The mortgage industry has long been central to racially and ethnically stratified access to homeownership. Liberalized access to credit during the 1990s and early 2000s targeted subprime and other high-cost loans to individuals and communities of color. This article draws on annual data from the Home Mortgage Disclosure Act (HMDA) from 2004 through 2017 to assess short-term variation in racial and ethnic disparities in loan outcomes associated with the Great Recession. We show that, relative to the boom, this period is associated with a reduction in disparities in loan outcomes between non-Hispanic whites and Asians on the one hand and blacks and Latinos on the other. This is particularly true for the disproportionate channeling of black and Latino applicants into high-cost loans, and in communities with higher minority concentrations. As the economy and access to credit improved, particularly after 2011, black and Latino over-representation in high-cost loans began to rebound, though ethno-racial disparities in loan rejection continued well below levels observed during the boom years. The return of inequality in high-cost lending is particularly troubling in light of the sharp drop in minority applications. Implications for ethno-racial stratification are discussed.
Inequality in homeownership is a major component of ethno-racial stratification. Previous studies demonstrate large ethnoracial differences in access and outcomes throughout the home buying process at both the individual and neighborhood levels. An underlying assumption in these studies is that neighborhood ethno-racial disparities in lending are similar across neighborhood spatial types. However, mortgage lending disparities are unclear when examining the neighborhood's racial composition across urban, suburban, and rural communities. This paper draws on annual data from the American Housing Survey and the Home Mortgage Disclosure Act (HMDA) from 2018 and 2019 to assess loan outcome disparities by neighborhood type and racial composition. I show that applicant disparities in loan outcomes vary when factoring the neighborhood's spatial type and racial composition. Borrowers seeking a mortgage in predominantly minority rural communities are more likely to be denied a mortgage than borrowers applying across all other neighborhood type and racial composition. The trends for urban communities are similar to suburban communities across adverse loan outcomes. When comparing the community's racial composition and neighborhood type, the observed lending pattern provides evidence of constrained mortgage access in rural areas, especially among minority rural communities.Homeownership is a major component of financial stability and asset growth for most Americans, especially for minorities. Unequal access to homeownership across ethno-racial groups is a significant contributor to asset inequality (Oliver and Shapiro 2006), as minorities are unable to take advantage of the tax incentives that subsidize homeownership and increase wealth accumulation (Prasad 2012; Quinn 2019). In addition to economic benefits, owning a home is associated with positive neighborhood attributes such as lower crime rates, better public schools, and increased social networks (Charles 2003;Massey 2005;Sharkey and Faber 2014;Yinger 1998). Unequal access to homeownership remains for minorities, despite anti-discrimination laws. The homeownership rate in 2020 was about 74 percent for non-Hispanic whites (hereafter "whites"), 60 percent for Asians, and only 50 percent and 45 percent for Hispanics (hereafter "Latinos") and non-Hispanic blacks (hereafter "blacks") (United States Census Bureau 2021).
There is a long history of gender and ethno‐racial stratification in access to homeownership. Previous research highlights unequal treatment of minorities and women in the mortgage market. However, prior studies focus on single loan applicants when assessing the roles of both gender and race and ethnicity in their analysis. Because of this, it is unclear how mortgage lending disparities differ when considering the intersection of gender and race and ethnicity across single and co‐applicants. This paper draws on annual data from the 2018 and 2019 Home Mortgage Disclosure Act (HMDA) to assess gender and ethno‐racial disparities in loan outcomes. I document two diverging trends. On the one hand, single applicant women generally perform similarly or outperform single applicant men in the mortgage market even across ethno‐racial groups. On the other hand, women‐headed co‐applicants are more likely to experience an adverse loan outcome compared to male‐headed co‐applicants. The gender gap is substantially larger for black and Latino co‐applicants than for white co‐applicants. This is particularly true for black women‐ and Latina‐headed co‐applicants when examining mortgage denials. The results for Asian co‐applicants are mixed, as gender disparities differ across mortgage outcomes. Implications for gender and ethno‐racial stratification are discussed.
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