Racial Discrimination and Mortgage Lending

Posted: 22 Aug 2012

See all articles by James B. Kau

James B. Kau

University of Georgia - Department of Insurance, Legal Studies, Real Estate

Donald C. Keenan

University of Cergy-Pontoise; University of Georgia

Henry J. Munneke

University of Georgia - Department of Insurance, Legal Studies, Real Estate

Multiple version iconThere are 2 versions of this paper

Date Written: August 22, 2012

Abstract

Looking at a sample of conventional fixed-rate mortgages, this paper examines whether lending practices are consistent with the competitive hypothesis that the racial and ethnic composition of the borrower's neighborhood affects the contract rate charged only to the extent that these characteristics objectively influence the probability of the loan defaulting or prepaying. Our results, however, reject this hypothesis, showing instead that borrowers in predominantly black neighborhoods pay a significantly higher contract rate than is consistent with evidence of their behavior.

Keywords: Racial discrimination, Mortgage lending

Suggested Citation

Kau, James B. and Keenan, Donald C. and Munneke, Henry J., Racial Discrimination and Mortgage Lending (August 22, 2012). Journal of Real Estate Finance and Economics, Vol. 45, No. 2, 2012, Available at SSRN: https://ssrn.com/abstract=2134168

James B. Kau

University of Georgia - Department of Insurance, Legal Studies, Real Estate ( email )

Athens, GA 30602-6254
United States
706-542-9110 (Phone)
706-542-4295 (Fax)

Donald C. Keenan

University of Cergy-Pontoise ( email )

33 Boulevard du Port
Cergy-Pontoise Cedex, Cedex 95011
France

University of Georgia ( email )

510 Brooks Hall
Athens, GA 30602
United States
706-542-3668 (Phone)

Henry J. Munneke (Contact Author)

University of Georgia - Department of Insurance, Legal Studies, Real Estate ( email )

Athens, GA 30602-6254
United States
(706) 542-0496 (Phone)
(706) 542-4295 (Fax)

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