published on February 29, 2016 - 12:44 AM
Written by The Business Journal Staff

Not everyone is participating in the ongoing recovery buoying the Valley housing market. According to a new report released this week by a Bay Area public policy research institute, many African American, Latinos and Hispanic borrowers in Fresno continue to be denied access to mortgages.


The report, entitled “Locked Out of the Market: Poor Access to Home Loans for Californians of Color,” was written by Zach Murray and Sasha Werblin, researchers at the Berkeley-based Greenlining Institute.
The Greenlining Institute report focused specifically on three California cities — Fresno, Long Beach and Oakland.
According to its website, Greenlining Institute “works to overcome the lingering effects of redlining” by helping communities of color “build wealth and ensure that our financial system works for all.”
Redlining is a discriminatory, illegal practice once used by certain lending institutions to deny loans to people living in specific geographic areas, especially poorer inner-city neighborhoods.
While doing the research for their report, the Greenlining authors found that statewide in 2013, of the more than $187 billion in mortgage credit lent to Californians, only $53 billion went to Asian, African American and Hispanic borrowers.
“California is a critical housing market and a bellwether for national trends,” the authors note. “Unfortunately, access to affordable and sustainable home loans remains elusive to many in California’s new majority, particularly to African American and Hispanic borrowers across the state.”
In the three cities highlighted in the report, Murray and Werblin found that African Americans and Latinos were “far less likely to apply for or receive home mortgages than would be expected based on their percentage of the population.”
The report, which only looked at 2013 data from the state’s top 12 lenders, found that blacks and Latinos combined, who represented 44 percent of California’s population, received just 10.6 percent of home mortgage dollars.
Fresno had the highest lending volume of the three cities spotlighted in the report.
In the Fresno market, according to the report, “whites submitted the highest percentage of loan applications in the city at 67 percent and consistently exceeded their population share in applications, [loan] originations and total dollars lent.”
While Latinos represented 48 percent of Fresno’s population in 2013, they received just 21 percent of mortgage dollars lent.
African Americans living in Fresno fared even worse proportionally, receiving just 3 percent of all mortgages approved in 2013 even though they represented 8 percent of the city’s population.
“This report clearly shows that for all practical purposes, African Americans and Hispanics are locked out of the homeownership market, beginning with the disturbingly low number of applications submitted by each ethnic group,” the authors write.
But the report’s conclusions were tempered to some degree by incomplete data, with researchers discovering that over 15 percent of applications from 2013 were missing race and/or ethnicity data.
“Unfortunately, the federal data can’t tell us why black and Latino borrowers are so underrepresented, but the fact that these families are effectively shut out of the home mortgage market should set off alarms,” said Murray, Greenlining Institute’s Economic Equity program manager.
“It’s time to ask whether banks are doing enough to reach African American and Latino borrowers with loan products that meet their needs and help them gain the benefits of homeownership,” he added.
“Our analysis revealed several major concerns regarding the home mortgage market,” said Oakland-based Urban Strategies Council Research and Technology Director Steve Spiker. “We found that applications from, and loans to, black and brown communities were much lower than would be expected given their share of the population.”
A recent survey of Fresno area mortgage lenders seems to indicate that many are stepping up their efforts to reach — and lend to — non-white mortgage applicants. A number of area loan officers said they have been promoting a new program from national mortgage-finance company Fannie Mae that makes it easier for working-class and multigenerational households to qualify for a mortgage because it allows underwriters to include qualifying income from non-borrowers within a household.
Sheryl Arndt, a Southern California-based mortgage broker who works exclusively with low-income borrowers, said that in her 24 years of experience in the industry, she has only encountered one incident of “blatant redlining.”
“Improving access to mortgage financing for underserved communities is an incredibly important issue right now,” Arndt said. “But having poor or non-existent credit scores” remains the “biggest hindrance” most of her clients encounter while trying to get approved for a home loan, she added.
Among their recommendations, the Greenlining authors suggest banks “diversify” their loan officers in order to increase their reach in African American and Hispanic neighborhoods. They also suggest lending institutions enhance their partnerships with housing counseling agencies and create more “proprietary mortgage products” for low- and moderate-income borrowers.
The authors argue that “identifying trends and creating solutions” that will increase homeownership among non-white Californians is “critical” to bridging the “racial wealth gap.”
“While California’s housing market is leading the recovery nationally,” the report concludes, “so far, little of this recovery has reached communities of color across the state.”

George Lurie  |  Reporter can be reached at:
490-3464 or e-mail george@thebusinessjournal.com


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