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Capital & Main: Are Nonbank Mortgage Lenders Good for Minority Borrowers?

Capital & Main, December 20, 2021, Are Nonbank Mortgage Lenders Good for Minority Borrowers?

A loan officer at a mortgage company questions a Black loan applicant about household debts, but subsequently invites a less creditworthy white borrower to fill out an application with “no inquiry about credit standing or debts.” He then offers to walk the same white homebuyer through the loan application and preapproval process and follows up with personal emails. The Black borrower receives neither offers of extra help nor emails from the lender.

This unequal treatment played out in Seattle, Washington, and was part of a study in which testers with white and Black-sounding names and similar credit and asset profiles called a random sample of mortgage companies, including Movement Mortgage, seeking loans, according to a complaint filed in October by the National Community Reinvestment Coalition, a Washington, D.C.-based fair housing organization.

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

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