Latinos, Minorities Continue to Face Mortgage Loan Discrimination

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Fifty years after the federal Fair Housing Act banned racial discrimination in lending, Latinos and other minorities continue to be routinely denied mortgage loans at rates far higher than their white counterparts.

Worse, research shows this disparity can lead minorities to apply for high-cost mortgages. That research draws on 2016 data, which is among the most recent, available evidence, according to The Hill.

“An analysis of data released by the Federal Financial Institution’s Examination Council released by Clever Real Estate Hispanic home buyers are 78% more likely to use high-cost mortgages for home purchases, putting them at greater risk of foreclosure,” John Bowden, a Hill reporter writes. “Just 10% of white applicants were denied mortgages that year.”

What does the Data Illustrate?

Both online and face-to-face mortgage lenders charge higher interest rates to black and Latino borrowers, according to the UC Berkeley study.

This kind of discrimination costs those homebuyers up to half a billion dollars more in interest every year than white borrowers with comparable credit scores

“African-American and Hispanic home buyers are respectively 105% and 78% more likely to use high-cost mortgages for home purchases, putting them at greater risk of foreclosure,” the Clever Real Estate analysis states.

According to research by The Hill, in 2017, 47% of all Latino households owned their own homes. Research also found that the number of Latino families submitting mortgage applications have plummeted 74%.

Moreover, as more people apply for mortgages via online,  ethnic discrimination still persists in online lending.

The researchers found that minorities paid 5.3 basis points extra in interest with online mortgage applications, little different than the 5.6 additional points they shell out with the overall set of lenders.

Is Mortgage Lending Discrimination the Modern-day Redlining?

Past discriminatory mortgage lending practices, or redlining, helped to create a racial wealth gap in neighborhoods that already lacked health-promoting assets, like healthcare, jobs, and transportation.

Redlining was made eventually made illegal by the Fair Housing Act of 1968.

Financial stress, especially concerning housing costs, is one of the most emotionally-toxic experiences people can undergo.

According to millions of Home Mortgage Disclosure Act records analyzed by Reveal from The Center for Investigative reporting modern-day redlining persisted in 61 metro areas even when controlling for applicants’ income, loan amount, and neighborhood.

The study revealed a pattern of troubling denials for people of color across the country, in major metropolitan areas. Furthermore, Latinos and other minorities faced the most resistance in Southern cities especially.

How Housing Affects Latino Health

Housing has long been recognized as a critical structural determinant of health that significantly shapes health outcomes.

Lack of affordable housing affects Latino health and has substantial implications on their quality of life.

According to our new Salud America! research review, sadly, Latinos face unaffordable housing, unreliable public transportation, and a lack of green space and parks.

Latino families have a high risk of food insecurity, energy (utility) insecurity, household and child foregone health care, and health cost sacrifices.

Check out more stories on Affordable housing in many major cities in the U.S. and how it affects Latino Health.

Learn More: Affordable Housing!