An activist group is distributing a new analysis that claims widespread racial disparities in mortgage lending, but the Mortgage Bankers Association is disputing it, stating that the study fails to consider the real issues behind why minority lending tends to skew lower than whites.
Discrimination in any way is unacceptable, said MBA President David Stevens in a blog post. He acknowledges that members of minority communities are being denied mortgage loans at a greater rate than white borrowers, but he says a study capturing news headlines, by the nonprofit Center for Investigative Reporting, is using accusations of racism as a distraction “from the real issues that are preventing minorities” from taking advantage of homeownership.
The CIR study cites government lending data to make the case that racial disparities are prevalent in mortgage lending. The report claims that an analysis of 31 million mortgage records found that minorities are being systematically denied home mortgages in 61 metros across the country.
“It is flat-out incorrect, defamatory, and disgraceful to accuse the mortgage lending industry of denying loans to borrowers simply based on the color of their skin,” Stevens writes at the MBA’s blog. Instead, Stevens says, the conversation needs to be focused on the credit challenges from access to credit within the nation’s communities.
Stevens argues that the government data cited by CIR shows that the two most frequently cited reasons for denial of loans among minorities was debt-to-income ratio and credit history. Stevens also raised concerns that CIR only looked at conventional loans and ignored government lending, like FHA loans. He says such loans are a predominant means of financing for black and Hispanic home buyers.
“The MBA and its members have been working long and hard to find ways to responsibly expand the credit box in order to serve borrowers of all demographics, with different credit profiles and income levels,” Stevens writes. “With the coming of the millennials—the largest, most diverse generation this country has ever seen—it is of paramount importance we solve this. But false narratives constructed in an effort to generate scintillating headlines and tarnish an entire industry are not a productive means to have this important discussion.”