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The Color of Credit: Mortgage Discrimination, Research Methodology, and Fair-Lending Enforcement

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Author Info
Stephen L. Ross () (University of Connecticut)
John Yinger () (Syracuse University)

Additional information is available for the following registered author(s):

Abstract

In 2000, homeownership in the United States stood at an all-time high of 67.4 percent, but the homeownership rate was more than 50 percent higher for non-Hispanic whites than for blacks or Hispanics. Homeownership is the most common method for wealth accumulation and is viewed as critical for access to the most desirable communities and most comprehensive public services. Homeownership and mortgage lending are linked, of course, as the vast majority of home purchases are made with the help of a mortgage loan. Barriers to obtaining a mortgage represent obstacles to attaining the American dream of owning one's own home. These barriers take on added urgency when they are related to race or ethnicity. In this book Stephen Ross and John Yinger discuss what has been learned about mortgage-lending discrimination in recent years. They re-analyze existing loan-approval and loan-performance data and devise new tests for detecting discrimination in contemporary mortgage markets. They provide an in-depth review of the 1996 Boston Fed Study and its critics, along with new evidence that the minority-white loan-approval disparities in the Boston data represent discrimination, not variation in underwriting standards that can be justified on business grounds. Their analysis also reveals several major weaknesses in the current fair-lending enforcement system, namely, that it entirely overlooks one of the two main types of discrimination (disparate impact), misses many cases of the other main type (disparate treatment), and insulates some discriminating lenders from investigation. Ross and Yinger devise new procedures to overcome these weaknesses and show how the procedures can also be applied to discrimination in loan-pricing and credit-scoring.

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Publisher Info
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This book is provided by The MIT Press in its series MIT Press Books with number 0262182289 and published in 2002.

Volume: 1
Edition: 1
ISBN: 0-262-18228-9
Handle: RePEc:mtp:titles:0262182289

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Web page: http://mitpress.mit.edu

For technical questions regarding this item, or to correct its listing, contact: (Jake Furbush).

Related research
Keywords: race; fair lending; mortgage discrimination;

Find related papers by JEL classification:
J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities and Races; Non-labor Discrimination

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. John M. Quigley, 2006. "Federal credit and insurance programs: housing," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 281-310. [Downloadable!]
    Other versions:
  2. Dhammika Dharmapala & Stephen L. Ross, 2003. "Racial Bias in Motor Vehicle Searches: Additional Theory and Evidence," Working papers 2003-12, University of Connecticut, Department of Economics, revised Dec 2003. [Downloadable!]
    Other versions:
  3. AKM Rezaul Hossain, 2004. "The Past, Present and Future of Community Reinvestment Act (CRA): A Historical Perspective," Working papers 2004-30, University of Connecticut, Department of Economics. [Downloadable!]
  4. John J. Donohue III, 2005. "The Law and Economics of Antidiscrimination Law," NBER Working Papers 11631, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Ethan Cohen-Cole, 2008. "Credit card redlining," Quantitative Analysis Unit Working Paper QAU08-1, Federal Reserve Bank of Boston. [Downloadable!]
  6. Stephen L. Ross & John Yinger, 2002. "Looking the Other Way: A Critique of the Fair-Lending Enforcement System and a Plan to Fix It," Center for Policy Research Policy Briefs 24, Center for Policy Research, Maxwell School, Syracuse University. [Downloadable!]
  7. Judith A. Clarke & Marsha J. Courchane & Nilanjana Roy, 2005. "On the Robustness of Racial Discrimination Findings in Mortgage Lending Studies," Econometrics Working Papers 0516, Department of Economics, University of Victoria. [Downloadable!]
  8. Shamena Anwar & Hanming Fang, 2005. "An Alternative Test of Racial Prejudice in Motor Vehicle Searches: Theory and Evidence," NBER Working Papers 11264, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  9. Stephen L. Ross, 2003. "What Is Known about Testing for Discrimination: Lessons Learned by Comparing across Different Markets," Working papers 2003-21, University of Connecticut, Department of Economics, revised Nov 2003. [Downloadable!]
  10. Wendy Edelberg, 2007. "Racial dispersion in consumer credit interest rates," Finance and Economics Discussion Series 2007-28, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  11. Lloyd Blanchard & Bo Zhao & John Yinger, 2005. "Do Credit Market Barriers Exist for Minority and Women Entrepreneurs?," Center for Policy Research Working Papers 74, Center for Policy Research, Maxwell School, Syracuse University. [Downloadable!]
  12. Margery Austin Turner & Erin Godfrey & Stephen L. Ross & Robin R. Smith, 2003. "Other Things Being Equal: A Paired Testing Study of Discrimination in Mortgage Lending," Working papers 2003-09, University of Connecticut, Department of Economics, revised May 2004. [Downloadable!]
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