Measuring Fairness in the U.S. Mortgage Market

Elzayn, Hadi; Freyaldenhoven, Simon; Kobler, Ryan; Shin, Minchul

doi:10.21799/frbp.wp.2025.04

Working Paper

Measuring Fairness in the U.S. Mortgage Market

Abstract: Black Americans are both substantially more likely to have their mortgage application rejected and substantially more likely to default on their mortgages than White Americans. We take these stark inequalities as a starting point to ask the question: How fair or unfair is the U.S. mortgage market? We show that the answer to this question crucially depends on the definition of fairness. We consider six competing and widely used definitions of fairness and find that they lead to markedly different conclusions. We then combine these six definitions into a series of stylized facts that offer a more comprehensive view of fairness in this market. To facilitate further exploration, an interactive Online Appendix allows the user to examine our fairness measurements further across both time and space.

Keywords: fairness; discrimination; inequality; measurement; algorithmic decisions; HMDA;

JEL Classification: D63; G21; G28; J15; R21;

https://doi.org/10.21799/frbp.wp.2025.04