HUD Archives: News Releases
HUD
No. 02-047
Peggy Johannsen
(202) 708-0685
|
For
Release
Friday
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:
LOS ANGELES
- 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.
CHICAGO
- 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.
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Content Archived: April 9, 2010