Portland Latinos and Blacks Denied Mortgages at Twice the Rate of Whites

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Tuesday, September 30, 2014

Emily Liedel and Cornelius Swart

Blacks and Hispanics were turned down by Portland-area mortgage lenders at almost twice the rate of whites, according to an analysis by GoLocalPDX.

In 2012, mortgage lenders in the metro area denied both Hispanic and black applicants at a rate of about 20 percent, compared with whites, who were denied at a rate of 13.6 percent, according to data reported to the federal government under the Home Mortgage Disclosure Act.

What that data means depends largely on whom you ask in the local home-buying industry.

“That’s sad,” Hasson realtor Jim Arnal said of the statistics. “If that had anything to do with something subjective, that would be very sad and a violation of the law.”

Rate by specific lenders vary

GoLocalPDX analyzed data from all mortgage lenders in the metro area and came up with the average for the region. However, denial rates for specific lenders varied.

Wells Fargo, by far the largest mortgage lender in the Portland area, denied Hispanics at a rate of 22 percent, African-Americans at a rate of 25 percent and whites at a rate of 14 percent, according to findings.

Chase Bank, the region’s second largest mortgage lender, denied Hispanics at a rate of 24 percent, African-Americans at a rate of 27 percent and whites at a rate of 21 percent.

Representatives at Wells Fargo said its process for assessing loans was not subjective.

“Wells Fargo is a fair and responsible lender,” said Wells Fargo spokesman Tom Unger. “Our loan decisions are based on objective risk factors, such as credit score, loan value ratios and the type of property.”

Representatives from Chase declined to comment.

Michelle Puggarana, of the nonprofit Portland Housing Center, said she’d seen statistics like these before.

“It doesn’t surprise me,” Puggarana said. “There are multiple factors. We have a history in the mortgage and banking industry of disadvantaging communities of color.”

For 25 years the housing center has helped people qualify for home loans through a combination of financial counseling and mortgage services. The center goes through about 1,200 clients a year, evenly split between low-income consumers and young professionals.

'More complex web' than just poverty

It was unclear if the differences in mortgage denial rates reflected bias or simply the relative rates of poverty in communities of color.

In Oregon, the percentage of people living in poverty was twice as high for Hispanics (30 percent) than for whites (15 percent) and nearly three times as high for African-Americans (41 percent), according to a 2012 study by the Oregon Center of Public Policy.

“I think it’s easy to say that it’s just that they don’t have income,” said Puggarana. “But it’s a more complex web than that.”

Other housing advocates believe the numbers support their claim that widespread housing discrimination exists in the Portland metro area.

“These days it’s subtle, but it still exists,” said Kevin Sheehan, Homeownership Support Program Supervisor at Hacienda CDC.

Pegge McGuire, executive director of the Fair Housing Council of Oregon, agreed that housing discrimination is subtle and hard to spot, because the process is long and complex.

McGuire said testing done by her organization showed that people of color generally are given less information and fewer referrals than non-Hispanic whites.

Regulatory constriction

Other housing experts said that new, stricter regulations on lending may have a disproportionate impact on low-income and minority applicants.

Since the U.S. financial meltdown of 2007, the federal government has tightened banking regulations, most notably through the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act.

“Since Dodd-Frank the industry has tightened up so much,” said Tammy Wittren, with Northwest Mortgage Group. “People are getting squeezed tighter and tighter.”

She said the discrepancies in denial rates between Hispanics, blacks and whites could be tied more to income than anything else.

Long gone are the days when an applicant could merely state their income and qualify for a home loan. Lenders now look for two years of stable income, spotless credit, and cash on hand.

“There used to be more options for people who couldn’t get that all combined,” Wittren said.

Many experts said Portland is a seller’s market where homes often get as many as half a dozen bids on them at one time.

Realtor Jim Arnal that kind of pressure can be hard on anyone who wants to buy a home.

“Often homes are just going to whomever has the most cash on hand,” Arnal said.

Puggarana agrees that it’s harder than ever to get a loan.

The housing center works with people for a year or more to get a consumer’s credit and other financials straightened out.

McGuire said statistics on denials still don’t show the whole picture because many consumers can’t even get through the application process itself.

“The data doesn’t show people who fall out of the process,” McGuire said. 

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