Mortgage discrimination

Mortgage discrimination or mortgage lending discrimination is the practice of banks, governments or other lending institutions denying loans to one or more groups of people primarily on the basis of race, ethnic origin, sex or religion.

Instances of mortgage discrimination occurred in United States inner city neighborhoods from the 1930s and there is evidence that the practice continues to a degree in the United States today.[1][2] In the United States, banks practiced redlining or denial of financial services including banking or insurance to residents of areas based upon the racial or ethnic composition of those areas, either directly or through selectively raising prices.


African Americans and other minorities found it nearly impossible to secure mortgages for property located in redlined zones.[3] The systematic denial of loans was a major contributor to the urban decay that plagued many American cities during this time period. Minorities who tried to buy homes continued to face direct discrimination from lending institutions into the late 1990s. The disparities are not simply due to differences in creditworthiness.[4] With other factors held constant, rejection rates for Black and Hispanic applicants was about 1.6 times that for Whites in 1995.[5]

Fairness in lending was improved by the Home Mortgage Disclosure Act, passed in 1975. It requires banks to disclose their lending practices in the communities they serve. In the 1970s, the private sector fight against mortgage discrimination began to be led by community development banks, such as ShoreBank in Chicago.[6]