Report: Minorities more likely to be denied a mortgage loan

07.14.09
By James Conroy

The ability to get a mortgage has been made more difficult in recent years as banks raise credit score requirements and tighten lending criteria. But a new report indicates that it is even harder for minorities as they are more likely to be turned away for a mortgage loan than their white counterparts.

According to the report from the Charlotte Observer, one-third of all mortgage loan applications were denied by the country's largest banks, but that number is more pronounced for the nation's minorities as the report notes that one-half of blacks saw mortgage denials.

Banks denied about one-quarter of applications for mortgage loans for whites, the investigation found.

The newspaper's analysis finds that refinancing their mortgage was particularly difficult for minority home owners.


Refinancing was denied by banks more often regardless of race, according to the report, with home-purchase loans denied 20 percent of the time, compared to 38 percent for refis. But the report found that refinancing was a larger problem for blacks as they were denied more than half of the time (52 percent) while one-third of whites were denied in 2008.

Mark Pearce, North Carolina deputy commissioner of banks, said this could be a larger issue than being denied a mortgage loan for a new home purchase.

"For a decade, subprime lenders targeted minority families," Pearce told the paper. "Now the economy is in stress and the market has dried up, and a lot of people are in loans they can't afford. Their credit is impacted and it's affecting their ability to get credit."

The inability to refinance a mortgage may also force some homeowners into foreclosure, but recent programs set up by the government have been aimed at preventing that. Unfortunately, many Americans don't believe it is working.

According to a recent survey from Realtor.com, 41 percent of respondents said the Making Homes Affordable program is not helping to reduce the number of foreclosures.

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A new report finds that whites are denied mortgages at a lower rate than minorities