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HUD Archives: News Releases
HUD Study Finds Most Receive Equal Treatment in Mortgage Process, But Room for Improvement in Treatment of MinoritiesTesting done in Los Angeles and Chicago with white, African American, and Hispanic borrowers WASHINGTON - A majority of people inquiring about a home loan receive equal treatment but there is still room for improvement in the number of minorities facing discrimination by mortgage lending institutions, according to a new report released by the Department of Housing and Urban Development. "Housing discrimination contradicts the principles of freedom and opportunity we treasure as Americans," said HUD Secretary Mel Martinez. "This study will help to make the public more aware of their rights under the Fair Housing Act." The Urban Institute conducted the study for HUD, titled All Other Things
Being Equal: A Paired Testing Study of Mortgage Lending Institutions (linked to However, the Urban Institute researchers also found that "paired testing revealed statistically significant patterns of unequal treatment that systematically favor whites." The study looked at such things as: receipt of requested information, loan amounts offered, number of products discussed, "coaching" through the application process, follow-up help, and steering toward more-restrictive loans. In a paired test, two individuals - one white and one minority - pose as home buyers and inquire about the availability and terms for home mortgage loans in the pre-application stage of the lending process. Because the two individuals present themselves as equally qualified borrowers except for race or ethnicity, systemic differences in the treatment they receive provides direct evidence of discrimination. Paired testing has been widely used in rental and home sale transaction situations, but this is the largest investigative study applied to mortgage lending. The unequal treatment took different forms in the two metropolitan areas and for the two minority groups: LOS ANGELES
CHICAGO
The frequency of unfavorable treatment varied considerably from one category
to another. For example, in 86% of the tests, whites and minorities were
treated equally in receiving information that they requested about loans.
April has traditionally been Fair Housing Month ever since Congress paid tribute to Dr. Martin Luther King, who was killed April 4, by passing the Civil Rights Act of 1968. Included in that landmark legislation was Title VIII, the Fair Housing Act. Anyone who believes they have experienced housing discrimination is asked to call HUD's Housing Discrimination Hotline at 1-800-669-9777. They can also visit HUD's fair housing website at http://www.hud.gov/complaints/housediscrim.cfm. HUD is the nation's housing agency committed to increasing minority homeownership, creating affordable housing opportunities for low-income Americans, supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov. ###
Content Archived: April 9, 2010 |
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