Racial Stratification in the Mortgage Market: The Role of Co-Applicants

Presenter: Jose Loya, PhD Candidate in Sociology

Discussant: Lisa Servon, Professor and Chair of City & Regional Planning

Breafast treats, coffee, and tea in the URBS space, Room 130 McNeil!


Unequal access to homeownership has long been central to racial stratification. Ample research demonstrates large racial disparities that exist in access and outcomes throughout the mortgage process at both the individual and neighborhood levels. However, the underlying assumption in most of these studies is that the couples applying for a mortgage are racially homogenous. It is unclear what racial stratification is when examining different ethno-racial couples. This paper draws on annual data from the Home Mortgage Disclosure Act (HMDA) from 2010 to 2016 to assess variation in racial disparities in loan outcomes associated with different racial couplings. I show that racial disparities in loan outcomes vary tremendously when factoring the ethno-racial identity of the co-applicant. Inter-racial couples involving a white applicant and a black or Latino partner are more likely to experience an adverse loan outcome than mono-racial white couples. This is not the case for Asian co-applicants. In particular, applications that have a black or Latino co-applicant are disproportionately channeled into high cost loans, while Asian applicants perform on par with whites. This pattern of racial hierarchy shifts when examining mortgage denials.  More specifically, the performance of Asian applicants shifts depending on the ethno-racial classification of their partner. In addition, large variation exists between and within ethno-racial couples that support and challenge the fluidity of racial stratification in housing.