This recent study is just one piece of a much larger puzzle concerning minority lending that researchers have highlighted in recent reports.
The NCRC report found that white applicants have a significant advantage in Baltimore as 75 percent of their 2,653 mortgage applications were approved. Meanwhile, only 61 percent of the 1,304 mortgage applications submitted by black applicants were approved.
Even more surprising, whites only occupy 28 percent of Baltimore's population and account for 54 percent of mortgage loan applications. On the other hand, blacks account for 63 percent of the population, but only 27 percent of applications.
“While many Americans take the ability to obtain a mortgage for granted, majority African-American neighborhoods in Baltimore City are largely closed off from access to responsible credit and economic opportunity," said John Taylor, CEO of NCRC. "These neighborhoods are lending deserts. This is part of a sad legacy of racial discrimination and segregation that continues to afflict the city.”
He continued, “Until our financial institutions make a full and genuine commitment that creditworthy borrowers, regardless of their skin color, will be able to access responsible credit, the economies in these neighborhoods will continue to deteriorate, and we will continue to have the circumstances you see in Baltimore, Ferguson, and elsewhere.”
From a national perspective, Zillow’s analysis of mortgage access and homeownership by race showed that eased credit access is allowing more people to be eligible for mortgage loans, especially among middle-income blacks and Hispanics, but despite the uptick, they still lag behind in the housing market recovery.
Mortgage denial rates are down and the percentage of U.S. mortgage applicants getting approved has increased for all borrowers, but most notably among the black and Hispanic races, the report says.
In 2013, 27.6 percent of blacks who applied for a conventional home loan did not get approved, while in 2014, 23.5 percent were denied, according to the most recent federal data released under the Home Mortgage Disclosure Act.
The Zillow analysis showed that “despite that improvement, there is still significant disparity in mortgage access among racial groups.”
Another report from the Urban Institute showed that clear signs of recovery have been recorded in the housing market, but minority borrowers do not seem to be linked to this recovery.
Minority households were locked out of the recovery period following the recession partly due to tight lending standards as they tend to have lower income and weaker credit scores.
The share of loans among African-Americans and Hispanic households deceased from 23 percent to 12 percent from 2005 to 2012.
"Today’s tight credit environment has constrained mortgage lending and is disproportionately affecting African-American and Hispanic households," Urban Institue noted. "As a result, these communities have found it harder to take advantage of the low home prices and interest rates that followed the housing market crash, missing an important opportunity to build wealth through homeownership."
"A number of reforms can be undertaken to encourage lending to creditworthy borrowers who would have qualified before the housing boom," Urban Institute said. "A return to 2005 and 2006 lending practices would be ill-fated, but the pendulum has unquestionably swung too far. Today’s tight standards have locked out many prospective borrowers from homeownership, disproportionately preventing African-American and Hispanic families from building wealth and benefiting from the recovery