Application Denied: Assessing the Relationship Between Race-Specific Mortgage Denials, Neighborhood Structure and Crime

• In Event: Communities and Place: Housing and Neighborhood Crime

Abstract

External investment through home mortgage loans can mitigate neighborhood crime, even in disadvantaged neighborhoods. Historically, however, disparate lending practices across race have resulted in less mortgage investment in minority communities and a disproportionate number of mortgage denials by minority applicants. This is particularly important in light of neighborhood steering practices by real estate agents, residential preferences, and housing affordability, which may result in minority applicants disproportionately purchasing homes in disadvantaged or predominantly minority communities. As such, minority or disadvantaged neighborhoods may be less likely to benefit from an important mitigator of crime: investment. The current study examines both direct and conditional effects of mortgage loan denials by race in census tracts across 90 U.S. cities, estimating a series of multilevel negative binomial models on crime. We explore direct effects of loan denials on crime. Then, we consider whether tract characteristics such as socio-economic disadvantage and the racial/ ethnic makeup moderate these effects. Finally, we explore whether the racial/ethnic characteristics of individual borrowers condition the relationship between loan denials and crime. In conclusion, we consider the implications for racial differences in lending practices, and whether minority applicants should be prioritized in an effort to reduce housing inequality and neighborhood crime.

Authors

• Alyssa Chamberlain, Arizona State University

• Thomas D. Stucky, Indiana University-Purdue University Indianapolis

• Lyndsay N. Boggess, University of South Florida