Working Paper

The role of race in mortgage lending: revisiting the Boston Fed study

Abstract: This paper reexamines claims that non-economic discrimination persists in mortgage loan origination decisions. I find that racial differences in outcomes do exist, as minorities fare worse regarding debt-to-income requirements but better for loan-to-value requirements. Overall, significant racial differentials exist only for ``marginal'' applicants and are not present for those with higher incomes or those with no credit problems. Thus, the claim that non-economic discrimination is a general phenomenon is refuted. Further, I can say little regarding the existence of discrimination among ``marginal'' applicants. To conclude that such discrimination exists, one must prove that the observed differences are not due to economic factors.

Keywords: Discrimination in consumer credit; Federal Reserve Bank of Boston; Mortgages;

Bibliographic Information

Provider: Board of Governors of the Federal Reserve System (U.S.)

Part of Series: Finance and Economics Discussion Series

Publication Date: 1997

Number: 1997-2