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HUD No. 02-047
Peggy Johannsen
(202) 708-0685
For Release
April 26, 2002

HUD Study Finds Most Receive Equal Treatment in Mortgage Process, But Room for Improvement in Treatment of Minorities

Testing done in Los Angeles and Chicago with white, African American, and Hispanic borrowers

WASHINGTON - A majority of people inquiring about a home loan receive equal treatment but there is still room for improvement in the number of minorities facing discrimination by mortgage lending institutions, according to a new report released by the Department of Housing and Urban Development.

"Housing discrimination contradicts the principles of freedom and opportunity we treasure as Americans," said HUD Secretary Mel Martinez. "This study will help to make the public more aware of their rights under the Fair Housing Act."

The Urban Institute conducted the study for HUD, titled All Other Things Being Equal: A Paired Testing Study of Mortgage Lending Institutions (linked to

However, the Urban Institute researchers also found that "paired testing revealed statistically significant patterns of unequal treatment that systematically favor whites."

The study looked at such things as: receipt of requested information, loan amounts offered, number of products discussed, "coaching" through the application process, follow-up help, and steering toward more-restrictive loans.

In a paired test, two individuals - one white and one minority - pose as home buyers and inquire about the availability and terms for home mortgage loans in the pre-application stage of the lending process. Because the two individuals present themselves as equally qualified borrowers except for race or ethnicity, systemic differences in the treatment they receive provides direct evidence of discrimination. Paired testing has been widely used in rental and home sale transaction situations, but this is the largest investigative study applied to mortgage lending.

The unequal treatment took different forms in the two metropolitan areas and for the two minority groups:


  • Blacks were offered less coaching than comparable white homebuyers, and were more likely than whites to be encouraged to consider an FHA loan (Because FHA guidelines are relatively flexible, they can serve some borrowers who do not qualify for conventional loans; however, FHA loans can cost more over the long term and may also permit lenders to charge higher fees.).
  • Hispanics were denied basic information about loan amount and house price, told about fewer products, and received less follow-up compared to white homebuyers.


  • Blacks were denied basic information about loan amount qualification, told about fewer products, offered less coaching, and received less follow-up than comparable white homebuyers.
  • Hispanics were quoted lower loan amounts or house prices, told about fewer products, and offered less coaching.

The frequency of unfavorable treatment varied considerably from one category to another. For example, in 86% of the tests, whites and minorities were treated equally in receiving information that they requested about loans.

HUD is committed to fighting housing discrimination and is committed to fighting for the right of all Americans to live in a place of their choosing.

  • The Bush Administration inherited a backlog of fair housing cases totaling 85% and has since reduced the caseload to 60%, the lowest in HUD's history.

  • HUD will award this year more than $45 million in grants to fund fair housing organizations nationwide in their efforts to fight housing discrimination, about $4 million more than last year.

  • HUD is funding a fair housing media campaign and a separate national campaign to educate the public on the dangers of abusive lending practices that target specific neighborhoods or vulnerable segments of the population.

  • HUD's FY 2002 Notice of Funds Availability sets as a priority addressing housing discrimination based on national origin and religion since the September 11, 2001 terrorist attacks and, to reach as many people as possible, encourages faith-based and other community-based organizations to participate in the Fair Housing Initiatives Program.

April has traditionally been Fair Housing Month ever since Congress paid tribute to Dr. Martin Luther King, who was killed April 4, by passing the Civil Rights Act of 1968. Included in that landmark legislation was Title VIII, the Fair Housing Act.

Anyone who believes they have experienced housing discrimination is asked to call HUD's Housing Discrimination Hotline at 1-800-669-9777. They can also visit HUD's fair housing website at http://www.hud.gov/complaints/housediscrim.cfm.

HUD is the nation's housing agency committed to increasing minority homeownership, creating affordable housing opportunities for low-income Americans, supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov.



Content Archived: April 9, 2010

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