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Zillow analysis: 15% of Black homebuyers denied mortgages in Colorado

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Posted at 4:25 PM, Jan 14, 2022
and last updated 2022-01-14 19:52:44-05

COMMERCE CITY, Colo. — A newly published Zillow analysis found 15% of Black mortgage applicants are denied loans in Colorado.

“Overall, Black mortgage applicants were denied 84% more times than white applicants. In Colorado specifically, that number was 67%,” saod Nicole Bachaud, Zillow economic researcher.

Bachaud said the main reasons for loan denials were lack of credit or poor credit history, but the reason for these credit issues dates back decades.

“It really goes back to redlining," Bachaud said. "When Black and brown communities were really barred from accessing traditional financial institutions, they were really barred from accessing credit.”

Bachaud said research uncovered issues with down payments as well.

“Black applicants were putting down smaller down payments. Overall, the down payment size was 3.5% — it was the same rate in Colorado — compared to around 8% or 9% nationally as the the typical down payment for all applicants. So, that is stemming from income inequalities and disparities as well," Bachaud said.

Zaneta Vaughn recently closed on her home in Commerce City.

"I have never been flat out denied a mortgage, but I have experienced what I would perceive as predatory lending," Vaughn said.

For months leading up to the closing, Vaughn said her mortgage lender would not lower her interest rate.

“The interest rates have been at an all time, you know, low during the pandemic. But I get different excuses as to why I can't get a lower interest rate," Vaughn said. “Some of the reasons have been a no credit or not enough credit history as well as fluctuating income, although my income has steadily increased for the last 20 years.”

Vaughn’s realtor, April Denmon, owner of Denmon Realty has sold 111 homes over the past two years. She said the majority of her clients are Black, and many have been denied due to credit issues.

“I have a client I was working with for at least a year. We got his credit up, he got a secured credit card, he missed one payment and it dropped his credit 150 points. The lender is telling him it's going to take two years to build his credit back,” Denmon said.

Tanaia Smith, a loan officer, said every day she sees the legacy discrimination has had on home buying.

“I know I'd say I'm crazy if I said, 'Oh, no, it never happens.' I know that it happens out there,” Smith said.

Smith said the best way to combat discrimination, as well as denied loans, is education.

“I think that sometimes within our community, there's a lack of understanding what credit is how it affects you long term and how it affects, you know, you potentially purchasing a home,” Smith said. “I think that the assumption is, 'let me fix my credit so that I can purchase a home,' not necessarily knowing the ins and outs of credit to know what to fix.”

To learn more about credit repair, down payment assistance and home buying click here.