Fair Housing Partnership study: Blacks still face mortgage bias

| Wednesday, Nov. 25, 2009

Black Pittsburghers continue to face discrimination in obtaining a mortgage from area lenders, compared with white applicants with identical income and credit history, according to study by a local fair housing group.

The Fair Housing Partnership of Greater Pittsburgh said Tuesday it used 50 pairs of trained testers to measure race discrimination in the Pittsburgh mortgage market between April 2007 and April 2008. The black testers were slightly better qualified than their white counterparts, based on income, debt, credit scores, savings and family composition, the group said.

"Of 50 paired pre-application tests conducted, 28 — or 56 percent — indicated some form of race discrimination," said Peter Harvey, executive director, during a briefing Tuesday.

Types of discrimination the study cited include different treatment, such as appointments versus phone interviews; different terms and conditions in product recommendations and interest rates; discouragement by a lender who told applicants they could not find an affordable house; and making information or products unavailable or referring applicants elsewhere. Some tests showed more than one type of discrimination, he said.

In addition, black testers were quoted an average annual percentage interest rate of 6.27, while white testers were quoted 6.069 percent, Harvey said.

"Over the course of a loan, that two-tenths of a percent difference could cost a homebuyer an extra $5,000," he said.

Harvey said the information is a year old but said "we see nothing to show that the practice of discrimination has changed."

He declined to identify the 29 lenders who were involved in the study.

"I'm shocked that this type of discrimination is still going on here," said Rich Riethmiller, president of the Mortgage Bankers Association of Southwestern Pennsylvania. "If this is happening, I would like to know which mortgage lender is discriminating.

"Normally, there is no face-to-face meeting with applicants until after they provide all the necessary income, credit and other information necessary for the loan, usually through e-mail, the phone or fax," he said.

The testing project was conducted along with the Housing Counseling Collaborative and was funded by the Heinz Endowments.

The Fair Housing Partnership was founded in 1984 under an agreement between the Department of Housing and Urban Development and the Realtors Association of Metropolitan Pittsburgh to advance fair housing. Members of the collaborative include Action Housing, the Mon Valley Initiative, NeighborWorks of Western Pennsylvania and the Urban League.

Harvey noted that during the past year, the number of discrimination complaints monitored by the agency has increased 55 percent. Of 100 cases checked, one-third had evidence of discrimination.

"We also found that 14 percent of black applicants discovered unexpected fees added at their closing on a mortgage," Harvey said.

To curtail future discrimination, Jay Duron, in charge of enforcement of federal, state and local fair housing laws for the partnership, said discrimination complaints will be turned over to federal, state and local agencies.

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