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The Role of Race in Mortgage Lending: Revisiting the Boston Fed Study

Board of Governors of the Federal Reserve System Finance and Econ. Disc. Series #97-2

45 Pages Posted: 19 Mar 1997  

Raphael W. Bostic

Federal Reserve Banks - Federal Reserve Bank of Atlanta

Date Written: January 1997

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 Classification: G21, G14, J15, J71

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: https://ssrn.com/abstract=2135 or http://dx.doi.org/10.2139/ssrn.2135

Raphael W. Bostic (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Atlanta

1000 Peachtree Street N.E.
Atlanta, GA 30309-4470
United States

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