Jan 24, 2022 - Real Estate

Study: 20% of Black mortgage applicants in N.C. denied

charlotte real estate market

charlotte real estate market

Black homebuyers in North Carolina are twice as likely to be denied for mortgages as white homebuyers.

By the numbers: A recent Zillow analysis of Housing and Mortgage Disclosure Act data shows that 20% of Black applicants in N.C. were denied mortgages in 2020, compared to 10.9% of white potential buyers.

  • Nationwide, the gap is growing: Black applicants in the U.S. were denied at an 84% higher rate than white applicants in 2020 — a 10% increase over 2019.

Why it matters: Homeownership is still one of the best ways to build generational wealth in the United States. And time and again throughout history, locally and nationally, Black families have been shut out more than white families.

Data: Zillow analysis of data from the Home Mortgage Disclosure Act (HMDA); Map: Baidi Wang/Axios

Context: The Zillow report states that credit history is the most commonly cited reason Black applicants were denied a mortgage.

  • “The access gap between Black and white mortgage applicants continues to grow, setting Black would-be homeowners farther back from well-established wealth- and community-building benefits of homeownership than their white peers,” the report says.
  • ‘This is partly a result of longstanding income and credit disparities that only deepened during the pandemic.”

The big picture: The demographics of Charlotte’s neighborhoods didn’t happen by chance.

  • When Myers Park was built in the early 1900s, for instance, deeds included restrictions that said: “This lot shall be owned and occupied by people of the Caucasian race only.”
  • In the 1930s, the federal government created color-coded maps of urban neighborhoods based on perceived credit risk, with green neighborhoods the lowest risk and red ones the highest risk.
  • Charlotte historian Tom Hanchett has noted that four areas of Charlotte received the green rating: Myers Park, Eastover, Dilworth, and a tract around Charlotte Country Club. The red neighborhoods were where people of color lived.
  • In the 1950s and 60s, city leaders approved a federal “urban renewal” program and tore down the mostly Black Brooklyn neighborhood, forcing families to move out of what’s now Second Ward.

Of note: UNC Charlotte’s Urban Institute dove deep into the legacy of redlining and other issues surrounding the wealth gap.

Go deeper: UNC Press in 2019 published Keeanga-Yamahtta Taylor’s “Race for Profit: How Banks and the Real Estate Industry Underminded Black Homeownership.

  • The book, a Pulitzer finalist in 2020, goes into great depth to show how even programs designed to fix the problem only worsened it.
  • In the mid-20th century, for instance, the federal government started guaranteeing urban mortgages to entice lenders to approve Black applicants. That created a situation where investors and agents and banks targeted people most likely to default, so they could double-dip on profits.

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