The Color of Credit

The Color of Credit

Mortgage Discrimination, Research Methodology, and Fair-Lending Enforcement

By Stephen L. Ross and John Yinger

An analysis of current findings on mortgage-lending discrimination and suggestions for new procedures to improve its detection.





An analysis of current findings on mortgage-lending discrimination and suggestions for new procedures to improve its detection.

In 2000, homeownership in the United States stood at an all-time high of 67.4 percent, but the homeownership rate was more than 50 percent higher for non-Hispanic whites than for blacks or Hispanics. Homeownership is the most common method for wealth accumulation and is viewed as critical for access to the most desirable communities and most comprehensive public services. Homeownership and mortgage lending are linked, of course, as the vast majority of home purchases are made with the help of a mortgage loan. Barriers to obtaining a mortgage represent obstacles to attaining the American dream of owning one's own home. These barriers take on added urgency when they are related to race or ethnicity.

In this book Stephen Ross and John Yinger discuss what has been learned about mortgage-lending discrimination in recent years. They re-analyze existing loan-approval and loan-performance data and devise new tests for detecting discrimination in contemporary mortgage markets. They provide an in-depth review of the 1996 Boston Fed Study and its critics, along with new evidence that the minority-white loan-approval disparities in the Boston data represent discrimination, not variation in underwriting standards that can be justified on business grounds. Their analysis also reveals several major weaknesses in the current fair-lending enforcement system, namely, that it entirely overlooks one of the two main types of discrimination (disparate impact), misses many cases of the other main type (disparate treatment), and insulates some discriminating lenders from investigation. Ross and Yinger devise new procedures to overcome these weaknesses and show how the procedures can also be applied to discrimination in loan-pricing and credit-scoring.


Out of Print ISBN: 9780262182287 469 pp. | 6 in x 9 in 16 illus.


$35.00 X ISBN: 9780262538602 469 pp. | 6 in x 9 in 16 illus.


  • ... destined to become as famous and controversial as the seminal studies it cites, re-evaluates, and critiques.

    Journal of Economic Issues

  • [D]iscrimination in mortgage markets is an extremely important issue... an essential contribution to our understanding of this problem.

    Journal of Economic Literature

  • [T]he authors provide important guidance for improving the quality of research into discrimination in mortgage lending.

    Public Administration Review

  • [T]he entire lending industry...would unmistakably benefit from considering the author's conclusions and policy suggestions.

    Journal of Affordable Housing

  • [T]he value of the book is that it brings much needed analytical clarity to the mortgage lending discrimination debate.

    Contemporary Sociology


  • This is a splendid book. Ross and Yinger have synthesized the economic theories of mortgage market discrimination and the empirical evidence on its magnitude in the American mortgage market. The result is a model of careful research and judicious analysis on an important topic.

    John M. Quigley

    Department of Economics, University of California, Berkeley

  • This book provides the most comprehensive review to date of what we know and do not know about mortgage lending discrimination. More importantly, it offers readily available tools that fair lending enforcement agencies can utilize to insure that all applicants will be treated in a fair and equitable manner, free from any fear of racial discrimination.

    Gregory D. Squires

    Department of Sociology, George Washington University

  • Ross and Yinger use their clever conceptual and empirical analyses to cut through the rhetorical fog obscuring the issue of mortgage market discrimination. Their pathbreaking test for discrimination provides the foundation for the next generation of research and enforcement initiatives.

    George Galster

    Hilberry Professor of Urban Affairs, Wayne State University