Editorial | Study gives fair look at housing loan gap

A new report released this week by the Massachusetts-based Partnership for Financial Equity offers a clear-eyed assessment of the current state of home lending practices both across the state and at the neighborhood level. The non-profit think tank, led by longtime affordable housing champion Thomas Callahan, has spent years tracking and analyzing data from mortgage applications and loans.

The full report, entitled “Mortgage Lending Matters,” is a comprehensive look at trends through 2021 and offers both good and bad news about the local marketplace in Boston. It was done in collaboration with the Chicago-based Woodstock Institute, which seeks to advance economic justice and racial equity in financial systems.

Clearly, there remain glaring racial disparities at play across the city and state. Here are some key takeaways from the study:

• Home purchase loans going to Black and Latino homebuyers in the Commonwealth hit a 30-year high in 2021, with 4,920 Black households and 8,694 Latino households approved out of a total 81,401 mortgages funded state-wide.

• In the city of Boston, though, Black and Latino purchasers lagged way behind Asian and white residents in getting loans approved. Black people make up about 23 percent of the city’s population but account for just 7 percent of mortgages. White people —about 44.5 percent of the city’s population—received 71.2 percent of the home purchase loans.

• Boston’s legacy of segregated neighborhoods is alive and well in the mortgage sector. There were zero traditional mortgages issued to Black borrowers in the Back Bay or Allston in ’21; and in Charlestown, Seaport, and South Boston, less than one percent of mortgages went to Black applicants. As the report states: “Only in Mattapan, where Black residents are nearly 75 percent of the population, did Black borrowers receive more than a third of traditional purchase mortgages.”

• In Dorchester, even though white people make up roughly 22 percent of the current population, white borrowers secured over 60 percent of mortgages, according to this report.

• There’s a major gap, too, in the types of loans secured. FHA loans, which often come with higher monthly costs in insurance and closing fees, are disproportionately awarded to Black and Latino borrowers.

The report takes note of some progress that has been made regionally, particularly in so-called “Gateway” cities, where more Black and Latino buyers have found affordable options and attained loans than ever before. But it also sounds the alarm about the overall failure of the Commonwealth to create new housing in Boston— and beyond. Additionally, it calls on further investment in existing programs that have seen success in moving the homeownership needle, including the ONE Mortgage effort pioneered in Dorchester by the Mass Affordable Housing Alliance. The report highlights a brand new fund— the Lift Up Homeownership program crafted by the Federal Home Loan Bank of Boston, that offers up to $50,000 in down payment funding to eligible people of color.

It took generations of intentional redlining and outright discrimination against would-be Black and Brown homeowners to create the disparities that are so clearly documented in this study, which serves as a stark reminder of how far we have to go in Massachusetts and in the neighborhoods of Boston.

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