Racial discrimination in mortgage lending on the decline?

in us •  2 years ago 

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https://www.economist.com/united-states/2022/11/24/racial-discrimination-in-mortgage-lending-has-declined-sharply-in-america

The actual story is not bad, but this caption my gods, no that's not what the piece is about.

The actual piece is about a new Federal Reserve paper on racial bias in mortgage lending. Previous research in 1996 had shown that even controlling for creditworthiness, black mortgage applicants were rejected at rates 1.8x higher than whites. The new research shows that this gap has narrowed a considerable amount over the years.

The gap has narrowed thanks to more automatic underwriting processes that take discretion out of the process. And due to strict enforcement of laws against racial discrimination in lending.

As the piece notes though, racial discrimination may be reflected in creditworthiness. So this study is only examining racial bias after controlling for creditworthiness. We still have to grapple with the large racial gaps on various economic dimensions, and whether racial bias may be reflected in underlying elements like credit scores that are part of the underwriting systems.

https://www.federalreserve.gov/econres/feds/how-much-does-racial-bias-affect-mortgage-lending.htm

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