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Researcher: Dayton-area black borrowers denied home loans more often

In Montgomery County, black borrowers, regardless of income, are less likely to be approved for home purchase loans than white borrowers, according to an analysis released this week by a Cleveland Fed researcher.

Home purchase loan originations declined between 2005 and 2016 for white and black borrowers, but the declines were much greater for black borrowers (59 percent) than they were for white borrowers (28 percent), according to research by Lisa Nelson, a community development advisor at the Federal Reserve Bank of Cleveland.

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In 2016, 56 percent of black borrowers with low to moderate incomes who applied for home loans in a low- to moderate-income neighborhood received one, Nelson’s analysis found.

By comparison, about 73 percent of white borrowers in low- to moderate-incomes who applied for home purchase loans obtained them.

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However, the Home Mortgage Disclosure Act (HMDA) data used in the analysis did not include information used in lending decisions, including borrower’s credit score, debt, and employment history, Nelson said.

The data on its own cannot explain the differences in borrowing success trends.

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