Why is it Still so Difficult for Inner-City Residents to Take Out a Mortgage?

Location, location, location.

There’s a large gulf in mortgage lending between inner city Milwaukee and suburban neighborhoods and between black and white applicants, according to a recent report by the National Community Reinvestment Coalition, a group of local housing agencies. The report mapped lending in the Milwaukee area and concluded that the lack of it to black would-be homeowners sets off a self-reinforcing cycle, “impacting the ability of majority African American neighborhoods to build wealth and increasing the likelihood that lenders will not invest there.”

Source: National Community Reinvestment Coalition
Source: National Community Reinvestment Coalition

This is just the latest documentation of a long-standing problem. In 1988, a Pulitzer Prize-winning series in the Atlanta Journal-Constitution famously roused Milwaukeeans by concluding its black residents had the hardest time getting a home mortgage, relative to whites, out of any such population group in the country. Blacks were being rejected at four times the rate of white loan applicants, the newspaper found, and the city continued to appear in investigations of “redlining,” or interfering with a community’s access to lending. In 2015, the U.S. Department of Housing and Urban Development (HUD) reached a $200 million settlement with Green Bay-based Associated Bank, the largest bank based in Wisconsin, over accusations that race had played a role in its low loan rate to minorities here and around the country.

In the HUD case, the government concluded that the racial differences in Associated Bank’s lending were statistically significant, meaning applicants were denied loans based on their race and not just economic factors, an allegation the bank denies. As a result of the case, Associated will spend close to $200 million on various outreach, education and lending programs in several U.S. cities – including Milwaukee, Racine, and Kenosha – over the next three years. “We’re on pace to meet and exceed the commitments we’ve made in the HUD agreement,” says David Stein, the bank’s executive vice president and head of consumer and commercial banking. He points to the bank’s new loan production office at 77th Street and Good Hope Road as an example. “We view [the agreement] as one step in a much broader objective to expand our presence,” he says, “and make available our mortgage products to the entire Milwaukee community.”

Housing and mortgage discrimination – a refusal to do business with someone because of race – is against federal law and greatly underreported, according to Bethany Sanchez, executive director of the nonprofit Metropolitan Milwaukee Fair Housing Council, the leading entity for investigating such discrimination in southeast Wisconsin. “The prospect of someone [discriminating against them] because of the color of their skin is so hurtful or confusing,” she says. “People don’t want to believe it happened to them.”

‘Location, Location, Location’ appears in the November 2016 issue of Milwaukee Magazine.

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Claire Hanan worked at the magazine as an editor from 2012-2017. She edited the Culture section and wrote stories about all sorts of topics, including the arts, fashion, politics and more. In 2016, she was a finalist for best profile writing at the City and Regional Magazine Awards for her story "In A Flash." In 2014, she won the the Milwaukee Press gold award for best public service story for editing "Handle With Care," a service package about aging in Milwaukee. Before all this, she attended the University of Missouri's School of Journalism and New York University's Summer Publishing Institute.