is there housing discrimination?. homeownership rates

Is There Housing Discrimination?

Homeownership Rates

Household with High Housing Costs Burdens

Housing With Physical Problems

Crowding: Households with more than one person per room

Reported Problems in the Neighborhood, 1993-1995

Average Racial and Ethnic Composition of Metropolitan Neighborhoods, 1990

Whites’ Attitudes Towards Integration

Measuring Housing Segregation

Dissimilarity

Measures the neighborhood as compare to population as a whole

Similar to the Duncan Index Provides an evenness dimension

Exposure

Shows the level by which minorities are either “embedded” or not into the majorities neighborhoods

Concentration

Delta Index places importance to the concentration of the minority

Centralization

Absolute Centralization Index

Clustering

Spatial Proximity Index

Dissimilarity

Dissimilarity

Dissimilarity

Isolation

Isolation

Isolation

Concentration

Concentration

Concentration

Centralization

Centralization

Centralization

Spatial Proximity

Spatial Proximity

Spatial Proximity

Discrimination in Housing

Agent (whether renting or buying)

Lending Process(when buying a home)

Discrimination in Metropolitan Housing Markets:

National Results from Phase I HDS 2000

by

Margery Austin Turner, Stephen L. Ross,

George C. Galster and John Yinger

The Urban Institute. Metropolitan Housing and Communities Policy Center

Prepared for USDHUD

AGENTBackground

Paired testing originated as a tool for fair housing enforcement, detecting and documenting individual instances of discrimination. Since the late 1970s, this methodology has also been used to rigorously measure the prevalence of discrimination across the housing market as a whole. When a large number of consistent and comparable tests are conducted for representative sample of real estate and rental agents, the results control for differences between white and minority homeseekers, and directly measure patterns of adverse treatment based on a homeseeker’s race or ethnicity.

Paired Testing MethodologyIn a paired test, two individuals¯one minority and the other white¯pose as otherwise identical homeseekers, with comparable housing needs and resources. Both testers visit a real estate or rental agent to inquire about the availability of housing, making the same requests and providing the same information about themselves. Each tester systematically records the information and assistance he or she receives from the agent. If the minority and white are treated differently in important ways, a test provides direct and powerful evidence of differences in the treatment minorities and whites experience when they search for housing.

Lending Process

It can occur at the in the pre-loan process

It can occur at the loan stage At the Loan Approval or Disapproval

Stage At the Loan Administration Stage

Advertising

When done on TV or Radio or Newspapers it would appear there is no discrimination– However, stations or association with

certain programs could target certain markets and create discrimination. However that in it self is difficult to prove

– Mailing by Zip Codes

Location

Another subtle mode of discrimination is location of Loan offices– In an important case with the Justice

Department – The Decatur Federal Savings and Loan

Association in the Atlanta area settled a discrimination law suit

The Decatur Federal Savings and Loan Association

FACTS– Between 1927 and 1980 Decatur Federal

Opened 43 offices in Atlanta– It only opened 1 in a predominantly Black

neighborhood– It closed only 2:

• The one in the Black Neighborhood• One in a neighborhood that was become

mostly Black

The Decatur Federal Savings and Loan Association

FACTS– Justice found that different criteria were used to

decide when to close Branches between White and Black neighborhoods

– It excluded census tracks that were located in predominantly Black neighborhoods

– An former Loan Officer testified that she was ordered to reject loans south of IH 20, and area where many of the Black neighborhoods in Atlanta are located

In the Pre-Application and Application Process

Discrimination can occur:– When discussing different alternatives– Who is presented with larger number of

alternatives– The Time spent with the loan officer– Who receives lower interest rates given the

similar economic backgrounds

Discussing Different Alternatives

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10

20

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70

80

90

White OnlyBlack OnlyNo Difference

Who is Provided with More Alternative Loan Packages

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10

20

30

40

50

60

70

White OnlyBlack OnlyNo Difference

Who Spend More Time with Loan Officer

0

10

20

30

40

50

60

70

80

White OnlyBlack OnlyNo Difference

Who Received The Lower Interest Rate

0

10

20

30

40

50

60

70

80

White OnlyBlack OnlyNo Difference

Can there Be Discrimination After the Loan is Given: YES

There is no concrete evidence of this type of discrimination

There is anecdotal evidence done by several TV-magazine shows that indicate there may be evidence of racial discrimination in:– Treatment of customers with late payments

may differ by race

Can there Be Discrimination After the Loan is Given: YES

– For instance• Number of times late payments are allowed

before bringing additional penalties• Working out payments to bring loan up to date• Degree of lagging in payments before

foreclosure is started

Can there Be Discrimination After the Loan is Given: YES

– The worst case scenario:• Loans that are given with the express intent of expecting

a default in order to repossess and make a profit on the house

• Problem is that in this cases there is a downward bias in the loan discrimination since more are generally given

HOWEVER, these are anecdotal stories that may or may not represent and accurate representation of the treatment by minorities in the after lending process