According to an analysis of 2013 HMDA data, black and Hispanic applicants from New York City (NYC) were significantly more likely to be denied for a mortgage than white and Asian applicants (Morningstar, 6/19/2015):

Black and Hispanic applicants are disproportionately denied conventional loans in New York City, with 33.6 percent and 29.2 percent of applications being denied, respectively, while 15.8 percent of white applicants were denied.

Hispanic people account for 28.9 percent of New York City’s population, but represent only 6.2 percent of conventional loan applications. Black people account for 22.4 percent of the population, but represent 5 percent of conventional loan applications.

The homeownership rate in New York City is 32 percent, compared to 63.5 percent nationwide. The rate among Asian people is 41.6 percent; white people, 41.4 percent; black people, 26.5 percent; and Hispanic people, 16.1 percent.

The study highlights the challenges that minorities face in financing homes in NYC and the difficulties that lenders have in providing credit to these groups. High home prices and the income gap between white/Asian applicants and black/Hispanic applicants are market paradigms that result in divergent homeownership rates that present challenges for mortgage lenders. However, while lenders do not hold the levers that directly control the housing market and socioeconomics in NYC and similar markets like Boston and Los Angeles, they do have the ability to improve penetration relative to their peers and to assess whether they are leaving opportunities on the table based on the loan applications they receive. Benchmarking and a Fair Lending analysis can identify relative strengths, weaknesses and opportunities to improve lending to minority groups.

 

July 6th, 2015|