Blacks, Hispanics more likely to be denied a home loan than whites

Friday, Oct. 24, 2003 | 11:24 a.m.

Blacks and Hispanics are twice as likely to have their applications for home loans denied than whites in the Las Vegas metropolitan area, according to a new study.

Twenty-one percent of the Las Vegas Valley's blacks who applied for conventional home loans in 2002 were denied, compared to 20 percent of all Hispanics and 10.5 of whites.

The distance between minorities and whites grew even greater at the upper end of the economic spectrum, offering evidence of discrimination, the study's author, Valerie Coffin, said.

"That is the most alarming statistic," said Coffin, who wrote "The Great Divide: Home Purchase Mortgage Lending Nationally and in 115 Metropolitan Areas," for the Association of Community Organizations for Reform Now, a Washington-based nonprofit organization.

"Even if you account for higher income level -- which would also infer credit scores -- we see signs of bias," she said.

Felix Deherrera, immediate past president of the Nevada Association of Hispanic Real Estate Professionals, said the numbers didn't surprise him.

"Historically, those numbers (of denials for minorities) have always been high," he said. "There is definitely discrimination going on in Las Vegas."

The study showed that there was a greater disparity between whites and other racial and ethnic groups as the income level went up. According to the report, it was more than twice as likely for a black applicant in the upper-income level to be denied as it was for a white applicant to be rejected. In the moderate-income category, it was slightly less than twice as likely for blacks to be denied as it was for whites.

Additionally, both minority populations received homeowner loans in percentages that were less than their share of the overall population, the study showed. In 2002, blacks in Southern Nevada received 3.4 percent of all conventional loans, while making up 9 percent of the valley's population. Hispanics received 8 percent of the loans, though they represented 24 percent of the total population.

Nationwide, blacks received 5 percent of all conventional loans in 2002, while making up 13 percent of the total population. Hispanics received 8.5 percent of the loans, though they represented 13.3 percent of the total population.

David Olshan, managing attorney for Nevada Fair Housing, a Las Vegas nonprofit group, said the study's results were not surprising.

"They demonstrate the obvious: There are significant barriers to people of color when it comes to obtaining financing," he said.

Deherrera said the Hispanic population -- about 25 percent of the region's total -- presents particular obstacles that must be overcome to lower the denial rate on loan applications.

One issue he sees in his day-to-day work is the growing number of undocumented immigrants who attempt to buy houses with falsified documents.

"Then they get discovered and their application is denied," he said.

Then there are large numbers of Hispanics who are seeking a home without completely understanding how credit works.

"Our surveys show that many of them don't understand the credit process, and get into the application without knowing they have problems with their credit score," he said.

Deherrera, who is also a real estate broker, also said that new programs run by Fannie Mae and Freddie Mac meant to educate first-time homeowners should make a dent in the lack of education among Hispanics.

"Three or four years from now, there should be a change in those numbers," he said.

Louie Overstreet, executive director for the Urban Chamber of Commerce, an organization representing black businesses, said that the study also pointed to the need for better job opportunities for minorities.

"It's more of an intrinsic economic issue ... where we're not getting equal access to opportunity," he said.

Coffin said the study's results are important given the region's pace of growth.

"Especially since Las Vegas is one of the fastest-growing areas in the nation, you need to have all people feel welcome, regardless of race, ethnicity or income level," she said.