Fannie Mae and Freddie Mac are more likely to reject mortgage applications from black and Hispanic borrowers than from non-hispanic whites. That could be evidence of discrimination, or it could simply be a reflection of broader economic gaps in American society.
And, indeed, as this Urban Institute chart shows the primary cause of the racial gap is a difference in credit quality. White families are more likely to get a loan because they're more likely to be highly creditworthy:
But if you look at the "weak applicants only" lines you'll see that while the black-white gap is still pretty huge. White applications are rejected at a high rate, but black applications seem to be rejected at a fifty percent higher rate.
That could be evidence of direct discrimination or it could be evidence that you need to peer deeper into the data to find an explanation.
It's also worth pulling out, however, and saying that this is the kind of issue where focusing on bias and discrimination can miss the point. The United States government, as a matter of public policy, does a great deal to subsidize mortgage borrowing. And yet, not everyone can get a subsidized mortgage. At best, we can say that this pattern of subsidized mortgage lending serves to re-inscribe existing racial economic inequities whose origins lie elsewhere. At worst, we can see a pattern of discriminatory credit allocation that actively makes things worse.
Ta-Nehisi Coates' recent case for reparations focuses heavily on the ways in which disparate access to mortgage credit exacerbated the racial wealth gap in the middle of the twentieth century. And in a way, it's still happening today.
- Coates' The case for reparations
- Ira Katznelson's When affirmative action was white
- Blanchflower, Levine, and Zimmermen Discrimination in the small business credit market