Dispute Over Banking Group's Analysis of Mortgage Denials to Blacks

May 24, 2014
New York Times 
mortgage lending news

The Mortgage Bankers Association (MBA) recently reported that 56 percent of blacks who applied for a common type of mortgage were denied. The statement set off a series of questions about the group's calculations, since its rate is much higher than those cited by other analysts.

MBA supports a wind-down of government intervention in the mortgage market and greater participation from the private sector. Some consumer advocates, however, worry that undoing the current system, which includes Fannie Mae and Freddie Mac guaranteeing mortgages, could restrict minority access to credit. But MBA President David Stevens counters that 56 percent of blacks who applied for a Fannie- or Freddie-backed loan in 2012 were rejected. Real-estate website Zillow, in contrast, has estimated the denial rate for blacks at 25.4 percent in 2012. The Federal Reserve has calculated that the denial rate was 32 percent for that year, compared to 11.6 percent for whites.

Some analysts question whether MBA took questionable steps in its calculations to reach a much higher denial rate, hoping to use the number to bolster the argument that minorities are already being left out under Fannie and Freddie existing lending standards. MBA spokesman John Mechem said that the group got the 56 percent denial rate by counting 45,897 total loan denials in 2012 for blacks for conventional mortgages, out of 82,399 loans in the overall loan sample. However, it included data that others leave out -- such as denials on preapproved mortgages and manufactured housing loans.

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