Minority Mortgages, Part 1

Minority Mortgages, Part 1 (1992)

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Themes: Urban Challenges |

Guests: Karla Brintley, Eugene Perly, Lorraine Van Etten, Saleem Khalid
Host : Cliff Russell
Producer : Tony Mottley


Summary: Few matters are more fundamental to people's lives than the idea of home, and this program from 1992 explores the difficulties that African Americans face in obtaining the mortgage loans that make home ownership possible.


Host Cliff Russell moderates a discussion of how black Detroiters are affected by mortgage lending with Saleem Khalid, executive director of the Detroit Alliance for Fair Banking; Lorraine Van Etten, vice president of community lending for Standard Federal Bank; Dr. Eugene Perly, an associate professor of geography and urban planning from Wayne State University; and Karla Brintley, chair of the banking committee of the community group ACORN.


The discussion begins with a brief explanation of the mortgage approval process and the presentation of federal government statistics from 1990 that show, nationally, that 34 percent of mortgage applications from blacks were rejected by lending institutions while only 14 percent of whites' mortgage applications were turned down.


In Michigan, the survey showed, 89.3 percent of whites' applications were approved while 74.2 percent of blacks' applications were approved. A survey of five Detroit banks and mortgage lenders also showed a big gap between blacks and whites in the rate of mortgage approvals - a gap that ranged from 11.4 percentage points to 22.8 percentage points.

Brintley says ACORN did its own study that showed that even when mortgages were granted in Detroit, they were granted disproportionately in affluent neighborhoods like Indian Village and Rosedale Park.


"There aren't that many loans being made to the inner city, what's considered the real inner city of Detroit," she says. "Whether it's intentional or not, it's being done. We know from experience that with cooperation from the banks that there are low and moderate income people that are qualified for loans in our city that would make an excellent loan candidate."


Van Etten says banks have been making increasing efforts to monitor their own performance to avoid discrimination. But she adds that the single largest reason for application rejections is credit problems.


Perly says his preliminary study of data from the early 1980s did not find any evidence of geographic redlining in mortgages, but he says that low-income minorities often run afoul of credit standards and debt-to-income ratios that lenders use in evaluating applications.


"We don't have enough minorities involved in the lending process, the actual decision making process," Khalid says. "Unless minorities can participate in that process, can help to shape the guidelines and the criteria that's used to make those kinds of decisions then it can't at all be objective. It's just not possible."


The program - the first of two to examine the issue - is particularly valuable for the statistics it provides and the way it helps frame the issue of mortgage lending and concerns about racial discrimination.