Blogs / Resources
THE BASELINE DATA — WHAT THE NUMBERS SHOW
According to the CFPB’s official HMDA 2023 data for conventional, first-lien, owner-occupied home purchase loans, denial rates remain uneven across racial and ethnic groups:
Black applicants: 16.6%
Hispanic-White applicants: 12.0%
Asian applicants: 9.0%
Non-Hispanic White applicants: 5.8%
Why this matters:
HMDA is the most widely cited public dataset, yet it cannot capture every factor lenders use. This allows disparities to persist without clear accountability or borrower-level explanations.
WHMRP Insight:
This data confirms many borrowers’ lived experience, unequal outcomes exist even before individual explanations are provided.
WHY “REASONS FOR DENIAL” DON’T TELL THE FULL STORY
Research from the Federal Reserve Bank of Minneapolis shows that lender-reported HMDA denial reasons, such as debt-to-income or credit, do not fully explain racial disparities. Even when applicants appear similar on paper, Black and Latino borrowers remain more likely to be denied.
Why this is controversial:
Borrowers are often given a label, not a roadmap. The research shows these labels do not account for the full denial gap.
WHMRP Insight:
Many denials stem from information failures, not borrower failures. Without clarity, borrowers cannot fix what went wrong.
AUTOMATED UNDERWRITING — THE INVISIBLE FILTER
A Federal Reserve Bank of Philadelphia working paper highlights that automated underwriting systems often act as a first filter. Black and Hispanic applicants are less likely to receive favorable automated recommendations, even before a loan officer reviews the file.
Why this is little known:
Borrowers assume denials are personal decisions. In reality, automated systems apply rules most borrowers never see and rarely have explained to them.
WHMRP Insight:
Borrowers cannot address issues they cannot see. Translating automated underwriting logic into actionable readiness steps is critical.
INVESTIGATIVE REPORTING — CONTROLLED STUDIES STILL SHOW GAPS
The Markup’s “Denied” investigation analyzed mortgage outcomes while holding numerous factors constant. Their findings showed that borrowers of color were still more likely to be denied than similarly situated White applicants.
Reported likelihood of denial:
Latino applicants: 40% more likely
Asian/Pacific Islander applicants: 50% more likely
Native American applicants: 70% more likely
Black applicants: 80% more likely
Why this matters:
Industry explanations often cite missing variables, but repeated findings reinforce that structural issues persist.
WHMRP Insight:
Regardless of cause, families need a strategy and documentation plan, not generic advice.
THE HIDDEN IMPACT OF APPLYING SOLO
The Markup’s “Denied” investigation analyzed mortgage outcomes while holding numerous factors constant. Their findings showed that borrowers of color were still more likely to be denied than similarly situated White applicants.
Reported likelihood of denial:
Latino applicants: 40% more likely
Asian/Pacific Islander applicants: 50% more likely
Native American applicants: 70% more likely
Black applicants: 80% more likely
Why this matters:
Industry explanations often cite missing variables, but repeated findings reinforce that structural issues persist.
WHMRP Insight:
Regardless of cause, families need a strategy and documentation plan, not generic advice.
CURRENT EVENTS & POLICY SHIFTS
Digital Redlining and Enforcement Changes
Recent developments raise concerns about accountability:
A federal judge blocked a Wells Fargo class action related to alleged discriminatory outcomes tied to automated systems, pushing borrowers toward individual cases.
The CFPB proposed changes asserting that ECOA does not authorize disparate-impact liability, which advocates warn could weaken enforcement.
Why this is concerning:
As automated underwriting expands, transparency and remedies may decline.
WHMRP Insight:
Borrowers cannot wait for systemic reform. Readiness education and disciplined documentation are needed now.
ADDITIONAL RESEARCH & READINGS
UCLA Research Reveals Significant Racial and Ethnic Disparities in Los Angeles County’s Mortgage Market
Latino Policy & Politics Institute
https://latino.ucla.edu/research/ucla-research-reveals-significant-racial-and-ethnic-disparities-in-los-angeles-countys-mortgage-market/
Racial Gaps in Mortgage Denials Persist Despite Industry Progress
National Mortgage Professional
https://nationalmortgageprofessional.com/news/black-potential-homebuyers-denied-nearly-twice-often
Understanding Mortgage Lending Discrimination, What You Need to Know
Consumer Financial Protection Bureau
https://www.consumerfinance.gov/ask-cfpb/what-is-mortgage-discrimination-en-1955/
Lender-Reported Reasons for Mortgage Denials Don’t Explain Racial Disparities
Federal Reserve Bank of Minneapolis
https://www.minneapolisfed.org/article/2024/lender-reported-reasons-for-mortgage-denials-dont-explain-racial-disparities
The Secret Bias Hidden in Mortgage Approval Algorithms
The Markup
https://themarkup.org/denied/2021/08/25/the-secret-bias-hidden-in-mortgage-approval-algorithms
Latinos and Minorities Continue to Face Mortgage Loan Discrimination
Salud America
https://salud-america.org/latinos-minorities-continue-to-face-mortgage-loan-discrimination/
Important Disclaimer
The Welcome Home Mortgage Readiness Program provides education, file preparation, document review, and guideline-based readiness support. We are not a lender and do not issue loan approvals, commitments, or guarantees. After a member completes the analysis and vetting process and achieves readiness, their file may be placed with a licensed mortgage lender for final review. All lending decisions, approvals, and underwriting outcomes are made solely by licensed mortgage lenders.
Completion of the Welcome Home Mortgage Readiness Program does not guarantee loan approval or future credit results. All timelines and examples are representative only. Each borrower’s situation is unique and subject to documentation requirements, guideline changes, and lender discretion.
You’ve already been told “no.”
You deserve to finally understand why — and what to do next.
Welcome Home Mortgage Readiness Program
Welcome Home Mortgage Readiness Program provides mortgage readiness guidance, document review, and file analysis to help borrowers prepare for lender review. We do not originate or broker loans.
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