Evidence on Discrimination in Mortgage Lending
Much of the controversy about whether mortgage lenders discriminate against minorities can be explained in terms of the confusion about how to define discrimination. Based on the legal definition, careful studies of loan denial rates, such as that done by the Federal Reserve Bank of Boston, represent an appropriate method for testing for discrimination by lenders. Based on that study, it is quite clear that lenders discriminate. The fact that minorities have higher default rates on average than whites is irrelevant to the interpretation of the race coefficient in such models. Nonetheless, more research on and discussion about the relationship between the race of the applicant and delinquencies, defaults, and losses would be desirable.
Volume (Year): 12 (1998)
Issue (Month): 2 (Spring)
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- Charles W. Calomiris & Charles M. Kahn & Stanley D. Longhofer, 1994. "Housing-finance intervention and private incentives: helping minorities and the poor," Proceedings, Federal Reserve Bank of Cleveland, pages 634-678.
- Michael H. Schill & Susan M. Wachter, . "A Tale of Two Cities: Racial and Ethnic Geographic Disparities in Home Mortgage Lending in Boston and Philadelphia," Rodney L. White Center for Financial Research Working Papers 16-93, Wharton School Rodney L. White Center for Financial Research.
- Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-61, September.
- Lynn Elaine Browne & Geoffrey M.B. Tootell, 1995. "Mortgage lending in Boston: a response to the critics," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 53-78.
- Berkovec, James A, et al, 1994. "Race, Redlining, and Residential Mortgage Loan Performance," The Journal of Real Estate Finance and Economics, Springer, vol. 9(3), pages 263-94, November.
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