A recent report published in June 2023 by the Woodstock Institute and the Partnership for Financial Equity sheds light on the troubling disparities faced by Black and Latinx borrowers in mortgage lending in Cambridge and Massachusetts as a whole. The report analyzed data from the Home Mortgage Disclosure Act, which aims to combat discriminatory housing practices like redlining.
According to the report, Black borrowers in Cambridge experienced a denial rate of 17.7 percent from banks and credit unions, and a staggering 22.7 percent denial rate from non-bank licensed mortgage lenders. These rates are more than twice and four times the denial rates faced by white borrowers respectively. Latinx borrowers also faced considerable disparities, with an 18 percent denial rate from banks and credit unions, compared to just 4.2 percent from licensed mortgage lenders.
These racial disparities in mortgage loan approval are not limited to Cambridge alone but reflect a broader trend in Massachusetts. Black applicants face a denial rate of 26.3 percent from banks and credit unions, while white applicants face an 11.2 percent denial rate.
Commenting on these findings, Samuel M. Gebru, a professor of political science at Tufts University, stated that these disparities are not surprising given the systemic challenges faced by people of color in America. Gebru emphasized the need for policy solutions to address these racial disparities in mortgage and appraisal lending. Enforcing anti-discrimination laws at the federal and state levels, increasing access to education, and supporting community development financial institutions are some of the policy changes Gebru suggests.
In response to these disparities, government officials in Cambridge have taken steps to educate residents about identifying housing discrimination. The Cambridge Human Rights Commission regularly runs webinars focused on mortgage appraisal discrimination to educate community members about their rights. They stress the importance of reporting suspected discrimination to the commission and offer support to those who believe they have experienced unequal treatment during the application process.
Addressing and rectifying these disparities in mortgage lending is crucial for promoting financial equity and ensuring equal opportunities for all borrowers, regardless of their race or ethnicity. Public policy measures, along with education and community support, can play a pivotal role in dismantling systemic barriers and creating a more just and inclusive mortgage lending system.
The findings of this report highlight the ongoing need for vigilance and action in combating housing discrimination and promoting financial equality in our society. By addressing these disparities head-on, we can begin to build a more fair and equitable future for all borrowers.