40% of Black home loan applicants rejected in Detroit area, report finds

October 05, 2021, 10:31 PM


Lending disparities persist in metro Detroit, with the latest analysis finding Blacks more than twice as likely to be denied mortgages in the city than their white counterparts.

The Free Press and Bridge Detroit report the analysis by the Urban Institute, which looked at broader housing trends in 10 U.S. cities:

Mortgage applications from Black and Hispanic homebuyers were more likely to be turned down, according to an Urban Institute analysis of 2019 Home Mortgage Disclosure Act data. A little more than half of Black and Hispanic mortgage applicants in Detroit were rejected, compared with 22% for white homebuyers. In metro Detroit, the denial rate was 39% for Black applicants, 31% for Hispanic homebuyers and 18% for white buyers.

The three most common reasons for mortgage rejection were an applicant’s credit history, debt-to-income ratio and collateral, researchers note. A little more than half of Black households in Detroit and 46% in the metro area said credit history was the reason behind their denial, according to 2019 Home Mortgage Disclosure Act data.

“There’s an inherent discrimination involved in the lending system,” (said Laurie Benner, associate vice president of programs for the National Fair Housing Alliance, which commissioned the report). “There’s algorithmic biases in the computer-generated lending models and it really goes back even further than that, it goes back to decades of exclusionary policies and laws.”

The findings are in line with past comprehensive looks at the problem. In 2017, Bridge Michigan found whites getting nearly half of the mortgages in Detroit, even though at the time they made up just 10 percent of the population. That was up significantly from before the recession, when fewer white people were trying to purchase in Detroit. In 2007, just 17 percent of Detroit mortgages went to them.

Read more:  Bridge Detroit/Detroit Free Press

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