Fed Study Finds Less Available Credit for Non-White Borrowers – NMP Skip to main content

Fed Study Finds Less Available Credit for Non-White Borrowers

Phil Hall
Oct 04, 2016
The Federal Reserve has studies the disparity in lending to Whites and Non-Whites, and it has concluded that nonwhite have received fewer opportunities to borrow money due to lower credit scores

The Federal Reserve has studies the disparity in lending to Whites and Non-Whites, and it has concluded that nonwhite have received fewer opportunities to borrow money due to lower credit scores.

According to the new Fed report “Credit Availability and the Decline in Mortgage Lending to Minorities After the Housing Boom,” nearly 45 percent of black borrowers and 29 percent of Hispanic borrowers had credit scores below 620 in 2006, compared to 15 percent of white borrowers. But after the 2008 financial meltdowns, most lenders would not originate mortgages to borrowers with low credit score.

By 2014, roughly 17 percent of Black borrowers and 12 percent of Hispanic borrowers had credit scores below 620, compared with five percent of White borrowers. By 2014, Black and Hispanic borrowers with scores between 580 and 619 comprised a scant 0.71 percent and 0.6 percent of mortgages originations, respectively, below the 2006 levels of 1.7 percent and 1.5 percent.

“Since 2006, the shares of home purchase mortgages to black and Hispanic borrowers declined significantly,” the Fed report stated, adding that its research “provides evidence that most of the decline in black and Hispanic market shares have come from borrowers with low credit scores (less than 620). Within the white population, low-score lending has also declined sharply, but, historically, a much smaller fraction of White borrowers have low credit scores compared with Black and Hispanic borrowers. Tighter credit conditions since 2006 has therefore had a disproportionate effect on minorities' credit access.”

Published
Oct 04, 2016
Biden Reappoints Powell As Federal Reserve Chairman

A signal that The Fed will continue its policies as inflation surges and economic uncertainty spikes due to an emerging variant of the coronavirus. 

Industry News
Nov 29, 2021
Servion Taps Sagent For Consumer-First Servicing Tech Stack

A 7-year deal between Servion Mortgage and Sagent will equip Servion with Sagent's tech stack for performing, non-performing, and consumer experience.

Tech
Nov 29, 2021
Guaranteed Rate's Banosian Funds $2B In Total Loan Volume

The mortgage industry shouldn't be surprised by Guaranteed Rate's top loan officer, Shant Banosian, funding $2 billion in total loan volume during a record-breaking year. After all, “The Billion Dollar Man” is one of the top 5 loan originators in the U.S.

Wholesale
Nov 29, 2021
Chairman Xu Sells Off Personal Assets To Avoid Default

The Evergrande saga continues as Chairman Xu Jiayin sells off 7 billion yuan ($1.1 billion) of his personal assets to prop up the deflating property giant.

Industry News
Nov 23, 2021
OptiFunder Secures $25 Million In Capital

OptiFunder, a warehouse management system provider for mortgage originators, raised $25 million in additional capital lead by Arthur Ventures, a growth capital firm focused on high-growth, founder-led and capital efficient B2B software companies.

Tech
Nov 23, 2021
Mortgage Company Donates $100K To High School In Memory Of Fallen U.S. Navy Corpsman

Cleveland-based CrossCountry Mortgage donated $100,000 to Milan Edison High School in memory of U.S. Navy Corpsman, Maxton W. Soviak, who died while assisting in the evacuation of Americans and refugees in Afghanistan in August.

Community
Nov 23, 2021