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FairPlay Study Ranks Fairest Lenders & Metro Areas In U.S.

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This article originally ran in National Mortgage Professional

Mortgage fairness increased for the protected classes in 2021, but regional inequalities persist.

Key Takeaways

  • Native American homebuyers were approved for mortgages at 81.9% the rate of white homebuyers.
  • Black homebuyers were approved for mortgages at 84.4% the rate of white homebuyers.
  • Hispanic homebuyers are approved for mortgages at 88.7% the rate of white homebuyers.
  • Female homebuyers were approved for mortgages at 99.2% the rate of male homebuyers, the highest rate ever and approaching parity.

For the second year, FairPlay released its comprehensive study evaluating publicly available data to identify the fairest cities and fairest lenders in the United States. The data analyzes loan records from 2021 for four protected groups including Black, Native American, Hispanic, and female borrowers.

To determine fairness, FairPlay data scientists calculated the Adverse Impact Ratio (AIR) for each of the four protected groups across the Top 20 metro areas and the country’s largest lenders. For example, if protected class applicants had a 60% approval rate, while the control group had a 90% approval rate, the AIR would be 60/90 or 67%. An AIR of less than 80% is considered a statistically significant disparity. AIR does not control for risk.

The analysis shows that mortgage fairness increased for the protected classes in 2021, but regional inequalities persist, particularly for Black and Native American borrowers.