictionaries if necessary.
5. Have each group report its summary
to the rest of the class.
Discussion Questions
1. What was most interesting to you about
this article?
2. Did the information surprise you? Why
or why not?
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