Journal article
Discrimination in mortgage lending
Chicago fed letter / Federal Reserve Bank of Chicago, Vol.95, p.1
07/01/1995
Abstract
A Federal Reserve Board of Chicago study reexamined the role of race in the mortgage loan approval process. The marginal minority applicants in the sample were held to higher credit standards than marginal white applicants. Race was not a significant factor in the accept-reject decision for applicants with good credit profiles. When credit history was classified as bad (the applicant had one or more accounts at least 60 days past due) the approval probability was 8% higher in favor of white applicants. Race also became an important factor for those with high ratios of monthly debt to income. When the obligation-to-income ratio changed from a favorable 30% to an unfavorable 60%, the approval probability for marginal black and Hispanic applicants dropped by 72.1 percentage points compared to only 24.5 percentage points for white applicants. The findings are more precise than that of a recent study by the Boston Fed, which found the home mortgage loan denial rate for black and Hispanic applicants was about 1.6 times higher than for white applicants, even when other factors were constant.
Details
- Title: Subtitle
- Discrimination in mortgage lending
- Creators
- William Hunter
- Resource Type
- Journal article
- Publication Details
- Chicago fed letter / Federal Reserve Bank of Chicago, Vol.95, p.1
- ISSN
- 0895-0164
- eISSN
- 2163-3592
- Publisher
- Federal Reserve Bank of Chicago
- Language
- English
- Date published
- 07/01/1995
- Academic Unit
- Finance
- Record Identifier
- 9984963126502771
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