Willingness to Fail: Black and Hispanic Applicants Accept Home Loans at a Lower Rate Than Whites

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RELI, North Carolina (WTVD) – Four years ago, Mary Carmen Garmargo and her parents immigrated to North Carolina from Venezuela in search of a better quality of life.

After years of hard work, she tried to take a step forward in achieving a piece of the American Dream, owning a home, and starting to create wealth for her family. But a loan application for a 24-year-old was turned down due to a low credit rating.

“I haven’t lived here long enough,” said Garmargo. “I didn’t study when I needed to. I didn’t start when I needed to, and now my credit rating isn’t the best. “

Garmargo is not alone. Many other barriers prevent communities of color from buying a home and accumulating wealth, including a lack of a down payment or a lack of knowledge.

“Fortunately, my parents were able to sell everything they had in Venezuela, so they brought money here,” Garmargo said. “This is the money we will try to use as a down payment on the house.”

But she said many people in the Hispanic community, especially immigrants, lack such financial support, and home ownership is unlikely to ever become a reality for families like her.

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“They have no money,” said Garmargo. “They don’t have the legal status to do this, so it pushes them back and forces them to rent out their entire lives.”

When someone owns a home – even if they have a mortgage – their monthly fees and any additional funds go towards what they own, thereby increasing their wealth. However, when a family rents a home, the homeowner gets their money, not their own future.

And while many families are trying to avoid the endless rent cycle, the Home Mortgage Disclosure Act data analyzed by the ABC data team has shown serious inequities in home loans across the Triangle.

In the Raleigh-Carey metro area, which includes Wake, Johnston and Franklin counties, 71% of approved housing loans were issued to white applicants. That’s up from 63% for blacks and Hispanics and 61% for Asians.

In the Durham Chapel Hill metro area, which includes Durham, Orange, Chatham, Persona and Granville counties, 69% of approved housing loans were for white applicants, compared with 65% for Asian applicants and 63% for black and Hispanics.

“There is no doubt that communities of color throughout the 20th and 21st centuries were created to abandon housing,” said Professor Emeritus Robert Korstad of Duke University.

Korstad, who taught public policy and African American history for about 30 years, said the problem began in the 1930s. The administration of President Franklin Roosevelt then fostered home ownership by guaranteeing home loans as part of his plan to reverse the course of the Great Depression.

However, these loans almost exclusively went to white families and not to black communities. He said the implications of this redline are clear today.

“Ninety-eight percent of the loans made under this government program went to white households,” Korstad said. “It gives you an idea of ​​how government policies have created benefits for white families.”

He added that in the United States today, most of the wealth is the value of the home – wealth that cannot be passed on to descendants if they do not own property.

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Garmargo hopes to be able to build this legacy for his family – and for others in her community.

“We have to be better, grow and have our own things that no one can take from us,” said Garmargo.

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