Racial Stratification Among Latinos in the Mortgage Market

Abstract

Studies of the mortgage industry’s impact on racial stratification have long focused on racial disparities found between white and black homeowners. Ample research demonstrates that unequal access and treatment between white and black home seekers has created major differences in the type of loan products they are offered in the marketplace. While numerous studies also document disadvantaged Latino homebuyers, studies have yet to examine racial variation within the Latino population. This paper draws on annual data from the Home Mortgage Disclosure Act (HMDA) from 2010 to 2017 to assess variation in racial disparities among Latinos in loan outcomes and compares them to Non-Latino whites, blacks, Asians, and Others. I show that loan rejections and high cost originations are highest among black Latinos and lowest among white and Asian Latinos. Other Latinos perform somewhere in the middle. These trends are particularly true when examining mortgage denials. When comparing Latino racial groups to Non-Latinos, the observed lending patterns provide evidence of a tri-racial hierarchy in the mortgage market.