CLEVELAND — A study just released by the Cleveland State Maxine Goodman College of Urban Affairs, created by Mark Salling, PhD, indicates home purchase loans are denied more often for African-American applicants than white applicants in Northeast Ohio.
Salling said the study's findings not only indicate an inequitable situation, but it also creates an economic climate that could be damaging to local neighborhoods and the residents who live there.
"The statistics tell us that there's more than two to one denial rate for African-Americans than for whites," Salling said.
"So denying loans to neighborhoods more often in African-American communities means that the market value of those properties are decreased, it means the purchasing power of the neighbors in that neighborhood is decreased," he said.
"It's something that is against the law, but furthermore, the institutions that are making those decisions need to be held accountable," Salling said.
Salling said the report is based on census tract level data provided by the Home Mortgage Disclosure Act, on the number of loan applications that are submitted and the number of home purchase loans that are finalized.
The data is reported by the race and gender of individual applicants.
Maple Heights Mayor Annette Blackwell told News 5 the study is just further proof that lending discrimination continues in Northeast Ohio.
Blackwell said local banks need to do more than just using credit scores when considering home loans for African-American applicants.
Blackwell said banks should also examine bill paying history beyond credit accounts, including how the applicant pays utility bills and bills for other goods and services.
"Anyone, irrespective of their color, should be able to realize the American dream, and home ownership is one of them," Blackwell said.
"I think they need to get beyond making loans based on zip codes and demographics."
Maple Heights Housing Manager Ashley King said her city is working to open up more available homes by making the housing stock more attractive for home loan approval from banks for both minority and first time home buyers.
Coldwell Banker Schmidt Realtor Jennifer Burke said Maple Heights dropped its point of sale escrow hold, dropping fees and fines on homes to make them more attractive to investors for renovation and sale.
"This allow the city to hep put the product on the market, so that first time home buyers can purchase," she said. "Those are more of the turn key properties that lenders want to see. The ones that don't require major work to be done."
Meanwhile, Salling had some final advice for local banks when it comes to more equitable approval of home loans to African-American applicants.
"Hold yourselves more accountable if you care about the region, and you care about the neighborhoods that you're in," Salling said.
