Penn State Researching Racial Profiling In Mortgages – NMP Skip to main content

Penn State Researching Racial Profiling In Mortgages

Jul 24, 2020
Black couple in kitchen
Senior Editor

Penn State University researchers are exploring the rates of racial discrimination when it comes to delivering mortgages. Their research examines both the race of the broker and the borrower.
 
Brent Ambrose, the Jason and Julie Borrelli Faculty Chair in Real Estate in the Smeal College of Business at Penn State and director of the Penn State Institute for Real Estate Studies, recently collaborated on a research project to better understand pricing disparities in mortgage contracts. The paper  — “Does Borrower and Broker Race Affect the Cost of Mortgage Credit?” — has been accepted for publication in the Review of Financial Studies.
 
A Penn State report says Ambrose and his coauthors studied both the race and ethnicity of brokers and borrowers that took part in obtaining a mortgage to see if brokers were potentially charging different fees to different borrowers.
 
“It’s a complicated contract, and the fees are often hidden, so we wanted to look at how brokers charge fees because many of these fees aren’t obvious to the borrower,” Ambrose said. “It would be quite easy for a broker to charge different fees for the same product to different borrowers.”
 
However, what makes this research particularly innovative, the article states, was a complex set of data that Ambrose acquired through the Institute for Real Estate Studies. The institute used funding from the Penn State Real Estate Advisory Board to buy the data, which makes this research a direct result of alumni engagement. “We realized we had really unique data here where we could actually map brokers’ names to their race or ethnicity,” Ambrose said.
 
Results of the research showed that Blacks, Hispanics, and Asians pay between 3 and 5% more in fees than similarly qualified whites when obtaining a loan through a white broker. A key innovation of the research, though, is showing that the premium paid by minorities depends on the race of the broker.
 
About the author
Senior Editor
Keith Griffin is a senior editor at NMP.
Published
Jul 24, 2020
CHLA: More Freddie Mac MBS Buying Could Narrow Mortgage Spreads

Trade group estimates greater Freddie participation could compress spreads another 10 to 12 basis points as Fannie has taken the lead in GSE mortgage-bond buying

Sep 23, 2026
Early Loan-Limit Race Splits Into Three Tiers

Lenders are now offering $845,000, $847,440, or $850,000 before FHFA sets the official 2027 limits

Sep 23, 2026
Better, Garg Clash Over Claimed 46% Shareholder Support

Better disputes its former CEO’s preliminary consent count as the two sides trade accusations and an Oct. 2 target date approaches

Sep 23, 2026
Fannie Changes How Rent From A Former Home Counts

Fannie now prohibits leases for departing residences and permits market-analysis tools instead of Form 1007, creating a key documentation difference from Freddie Mac

MPF Expands Eligibility For Manufactured And Renovation Loans

The Mortgage Partnership Finance Program has expanded MPF Traditional eligibility for affordable loans, manufactured homes, renovations, and lender-funded assistance

Sep 22, 2026
Fed Hike Raises HELOC Costs While Mortgage Rates Stay Near 7%

Prime rose to 7% while the 10-year Treasury remained near 5%, giving originators two different borrower conversations

Sep 17, 2026