Black mortgage applicants nearly twice as likely to be denied: Zillow

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The ability to access credit and obtain a mortgage is significantly more challenging for would-be borrowers who are Black, Indigenous, People of Color, according to a Zillow analysis of the most recent data from the Home Mortgage Disclosure act.

Loan officers lean heavily on credit reporting — a metric typically disadvantageous for BIPOC. Historically, Black Americans have a higher likelihood of falling victim to predatory lending or not having any credit history at all, according to the Zillow report. The analysis found that Black applicants were denied mortgages at a rate that is 80% higher than white applicants.

"At a time when racism is at the front of many Americans' minds, the disparity in mortgage rate denials is yet another reminder that the housing market — and country — have not done enough to address inequities and heal the scars from an unjust past," Joshua Clark, economist at Zillow, said in a press release.

Black homeownership just rose to its highest level in 16 years, but it's still the lowest of any racial demographic, sitting 20.9 percentage points below the overall rate and 29 percentage points behind white people.

While the uptrend is encouraging, Black house hunters now face yet another obstacle in trying to attain the American Dream. Through presidential executive order on July 23, the Department of Housing and Urban Development gutted a section of the Fair Housing Act that enforced the accountability of discriminatory practices.

The Black community also has the lowest property value by race. Across the country, the average Black-owned house is worth $180,000, according to the Zillow Home Value Index. That compares to the U.S. average of $218,000 overall, $292,000 for Asians and Pacific Islanders, $233,000 for whites, and $187,000 for Latinx.

This incongruence stems from decades of redlining, which pushed Black Americans into less desirable locations, compounded by racist zoning regulations that ultimately resulted in less money for their communities.

"The mortgage approval process is rooted in a racially unjust history that persists to make homeownership a far more difficult dream to achieve for many Black Americans," Clark said. “Owning a home is a major way to generate, keep and pass down wealth, and unequal access to mortgages only serves to further entrench inequality."

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Racial Bias Under-served populations Originations Redlining HMDA Zillow Fair Housing Act HUD Credit reporting