The Role of Race in Mortgage Lending: Revisiting the Boston Fed Study
Raphael W. Bostic
University of Southern California - School of Policy Planning and Development (SPPD)
January 1997
Board of Governors of the Federal Reserve System Finance and Econ. Disc. Series #97-2
Abstract:
This paper reexamines claims that non-economic discrimination persists in mortgage loan origination decisions. I find that racial differences in outcomes do exist, as minorities fare worse regarding debt-to-income requirements but better for loan-to-value requirements. Overall, significant racial differentials exist only for "marginal" applicants and are not present for those with higher incomes or those with no credit problems. Thus, the claim that non-economic discrimination is a general phenomenon is refuted. Further, I can say little regarding the existence of discrimination among "marginal" applicants. To conclude that such discrimination exists, one must prove that the observed differences are not due to economic factors.
JEL Classifications: G21, G14, J15, J71
Working Paper Series
Suggested Citation
Bostic, Raphael W., The Role of Race in Mortgage Lending: Revisiting the Boston Fed Study (January 1997). Board of Governors of the Federal Reserve System Finance and Econ. Disc. Series #97-2. Available at SSRN: http://ssrn.com/abstract=2135 or doi:10.2139/ssrn.2135
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