Mortgage denial rates easing for minorities

Bria Murray and husband Kevin Maxwell recently moved in to their new home in Penn Hills.
Bria Murray and husband Kevin Maxwell recently moved in to their new home in Penn Hills.
Photo by Jasmine Goldband | Tribune-Review
| Saturday, May 31, 2014, 12:01 a.m.

Bria Murray and Kevin Maxwell Jr. found that obtaining a mortgage to buy their Penn Hills home was comparatively easy.

That wasn't the case three or four years ago when Murray, 30, who is black, endured repeated questions about her income and credit standing before the lender would pre-qualify her for the loan.

Although Murray told her real estate agent to make an offer on a house in Forest Hills, nothing happened.

“We wanted to stay in Pittsburgh but couldn't find a house that met our needs and was within our budget, such as one with 2 12 baths,” she said.

This time, working through agent Jessica Russell-Carter of ReMax Realty Centre, not only did the bank approve the mortgage in time but these buyers paid less than the amount for which they qualified, Murray said.

Depending where they try to buy homes, minorities in Pittsburgh or Allegheny County may be surprised, experts say.

The mortgage denial rate has eased somewhat in predominantly black or lower-income communities — although the approval rates in these neighborhoods still lag behind more affluent, largely white neighborhoods, said Rachel Rue, research analyst for the Pittsburgh Community Reinvestment Group, which recently surveyed mortgage lending activity.

“We have found the approval rate has increased for all neighborhoods since 2005, but those areas where minority and lower middle-income families reside are finding it ... slower for the application to be approved,” she said.

Penn Hills, where 39.2 percent of residents categorized themselves as non-white in the 2010 census, is considered a middle-income community. Median income there is $52,504, according to Realtors Property Resource, compared to $37,161 in Pittsburgh and $49,805 in the county.

The Reinvestment Group report found the loan denial rate in Allegheny County's minority communities fell from 61 percent in 2005 to 46 percent in 2012, the last year for which data were available. In lower middle-income areas, the rate declined from 51 percent to 38 percent.

In affluent neighborhoods the denial rate of 37 percent in 2005 declined to 19 percent in 2012, the report found.

The data show that half of all 2012 residential mortgages in Pittsburgh went to Shadyside, Squirrel Hill, Point Breeze, South Side Flats, Highland Park and the Strip District, which made the list because two multifamily developments bolstered the total value by $54 million, Rue said.

Three neighborhoods — Homewood North, Northview Heights and Chateau — had no loans.

Zillow, a Seattle-based home-related marketplace, recently reported the median price of a house in Pittsburgh was $119,500.

Despite fewer mortgage denials, several real estate company owners say minority clients have not obtained quick approvals.

PNC Bank, the Pittsburgh area's largest mortgage leander, “scrupulously adheres to new regulatory requirements regarding mortgage approvals, which require additional proof of a borrower's ability to pay. While this can slow the process, we constantly are working internally to streamline it,” said Marcey Zwiebel, vice president and senior manager for external communications.

Jeff Kursman, a spokesman for Fifth Third Bank, said delays in processing mortgages “may be the result of specific circumstances related to individual loan requests, but are not influenced by customer demographics.”

Yet Phyllis Lavelle, broker of record at Lavelle Real Estate Inc. in the Hill District, said even some customers with “super-clean credit” wait longer for approvals, “even though they should be able to purchase a home anywhere.”

Bob Epps, owner of Choice Realty in Homewood, said getting a mortgage for most buyers in Homewood “is still horrible.”

“I haven't had a super-clean credit applicant, but some of my customers have good credit. Yet, although the buyer qualifies for a mortgage, it often takes a longer time to get it approved,” he said.

Most buyers get FHA loans, especially the Federal Housing Administration's 203k loan that provides money for home renovation, Epps said.

In December, federal regulators slapped National City Bank with a $35 million fine to settle allegations of discrimination against 75,000 black and Hispanic borrowers by charging higher prices. The settlement with the Justice Department and Consumer Financial Protection Bureau covered residential mortgages that originated between 2002 and 2008. PNC acquired National City in 2009.

The government ordered Ally Financial Inc. and Ally Bank to pay $80 million to harmed minority borrowers and $18 million in penalties. Bank of America agreed to pay $335 million to settle allegations that its Countrywide Financial unit discriminated against black and Hispanic borrowers during the 2006-09 housing crash.

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