Editorial | The enduring cost of home loan bias

A report on the state’s home lending market published this week by the Massachusetts Community & Banking Council supports what many in Dorchester and Mattapan have already guessed from their own observations and Census data:

Many existing residents are being priced out of Boston, particularly in communities of color. And without intervention and more aggressive investment into our neighborhoods from lenders, that trend is likely to continue.

Despite a surge in overall home lending in 2020— the most recent year researched by the UMass-based Donahue Institute— the percentage of home loans given to Black and Latinx people is still far below their population share in the state. And, when we drill down locally, there were significant declines in the number of loans to Black borrowers between 2019 and 2020.

In Dorchester, there were nine fewer loans issued to Black applicants year over year, from 86 to 77. That’s down from a five-year high of 118 in 2017. In Mattapan, the number dropped even more significantly, from 55 in 2019 to 36 in 2020.

Statewide, Black residents make up “6.5 percent of the population and received 3.4 percent of non-FHA loans and 5.1 percent of total loans,” according to the report. The gap is even more pronounced for Latinx residents, who make up 12.6 percent of the population, but “received just 6.6 percent of non-FHA loans and 9.4 percent of total loans.”

The report also includes some fascinating intelligence on where many former Bostonians are likely settling instead. Taunton and Fall River, in the state’s southeast region, saw big spikes in the number of Black borrowers.

In Taunton, where Black people make up roughly 7 percent of the city, Black borrowers accounted for about 23 percent of all home loans in 2020. In Fall River, with the Black population at roughly 6 percent, about 17 percent of home loans went to Black applicants.

Here are some other key findings from this report that are relevant to our neighborhoods:

•Loans to Black borrowers in the city of Boston were heavily concentrated in Dorchester, Hyde Park, Mattapan, Roxbury, and Jamaica Plain. Those five neighborhoods accounted for 81 percent of all loans to Black borrowers in Boston.

•With the exception of Jamaica Plain, loans to Black borrowers declined in all of these neighborhoods from 2019 to 2020 by exactly 50 loans, from 306 to 256.

• According to the report’s executive summary: “Just five cities (Boston, Springfield, Worcester, Brockton, and Taunton) accounted for 38 percent of all loans to Blacks in Massachusetts. That percentage is down from just two years ago when the top five communities accounted for 46 percent of all loans to Black borrowers. At the same time, Black borrowers received no home-purchase loans in 107 of the state’s 351 cities and towns.”

Finally, the report analyzes denials to mortgage applicants who are “ostensibly best situated to buy a home,” including buyers who have a 20 percent down payment or higher ready to drop on a home.

“Just looking at this group, the report finds that Black, Asian, and Hispanic applicants are denied loans at rates higher than similarly situated white borrowers. Black applicants who have the 20 percent in hand were rejected at 13 percent rate, Hispanic borrowers at 9 percent, Asian borrowers at 6 percent and white borrowers at 5 percent.”

Even as the real estate market boomed through the pandemic, this report reveals a persistent, blatant disparity in lending that needs to be urgently addressed.

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