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What We Know About Mortgage
Lending Discrimination In America
Endnotes
1 The Fair Housing Act, 42 U.S.C.A. §3601 et seq; The Equal
Credit Opportunity Act, 15 U.S.C.A. §1691 et seq; and The Civil
Rights Act of 1866, 42 U.S.C.A. §§1981, 1982.
2 Although Federal law also prohibits discrimination in housing based
on sex, family composition, religion, and disability, this report focuses on the
issue of racial and ethnic discrimination.
3 For a comprehensive discussion of the myriad and complex issues
involved in legal and analytic investigations of mortgage lending
discrimination, see Goering and Wienk (1996).
4 This comprehensive review, edited by Margery Austin Turner and
Felicity Skidmore, includes chapters on paired testing evidence (by Smith and
DeLair), on statistical studies (by Ross and Yinger), and on the institutional
context in which discrimination persists (by Temkin, Levy, and Levine). It is
entitled, Mortgage Lending Discrimination: Review and Analysis of Existing
Evidence.
5 This report does not address potential discrimination by other
important actors--such as real estate brokers, appraisers, insurers, and
secondary loan institutions--who are not direct decision makers in the
mortgage lending decision.
6 We use the term "color-blind" in this paper to refer to
policies and practices that appear to treat people equally regardless of race or
ethnicity.
7 See Kim and Squires, 1995.
8 For more information on the cultural affinity hypothesis, see
Longhofer, 1996; Hunter and Walker, 1996; Black, Collins, and Cyree, 1997; and
Bostic and Canner, 1997.
9 For more information on the Decatur Federal case, see Ritter, 1996;
and Siskin and Cupingood, 1996.
10 Testers were paired on these ratios instead of on raw income and
loan amounts in order to avoid being detected by the lending institutions as an
investigative audit. However, in most instances, minority and white incomes and
requested loan amounts were not drastically different. See the chapter by Smith
and DeLair in Mortgage Lending Discrimination: Review and Analysis of
Existing Evidence.
11 See Smith and Cloud, 1996.
12 Since the major aim of the Urban Institute's re-analysis was
to compare treatment across standard elements to see if differential treatment
could be determined from statistical analyses, none of the information in the
narrative or open-ended questions was used. This lost information on whether or
how lenders may have coached some applicants or offered special exceptions. For
that reason, the re-analysis did not attempt to construct a composite measure
for each test pair. Rather, it focused on individual treatment items (such as
contact length and number of quotes).
13 The re-analysis of NFHA's paired testing data is fully
documented in the chapter by Smith and DeLair in Mortgage Lending
Discrimination: Review and Analysis of Existing Evidence.
14 Munnell et al., 1992 and 1996.
15 See, for example, Avery, Beeson, and Sniderman, 1996; Berkovec and
Zorn, 1995; Meyers and Chan, 1995; Siskin and Cupingood, 1996; Glennon and
Stengel, 1995; Rosenblatt, 1997.
16 See the chapters by Ross and Yinger in Mortgage Lending
Discrimination: Review and Analysis of Existing Evidence.
17 See Liebowitz, 1993; Horne, 1994, 1997; Day and Liebowitz, 1996;
Rodda and Wallace, 1996; Carr and Megbolugbe, 1994.
18 See Rachlis and Yezer, 1993; Philips and Yezer, 1995.
19 See Berkovec et al., 1998.
20 See Tootell, 1996a; Hunter and Walker, 1996; Ross and Tootell,
1998.
21 For a review of redlining studies at the census tract level, see
Schill and Wachter, 1993; also see Phillips-Patrick and Rossi, 1996.
22 See Schafer and Ladd, 1981; Black and Schweitzer, 1985.
23 See Shear and Yezer, 1985; Gabriel and Rosenthal, 1991; Canner,
Gabriel, and Woolley, 1991.
24 See the chapter by Temkin, Levy, and Levine in Mortgage Lending
Discrimination: Review and Analysis of Existing Evidence. Care must be taken
not to overstate the findings from this single case study.
25 These fair lending "best practices" are identified and
discussed in Listoken and Wyly, 1998.
26 It should be noted that the case-study lender is not subject to
regular fair lending exams by any Federal financial regulators.
27 There is some evidence to suggest that real estate agents may
provide different loan information and referrals to minorities than to whites.
See Turner, Struyk, and Yinger, 1991.
28 See 18 U.S.C.S. §1014. Note that this would not bar lenders
from conducting self-testing.
29 Although assembling such a data base presents significant
challenges, Federal Government regulators have sufficient leverage and resources
to obtain the necessary information from lending institutions if they make it a
priority.
30 For more information on the data and analysis required to test the
business necessity of key underwriting standards, see Temkin et al.,
1998.
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Content Archived: January 20, 2009
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