Dreaming for unveiling housing inequality: mortgage lending disparities within the heartland of America

Inhwa Kim ()
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Inhwa Kim: Harris-Stowe State University

SN Business & Economics, 2024, vol. 4, issue 10, 1-54

Abstract: Abstract Preceding the COVID-19 Pandemic era and time-frame immediately following, mortgage lending trends significantly impacted people of color in the mid-west in the United States. This paper explores this phenomenon by presenting a comprehensive analysis of mortgage lending outcomes within the Federal Reserve 8th District, utilizing HDMA data spanning from 2018 to 2021. It highlights the significant impact of demographic attributes, particularly race, applicant age, metropolitan status, and refinancing intent, on mortgage approval decisions. The study consistently underscores the role of race, revealing systemic racial disparities even when controlling for various other variables. Black/African and Hispanic American applicants encounter distinct and persistent challenges, shedding light on systemic obstacles within the mortgage lending system. Heightened economic vulnerabilities and reduced financial stability among minority groups during the pandemic, contrasted with White Americans’ better access to financial resources post-pandemic, highlight the compounded effect of the pandemic on minority groups, particularly Black/African Americans. Furthermore, the research critically evaluates the influence of external factors, such as county-level poverty rates, education attainment, and crime rates, on racial disparities in homeownership. It specifically examines the interaction between education attainment and mortgage approval, highlighting its significance in shaping racial disparities. Additionally, the study explores the interplay between financial behaviors and demographic information, uncovering distinct preferences among different racial groups. These findings contribute to a deeper understanding of racial disparities in homeownership and offer valuable insights for the development of strategies aimed at promoting minority homeownership within the 8th District.

Keywords: Mortgage lending; Racial disparity; Covid-19 pandemic; Socioeconomic index; Financial behaviors (search for similar items in EconPapers)
JEL-codes: D14 G21 I30 J15 R21 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s43546-024-00722-6

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