Discrimination in Mortgage Lending
This book substitutes rigorous and systematic analysis for the undocumented claims that have characterized the debate on "redlining"-the denial of mortgage money to poorer neighborhoods. In addition, Schafer and Ladd discuss discrimination against individuals, appraisal practices, and the likelihood of default, analyze recent policy decisions, and recommend a range of new policies. The thorough documentation that supports this analysis was obtained through an examination of individual mortgage applications-denials as well as approvals-in New York and California, the only two states in which such data is available, its disclosure mandated under state law. One of the book's major findings is that discrimination in home financing is based far more on an individual's race than on the location of the property-that although the redlining debate has turned on the issue of geographic discrimination, the underlying reality is one of racial discrimination, and individuals are more often the targets than are neighborhoods. After an introductory chapter, Discrimination in Mortgage Lendingtakes up default risk in mortgage lending, appraisal practices, the flow of funds, lending decision models, the decision to lend in California, mortgage credit terms in California, the decision to lend in New York, mortgage credit terms in New York, a summary of results, and recommendations.
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Default Risk in Mortgage Lending
Flow of Funds
Lending Decision Models
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5-10 percent level allegedly redlined neighborhoods Angeles Angeles-Long Beach applications involve variations appraised value baseline application borrower Bronx California census tract containing childbearing age City coefficients commercial banks conventional mortgages County Crown Heights default delinquency denial ratios denied difference is significant downward modification downward-modification ratios Dummy variable equal East Flatbush equation estimated federally assisted mortgages female-only FONLYNCB foreclosure four-family houses Fresno Garden Grove Hispanic households increase indicated characteristics interest rates lenders less level loan associations loan-to-value ratio marital status maturity period metropolitan areas modification ratios mortgage applications mortgage lending mutual savings banks neighborhood characteristics older neighborhoods Park Slope payments percent or less predicted property location Queens counties racial composition ratio is statistically requested loan amount risk of loss Rochester sample San Francisco-Oakland San Jose savings and loan single asterisk SMSA South Bronx statistically significant statistically significantly different study areas subject property Table underappraised Vallejo-Napa York York-Nassau-Suffolk