Riding the Stagecoach to Hell: A Qualitative Analysis of Racial Discrimination in Mortgage Lending

Abstract

Recent studies have used statistical methods to show that minorities were more likely than equally qualified whites to receive high cost, high risk loans during the U.S. housing boom, evidence taken to suggest widespread discrimination in the mortgage lending industry. The evidence, however, was indirect, being inferred from racial differentials that persisted after controlling for other factors known to affect the terms of lending. Here we assemble a qualitative database to generate direct evidence of discrimination. Using a sample of 220 statements randomly selected from documents assembled in the course of recent fair lending lawsuits, we code texts for evidence of individual discrimination, structural discrimination, and potential discrimination in mortgage lending practices. We find that 76% of the texts indicated the existence of structural discrimination, with only 11% suggesting individual discrimination alone. We then present a sample of texts that were coded as discriminatory to reveal the way in which racial discrimination was embedded within the social structure of U.S. mortgage lending, and to reveal the specific micro-social mechanisms by which this discrimination was effected.