Lender type and racial and ethnic gaps in the U.S. mortgage market.
Description
This manuscript examines whether racial and ethnic mortgage denial disparities are wider or narrower when applicants apply through nonbank mortgage originators rather than depository institutions. It uses more than 6.1 million recent conventional home purchase applications from 2022 through 2024 Home Mortgage Disclosure Act data.
The results show smaller denial gaps in the nonbank channel. The Black-White and Hispanic-White gaps are both materially lower among nonbanks than among depositories, and the evidence points in the same direction for Asian and other minority applicants. The paper frames lender type as an institutional boundary in fair lending analysis.
What this paper contributes.
Treats lender type as substantively important.
The paper compares depositories, bank-affiliated nonbanks, and independent mortgage companies rather than treating lender form as background.
Uses recent HMDA application records.
The analysis covers conventional home purchase applications from the 2022-2024 period.
Documents smaller nonbank denial gaps.
Minority-white denial gaps are generally lower in the nonbank channel than in the depository channel.
Shifts attention to origination systems.
The findings suggest that fair lending analysis should examine workflow, supervision, specialization, and market channel design.