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; mortgages; race; credit risk;

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Bibliographic Information

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

Part of Series: Finance and Economics Discussion Series

Number: 1997-02

Pages: 45 pages