Tamarine Cornelius
Wisconsin Budget

Home Loans Reinforce Metro Segregation

In 2014, whites got 81% of loans, blacks just 4%, report shows.

By , Wisconsin Budget Project - Jul 28th, 2016 10:22 am
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White Residents in Milwaukee Area More Likely to get Mortgages than Residents of Other Races

White Residents in Milwaukee Area More Likely to get Mortgages than Residents of Other Races

White residents of the Milwaukee metropolitan area have significant more access to mortgage lending than black and Hispanic residents, according to a new report that highlights how lending patterns affect different communities.

Whites represent 70% of the population in the Milwaukee area, according to the report from the National Community Reinvestment Coalition, yet received 81% of the mortgage loans made in 2014. African Americans are 16% of the population but received only 4% of the loans. Hispanics represent nine percent of the area’s population, and received four percent of the total loans. The Milwaukee metropolitan area includes Milwaukee County as well as Waukesha, Washington, and Ozaukee Counties.

Milwaukee-area residents of color are less likely than whites to apply for a mortgage in the first place, and they are less likely to have their application approved. Lenders approved 71% of mortgages sought by white residents of the Milwaukee area in 2014, compared to 47% for black residents, 59% for Hispanic residents, and 66% for Asian residents.

As a result of these lending patterns, loans in the Milwaukee area are “heavily concentrated in majority white and middle- and upper-income neighborhoods,” according to the report. In the City of Milwaukee, the neighborhoods “with a higher percentage of white residents also had a higher likelihood of seeing more mortgage activity.”

The Milwaukee area isn’t alone in having troubling patterns of concentrated poverty and racial segregation that are shored up by mortgage lending imbalances. The report takes a look at lending patterns in St. Louis and Minneapolis and finds that those metropolitan areas also have scarce lending in neighborhoods with lower incomes and higher proportions of residents of color.

The lack of full access to mortgage lending makes it more difficult for residents in economically challenged neighborhoods to get the loans they need to buy their own homes. Homeownership is often the first step to building wealth, and the lack of lending makes it difficult for families in some neighborhoods to start climbing the economic ladder.

For more information about mortgage lending imbalances, read the report: Home Mortgage Lending in St. Louis, Milwaukee, Minneapolis and Surrounding Areas by the National Community Reinvestment Coalition.

12 thoughts on “Wisconsin Budget: Home Loans Reinforce Metro Segregation”

  1. Colin Stuart says:

    Who says this is profiling? How can it be proved? Was it recorded what the credit scores were for those who were approved and those who weren’t? I’m sorry but if you’re credit is bad, it doesn’t matter what race you are, you’re not going to get a mortgage. I don’t see how granting mortgages to those with bad credit for the sake of normalizing the share of mortgages is a good thing for any creditor.

    Now, if it can be proven that those of race with good scores were for some reason denied, that would be an interesting article / finding.

    There is a lurking variable here that is not being considered (the most important one, at that).

  2. David says:

    Does the “study” control for variables like credit score, credit history?

  3. Vincent Hanna says:

    It has been proven that even if people have the exact same credit scores, white people are far more likely to receive mortgage approval. I’m always amazed and saddened when people find it so hard to believe that racism persists in this country. “people in essentially the same financial situations got different mortgages depending on the color of their skin” – https://www.washingtonpost.com/news/storyline/wp/2014/12/23/if-youre-poor-your-mortgage-rate-can-depend-on-the-color-of-your-skin/

    Black and Latino people also got higher-rate mortgages even when they had the same credit score as white people. http://www.epi.org/publication/latino-black-borrowers-high-rate-subprime-mortgages/

  4. Vincent Hanna says:

    And this, from Baltimore: “the racial makeup of a neighborhood — and not income, for instance — is the most significant predictor of whether a loan gets made” – http://www.nytimes.com/2015/11/17/business/dealbook/study-strongly-links-baltimore-mortgage-denials-to-race.html?_r=0

  5. David says:

    Vincent Hanna….. no one is saying that racism does not exist. The report does not, unless I missed it, control for credit scores or history as a predictor of home loans. It says that race is a predictor in the city of Milwaukee but not so much in the suburbs. This is most likely true because minorities buying in the burbs have higher incomes and credit scores than minorities attempting to buy in the city. Furthermore, the report another predictor of home loans is the age and condition of the home and infrastructure surrounding the home. Again, the city suffers in this comparison. Just because race might be correlated, it does not mean that there is a direct relationship. I’m only speaking to this report. However, all these factors have led to hyper segregation in region.

    With that said, of course racism exists and banks and realtors have played a big role.

  6. Casey says:

    Same credit scores but did they have the same income? Absolutely there is racism in America still and that is a big reason why blacks make less than white which in turn is probably why even if a black person has the same credit score as white person. Sorry but if you only have a HS diploma (if that) you’re going to make significantly less than if you had a tech degree or college. It’s going to be darn hard to make enough to buy a $80k home.

  7. Vincent Hanna says:

    Sorry David you are right. My mistake. A reminder that when multitasking one needs to carefully read a post in its entirety before commenting. I wonder why they didn’t control for credit score.

  8. BT says:

    At least someone mentioned credit scores, but there’s more that goes into a mortgage approval than just a credit score or even income (gross or net) there’s a whole slew of factors going into a mortgage app AND HERE’S ONE FOR ALL OF YOU “I LOVE LOVE LOVE BIG GOVERNMENT!! THERE’S NO PROBLEM YET ANOTHER STUPID NEW LAW THAT SOME LOBBYIST WROTE FOR CLUELESS POLS TO SIGN THAT WON’T FIX ANYTHING!!! DID I SAY HOW MUCH I LOVE BIG GOV’T???” for all of you (libs) who fit THAT love the gov’t in a bizarre, even sexual sort of way-THE FEDS IN RESPONSE TO THE 2008/09 HOUSING CRASH DID PASS NEW REGULATIONS AIMED AT “FIXING” THIS HORRIBLE PROBLEM OF “PREDATORY LENDING” (where loan officers and the near universally sleazy mortgage broker crowd literally hunted down their prey like a cheetah in the wilderness, stalking the baby Impala lagging behind its pack, forcing these people to claim insane income amounts “yeah I’m a janitor, well part time at least and I made $473,000 each of the last 7 years!” “you mean an average of $473k?” “ummmmm, nope it always just came out to exactly that much” “ok great, that should be enough!” It took two to tango on those “liar’s loans” and the borrowers (now often portrayed as sad prey for the evil mortgage clowns) share equal guilt with the mortgage brokers (now a nearly dead breed, I think the .01% of them who were decent, honest people and not sleazebags prior to becoming mortgage brokers are the only ones left as mortgage brokers, I knew SO MANY sketchy characters who suddenly were making good or even big $$$ suddenly in that business and now are likely back to something sketchy or locked up on unrelated charges!)

    So, the feds stepped in and like with so many of the STUPID overreaches gov’t does, they passed a STUPID pile of regulations that, hmmmmm, sure as hell looks like something EXACTLY like some lobbyists for the really super big banks would’ve written!!! Now, in my example above, with the very well paid part time janitor and the mortgage broker who obviously doesn’t want to lose his/her commission by questioning this massive salary for a part time janitor, you’d wonder, where were the gov’t regulators, since the gov’t fixes EVERYTHING right? Did some evil corporations pay them off to fall asleep on the job? Nope, way worse than that, starting in 1993-hey did we get a new admin that year in DC?? (and a new and very determined intern from CA with a blue dress?) I think we did! Well anyway, SOMEONE in DC statred t to get very nasty towards any banks that weren’t meeting their quotas for low income and minority loans and they basically put a gun to the head of the lenders (easy to do when you need a gov’t charter to operate!) and even ENCOURAGED THEM TO FIGURE OUT SOME NEW FANGLED WAYS OF LENDING TO THESE PEOPLE TO GETS THEIR APPROVAL RATES UP, WAY WAY UP!! How about an “interest only” loan with a huge balloon payment at the end? That sure helps debt to income ratio, something no one mentioned and the TOTALLY CLUELESS author, who doesn’t even mention credit scores (which we only hear about 274 times a day!) would likely need to be tutored on.

    Thing is, this STUPID new pile of regs passed by the “fix it all for us” federal gov’t works out like no big deal for big banks, but totally screws smaller banks in two ways. #1 the compliance cost per loan is FAR higher when you write 1000, 500 or 50 mortgages a year vs 2 million! #2 It totally ties the hands of the smaller banks, who are FAR, FAR MORE LIKELY TO KNOW THEIR CUSTOMERS AND BE ABLE TO ASSESS A RISK BASED UPON MORE THAN NUMBERS SPIT OUT FROM EXPERIAN OR WHOEVER, SO THAT SCREWS RURAL AND ALSO INNER CITY, LOW INCOME BUYERS ESPECIALLY HARD! So, Charlie’s been banking with ABC Bank, a smaller bank in either some rural area or maybe here in the city, one that if in the city, may well be one in the newer niche market for small banks, getting the MASSIVE # OF PEOPLE WHO KNOW CHECK CASHING PLACES LIKE THE BACK OF THEIR HAND, BUT KNOW NEARLY NOTHING ABOUT A BANK AND SURE AS HECK HAVE NEVER HAD AN ACCOUNT-THAT’S A NEW AND MANY THINK PROMISING NICHE MARKET, BUT THANKS TO THE FEDS, SPECIFICALLY THE OBAMA ADMIN THIS TIME THAT PUSHED THIS STUPID JUNK, LOOKS MORE LIKE WAL MART, VIA ITS BANKING ARM AND OTHER MONSTER CORP’S WILL TAKE IT OVER VS ANY SMALL TIME ENTREPRENEUR, THANKS TO THE MASSIVE COSTS OF MASSIVE GOV’T REGS THAT HELPED CAUSE THE MESS THEY’RE SUPPOSED TO BE FIXING NOW!

    How much do you think they pay people like “Tamarine Cornelius” to write just blatantly stupid, totally missing all of the REAL issues here type articles like that one? I could bang em out in my spare time if the money’ good and totally mislead people on all sorts of important issues AND make a few extra bucks at the same time, woo hoo!!!!

  9. Tim says:

    I like how shallow BT reads the situation. If only the banks could remove the regulation, which BT says is harming the banks (which you’re saying they also wrote themselves?!? … to harm themselves?)… if only there was no regulation, more people could get mortgages?

    Uhhh, nope. How did it work in the past when there were big banks, no regulations & the gov’t didn’t try to make mortgages affordable? Well, mortgage loans had 5 year terms and you lost your house if you couldn’t renew the mortgage after that time.

    In the banking business, anything that takes effort is derided as a regulations. “Uggghh, the government makes us check to see if someone can pay back the loan, stupid Obama!”

  10. BT says:

    No Tim, I like how totally clueless you are as to the difference between BIG BANKS and smaller regional and especially, very small local banks. I also reference ACTUAL happenings in recorded recent history, while you talk about just nonsense, WHEN EXACTLY, NAME ME A YEAR HERE, DON’T JUST TOSS OUT MORE BULLSHIT ABOUT 5 YEAR MORTGAGES BEING YOUR ONLY OPTION (AHHH, WHEN WAS THAT TIM? SOMETIME PRE-INDUSTRIAL REVOLUTION? OR BACK WHEN WE COLONISTS WERE ALL HACKED OFF ABOUT THE KING AND HIS TEA TAX POLICIES?? GIVE ME A YEAR, YOU CAN’T BECAUSE YOU’RE TALKING NONSENSE!) Can you get a 5 yr term, sure you can get a 1 yr term if you fit the qualifications, but please stop the silly talk and if this is the extent of your understanding of things, do us all a favor and don’t vote either, stick to watching the media explain how the hell Bernie Sanders lost that nomination and there’s just no questions, let’s all move ahead now!

    Oh yeah, toss in the Obama reference too, he’s just as great of a friend to the big banks, investment banking houses like Goldman Sachs, who when they have time in between rigging various markets, supply half of his cabinet and advisors! You (actually I’m using the word “you” figuratively here, since YOU (Tim) don’t know what you’re talking about, but you could argue for hours as to who’s the best friend of Wall Street, BoA, Citi, etc Is it Obama, Bush II, Clinton (BJ Bill or KILLARY) Bush I and it could go for hours and have no clear choice, they’re ALL bought and paid for!

    Back to the little bank vs big bank details, yes there’s a MASSIVE difference and it’s the LITTLE BANK that’s FAR MORE LIKELY TO LOAN TO SOMEONE WHO DOESN’T MEET “THE NUMBERS AND RATIOS” (quite often a minority applicant) vs BIG BANKS, that’s a fact look it up and learn something!

    Here in MKE, North MKE State Bank has been on the ropes for a while and I’d have to check to see if they are still fighting for life or have been forcibly removed from life support by the feds and as ALWAYS happens, are then swallowed up by another bank deemed to be more “solvent”. This is ALWAYS going to be a larger bank, but North MKE is or maybe was a very longtime, black founded and owned bank that came through for countless families who needed loans and mortgages and I know several people familiar with the management of that bank and their original goal of course was to be profitable, that’s not a bad thing no matter what morons say these days, but ALSO to be a positive partner in our local black community and I can only imagine how many families they helped to get a mortgage denied otherwise or a business loan and much of that was based not on numbers and debt ratios, but on faith in the borrower. What the feds did with this legislation that like I said was so crazy that you know it was written in bullet points or maybe just word for word by the BIG BANKS, who LOVE to see banks like North Milwaukee DIE, just like they love to see rural small banks DIE!!

    Go read up on whatever subject you feel like posting some nonsense about BEFORE you post it next time!!!

  11. Casey says:

    BT….take a deep breath and relax.

    Caps Lock gives you cancer.

  12. Tim says:

    Ha, “look it up”… oh boy

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