Racial discrimination in mortgage lending has declined sharply in America

“ATLANTA’S BLACK neighbourhoods are under attack.” So wrote the editors of the Atlanta Journal-Constitution in May of 1988 upon the release of “The Colour of Money”, a series of articles documenting racial disparities in mortgage lending in Georgia’s most populous city. The Pulitzer Prize-winning investigation, which analysed $6bn-worth of home loans made over six years, found that Atlanta banks made five times as many loans to white neighbourhoods as black ones, and rejected black applicants four times as often. The reaction was swift. Demonstrators marched through bank lobbies, the NAACP urged black residents to withdraw their bank deposits and the Justice Department launched an investigation into discriminatory lending practices.

Much has changed in the 35 years since “The Colour of Money”, and yet racial disparities in mortgage lending remain. Data reported under the Home Mortgage Disclosure Act (HMDA) show that 15% of black applicants were denied conventional mortgage loans in 2021, compared with just 6% of white applicants, a ratio of more than two-to-one. Black homeowners seeking to refinance their existing loans were rejected 24% of the time, compared with 12% of the time for whites. Some lenders have been singled out. A recent analysis by Bloomberg News found that Wells Fargo, a bank, approved less than half of refinancing applications filed by black homeowners in 2020, compared with nearly three-quarters of those filed by white customers.