In St. Louis, Black Mortgage Applicants Are 2.5 Times More Likely to Be Denied

Feb 16, 2018 at 6:18 am
In St. Louis, Black Mortgage Applicants Are 2.5 Times More Likely to Be Denied
A new analysis of 31 million records covering "nearly every time an American tried to buy a home with a conventional mortgage in 2015 and 2016" adds to the evidence that the nation's lending landscape is tilted along racial lines.

According to the report, published yesterday by Reveal from the Center for Investigative Reporting, black applicants for mortgages in the St. Louis metro area were 2.5 times as likely to be denied a home mortgage as white applicants.

That's true for a broad area of our region, with borders stretching in a roughly 60-mile radius around the city. And the pattern persists nationwide. The report argues that the trend in the racial home-ownership gap has taken a significant turn after years of apparent progress. While the gap shrunk after the 1970s, the recent housing crash seemed to turn back the clock. That gap, the report contends, "is now wider than it was during the Jim Crow era."

When it came to banks and financial institutions nationwide, nearly two-thirds denied home loans for people of color at higher rates than for white people, though some were worse than others.

That lending disparities follow racial lines isn't a secret in St. Louis. Last year, the St. Louis Equal Housing and Community Reinvestment Alliance partnered with the Washington, D.C.-based National Community Reinvestment Alliance to release their own findings on the lending disparities in predominantly black neighborhoodslocally between 2012 and 2014.

Yesterday, along with the release of the Reveal report, the St. Louis Equal Housing and Community Reinvestment Alliance released an updated map of its own research — and the contrast separating where lending gets approved, and where it doesn't, remains stark.

In a statement released yesterday, Jackie Hutchinson, co-chair of the St. Louis Equal Housing and Community Reinvestment Alliance, emphasized that the lack of lending in predominately black neighborhoods is at a generational low.

"We hope that this research is call to action that brings lenders, nonprofits and community leaders to the table for a real discussion about what needs to be done to create an equitable lending ecosystem in St. Louis," she said.

The challenge is how to actually do that. Last week, city leaders participating in the Rockefeller Foundation’s 100 Resilient Cities Initiative gathered with representatives in one of the city's hardest-hit northern neighborhoods to workshop solutions to reverse the decade-long trends of disinvestment, poverty and crime. Patrick Brown, the city's Chief Resilience Officer, noted that only one new home loan was approved in the Wells-Goodfellow neighborhood in 2017. The loan applicant was white.

The Reveal report features an interactive map, which allows users to view lending data in their own neighborhoods. The report and map can be found here.

Follow Danny Wicentowski on Twitter at @D_Towski. E-mail the author at [email protected]