Black mortgage applicants in the Charleston area are twice as likely to get rejected as white borrowers with similar qualifications, according to a new analysis of federal lending data.
Analysis by nonprofit newsroom The Markupfound that racial disparities in mortgage lending spread across the country, but the gap was especially wide in the lowlands.
The markup identified 71 metropolitan areas where the difference in approval rates between equally qualified black and white candidates was statistically significant. In the Charleston area, inequality was greater than in two-thirds of them. At the local level, black applicants are 2.2 times more likely to be rejected for conventional mortgages than their white counterparts.
An investigation by the nonprofit The Markup on data-driven journalism, with history and data disseminated by the Associated Press, found lenders in 2019 were more likely to deny home loans to people of color than to whites with similar financial characteristics, even when they were under control. new financial factors that the mortgage industry has thought in the past may explain racial disparities in lending.
Elsewhere in South Carolina, borrowers in Columbia and Florence faced even greater inequality.
The analysis takes into account 17 variables that are unique to each borrower and the requested loans. It has been adjusted for the applicants’ income, the amounts they wanted to borrow and the value of the property they wanted to buy. It also looked at how much debt the applicants had and how the amount of the requested loan compared to the home’s valuation.
Even so, differences between borrowers could not explain racial inequality.
The revelation did not surprise Otu Meadows, president and chief executive of the Charleston City Area League, which promotes home ownership. The home ownership gap in the country is rooted in discriminatory policies that have prevented generations of black families from buying homes and accumulating wealth.
That often means loan terms are getting worse for colored home buyers, Meadows said.
But while many of the obstacles to home ownership are echoes of past politics, he added that history cannot fully explain the differences. In his opinion, only one explanation remains: “clear discrimination”.
The local city league many years ago published reports of interest rate discrepancies in mortgage approvals in Charleston. In 2014, the group found that the number of loans given to black families was disproportionately low. And he wrote that the evidence suggests lenders were involved in a modern version of the red line, which researchers call the federal government’s post-war practice of refusing to insure home loans in areas with black residents.
Problems can arise even when minority applicants are approved for loans. In 2017, for example, the U.S. Department of Housing and Urban Development sued Bank of America after the bank allegedly offered different loan terms to two people – one of whom was Hispanic and the other not – who walked into the James Island branch and pretended to apply for a loan with the same finances. (Bank of America paid over $ 400,000 to settle the dispute, but denies wrongdoing.)
“There is still very serious discrimination in decisions about people of color. … I think this is happening on a day-to-day basis, and the reason we are not seeing significant movement of the arrow is only for this fact, ”Meadows said. “Something is wrong here.”
When clients looking to buy a home contact Brandon Silvers, a Charleston estate agent, most of them already have pre-approved mortgages. Perhaps as a result, he said, he usually has more white clients than black clients.
Earlier this year, Silvers gave Eastside residents a presentation on the history of discriminatory housing policies in the United States and how they widened the home ownership gap. Over time, he realized that closing it would require a more proactive approach.
In his opinion, it can help individual families and the communities in which they live: home ownership can help families accumulate wealth, which in turn can help pay for college or start a new business. It could also give black residents a more active role in shaping development in Charleston.
So, together with Charleston Black Lives Matter, he founds Black Charleston Real Estate Club. The first meeting took place on 26 August.
Achieve Tad Moore by phone 843-937-5703. Follow him on Twitter @thadmoore.