Home mortgage approval rates are up in Detroit — but Black people are still being denied for mortgages at higher rates than white people, according to a report released Monday by the nonprofit Detroit Future City.
The report found three main reasons that loans were being denied: credit history, debt-to-income ratio, and home appraisal issues.
Anika Goss is the CEO of Detroit Future City. She said another issue is that there are not enough homes in Detroit that are move-in ready.
Goss said the mortgage loan system was built on racist practices such as redlining, which denied services to residents of certain neighborhoods, often based on race.
"What happened over time wasn’t that we completely dismantled this old structural system; they just revised it. The underlying factor is that those discriminatory laws are the foundation of the American lending process," Goss said.
In 2020, African-American applicants were denied home purchase loans at twice the rate as white applicants, the report said.
Some neighborhoods in Detroit received few, if any, mortgage loan applications in 2020, according to the report.
The analysis suggested appraisal reforms, alternative measures of creditworthiness, and more programs to create move-in ready homes.
Goss said that means the organization needs to address a wide range of issues.
"We’re focused on credit, focused on neighborhoods. We’re focused on home repair, and we’re focused on supporting borrowers. And we’re focused on leveling out the appraisal process in Detroit," she said.
The report also suggested ensuring more diversity among home appraisers and evaluating loan applicants on more than just traditional credit scores.
