Marsha J. Courchane, Stephen L. Ross

In this article, we present overviews of the research on discrimination in mortgage underwriting and pricing, the experiences of minority borrowers prior to and during the financial crisis and federal efforts to mitigate foreclosures during the crisis. We next discuss the history of legal cases alleging disparate treatment of minority borrowers, and recent cases alleging disparate impact in the wake of the Supreme Court’s “Inclusive Communities” decision. Using these discussions as a background, we discuss and examine mortgage regulations issued by the Consumer Finance Protection Bureau following the financial crisis, describe recent developments in the FinTech industry discussing their implications for fair lending policy and minority borrowers more generally, and finally draw conclusions and make recommendations for improving the mortgage market outcomes of minority borrowers and increasing minority borrowers’ access to credit.

JEL Codes
G01: Financial Crises
G21: Banks; Depository Institutions; Micro Finance Institutions; Mortgages
G23: Pension Funds; Non-bank Financial Institutions; Financial Instruments; Institutional Investors
G28: Financial Institutions and Services: Government Policy and Regulation
J15: Economics of Minorities, Races, and Immigrants; Non-labor Discrimination
J16: Economics of Gender; Non-labor Discrimination
K23: Regulated Industries and Administrative Law
L85: Real Estate Services
R30: Real Estate Markets, Production Analysis, and Firm Location: General
Fair Housing Act
mortgage discrimination
risk-based pricing
financial crises
mortgage foreclosure
subprime lending
legal settlements
disparate impact
inclusive communities
Consumer Finance Protection Bureau