Deadline Detroit | 40% of black mortgage applicants rejected in Detroit

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Credit disparities persist in Detroit, with the latest analysis showing black people are more than twice as likely to be denied mortgages in the city as their white counterparts.

The Free Press and Bridge Detroit report analysis from the Urban Institute, which examined general housing trends in 10 US cities:

Mortgage applications from black and Hispanic homebuyers were more likely to be denied, according to an Urban Institute analysis of 2019 Home Mortgage Disclosure Act data. Just over half of black and Hispanic applicants in Detroit were rejected, compared to 22% for white buyers. In the Detroit metro area, the rejection rate was 39% for black applicants, 31% for Hispanic buyers, and 18% for white buyers.

The three most common reasons for mortgage rejection were the applicant’s credit history, debt-to-income ratio, and collateral, the researchers note. Just over half of black households in Detroit and 46% in the metro area said credit history was the reason for their denial, according to 2019 Home Mortgage Disclosure Act data.

“There is inherent discrimination in the loan system,” said Laurie Benner, associate vice president of programs for the National Fair Housing Alliance, which commissioned the report). “There are algorithmic biases in computer-generated lending models and it really goes back further than that, going back decades of exclusionary policies and laws.”

The results are consistent with past global analyzes of the problem. In 2017, Bridge Michigan found that whites got almost half of the city’s mortgage loans, even though they made up only 10% of the population at the time. This was up considerably from before the recession, when fewer whites were trying to buy in Detroit. In 2007, only 17% of Detroit mortgages went to them.


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