Racial Disparities in Access to Mortgage Credit: Does Governance Matter?


  • *Direct correspondence to Colleen Casey, Assistant Professor, School of Urban and Public Affairs, 526 University Hall, Box 19588, University of Texas at Arlington, Arlington, TX 76019-0588 <colleenc@uta.edu. Colleen Casey will share all data and coding for replication purposes. We thank and acknowledge several anonymous reviewers and editors whose constructive criticism was invaluable in making this a better article. Any errors or inconsistencies herein are entirely our own.


Objectives. This article examines the effect of community organizing on the likelihood that minority borrowers pursue home mortgage credit from regulated lenders.

Methods. Governance perspectives suggest that community organizations exert significant influence on policy outcomes. We use logistic regression with interaction terms to test the effect of community organizing on the lending outcomes of minority borrowers. We use a matched control sample of cities, drawing on 2004 loan data from two midwestern cities similar in racial and economic composition but with different histories of organizing around the Community Reinvestment Act (CRA).

Results. We find differential effects based on an applicant's race or ethnicity. Overall, African-American applicants are less likely to pursue mortgage credit for home ownership from regulated lenders than their white, non-Hispanic counterparts. However, African Americans seeking mortgage credit in a city with a history of CRA organizing are more likely to apply to regulated lenders than their racial counterparts in a city without CRA organizing. However, while organizing reduces the disparities between white and African-American applicants, a gap still remains.

Conclusion. African-American borrowers living in cities with a history of community organizing around CRA appear more likely to pursue mortgage credit from traditional, regulated lenders, suggesting that governance matters.