All Other Things Being Equal: A Paired Testing Study of
Mortgage Lending Institutions (April 2002, 94 p.)
The U.S. Department of Housing and Urban Development contracted with the Urban
Institute to rigorously assess the effectiveness of paired testing for determining whether minority
homebuyers receive the same treatment and information as whites at the pre-application phase
of the mortgage lending process, and to produce rigorous measures of the incidence of unequal
treatment in two metropolitan areas. The mortgage lending process consists of a complex
series of stages, including advertising and outreach by lending institutions, responses to preapplication
inquiries from potential borrowers, approval or denial of loan applications and
determination of loan terms and conditions, and finally, loan administration. Discrimination may
occur at any of these stages and may take different forms at different stages.
The report found that African American
and Hispanic homebuyers in both Los
Angeles and Chicago face a significant risk
of unequal treatment when they visit mainstream
mortgage lending institutions to make
pre-application inquiries. Discriminatory treatment at this early stage in the mortgage lending
process has the potential to discourage some minorities from continuing their housing search, to
limit their search to lower cost homes than they could actually afford, and to prevent them from
choosing the most favorable loan products.
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