Business Notes Mortgages

Are members of minority groups routinely victimized by a deep-set bias in mortgage lending? They have long suspected so, and now they have a persuasive piece of evidence. In a study of 6.4 million loan applications at 9,300 lending institutions, the Federal Reserve Board found that blacks were turned down for loans twice as often as whites. Of 19 cities studied, Boston had the highest rejection rate for blacks: 34.9%, vs. 11% for whites. Houston had the highest rejection rate for Hispanics: 25.7%, vs. 13% for whites. The refusals were unbalanced for even government-backed mortgages, which require a lower down payment than conventional mortgages: 26.3% for blacks and 18.4% for Hispanics, vs. 12.1% for whites.

The Fed cautioned that the study was not detailed enough to prove outright discrimination. But the overall pattern was consistent enough to prompt several Washington lawmakers to call for new antidiscrimination bills.

CHART: NOT AVAILABLE

CREDIT: TIME Graphic

CAPTION: Percent of conventional mortgages denied, 1990