Largest lenders deny home loans for Black applicants up to three times more often than whites

Of the more than 153,000 Charlotte-area home loans originated in 2018 and 2019 where a person's race is listed, federal data show only roughly 20,000, or 13%, went to Black men and women; a group that makes up almost a quarter of the region's population. Marketwide, the data reveal home loan disparities spanning every income bracket.

"What that tells me is nothing has changed," Community Link president and CEO Floyd Davis, Jr. said. "Nothing has changed."

Davis runs an organization that helps people successfully buy homes by teaching them financial literacy and helping clean up their credit. He marched for civil rights in the 1960s and is still pushing for equity today.

"It's very difficult for a person like myself in some respects to understand and still tolerate where we are today, but I have to step back and say, 'Floyd, what can you do about it?' and that's why I do the work I do," he said.

"What can I do about it?"

Shay Myers asked herself that question three years ago when an area lender denied her first mortgage application.

"My debt-to-income, it was just too high and my credit score was too low," Myers said.

The 30-year-old first started caring for her wheelchair-bound mother at the age of 18. She's also raising two kids and providing for her deaf grandmother.

"I'm the main breadwinner of the household," Myers said.

She works multiple jobs.

"I don't get much sleep. I probably have maybe three hours. I know it's not healthy, but it's what I have to do to keep my family afloat," she said. "It goes back to the old times when you have to work twice as hard just to get halfway to your white counterparts."

Instead of giving up, Myers adapted and worked within the existing system. She cleaned up her debt and improved her credit score.

Here are other possible resources that can help you learn more about buying a home, getting a home or improving your credit:

• Alliance Credit Counseling, Inc.
• North Carolina Community Foundation (formerly known as Community Housing Development Corp. MSI)
• Community Link
• Monroe-Union County Community Development Corporation
• Neighborhood Assistance Corporation of America (NACA)
• Prosperity Unlimited, Inc.
• SafeGuard Credit Counseling Services, Inc.
• The Homeownership Center of Charlotte (a service of Charlotte Mecklenburg Housing Partnership, Inc.)
• Habitat for Humanity

"I went to probably five, six homebuying classes just to get it right," Shay Myers said. "I finally became credible as credit-wise last March."

Her reward is now just one month away.

"It took a lot to get here," Myers said. "It took a lot."

Barring any last-minute surprises, she's set to close on a new home in Charlotte in March.

"I can't wait until I get my keys, so I can do the ugly cry. I'll feel relaxed once I get there. I just feel like I'm not there yet," she said. "It's going to be a big accomplishment. I'm the first kid out of my mom's that she raised to be a homeowner and have a good credit score and I'm the youngest."

TAKE A LOOK: See how major banks and other lenders fare when it comes to denying Black applicants (or skip yourself to Chapter 10)

The federal government's lending rules, strengthened after the 2008 housing crisis, are meant to treat applicants equally regardless of their race, but advocates like Irvin Henderson say that's part of the problem, especially since socio-economic disadvantages like debt-to-income ratio and credit history are the reasons for most denials.

"If you want to talk about anything that is as un-American as you can imagine, (it's where) your credit profile is worse because of the community you live in and how you have been treated by the majority institutions in our country," Henderson said. "That is what's unfair."

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Henderson, who has previously testified before a Congressional banking committee, owns a North Carolina development and consulting company. The longtime fair housing advocate isn't suggesting a shift back to awarding bad loans and isn't downplaying the need for more financial literacy in Black communities but believes the only way to really address lending disparities is to get the industry to change.

"I think the most important solution is sensitive underwriting," he said. "There are reasons why a person of color might have higher debt-to-income ratios, because quite honestly, economically it is more difficult for people of color to make things work. Very often, there are situations where you're helping family members. There are situations where you are not receiving the same (compensation) for the same career that a majority person would be getting and quite frankly, there are just situations where there's leftover debt from a previous economic life in which you had difficulty for many reasons associated with the fact that you are a person of color. All of this adds up, so you need sensitive underwriting. Perhaps the higher debt-to-income ratio is not a predictor of how the person's going to pay their mortgage."

He believes more flexibility when reviewing a person's ability to repay a home loan would go a long way in addressing the lending disparities.

"More sensitive underwriting can take care of that," he said. "It still doesn't mean that there won't be some people denied. Some folks need to be denied because their behavior has not been solid."

TAKE A LOOK: See how major banks and other lenders fare when it comes to denying Black applicants (or skip yourself to Chapter 10)

Community Link president and CEO Floyd Davis, Jr. agrees with Henderson. The former United Way CEO said Black men and women are saddled with more debt and fewer savings as a byproduct of their circumstances.

"People who grew up in two-families household who were white, their parents were able to help them buy their first home or pay for them to go to college," Davis said. "A young African-American today growing up in a family, the family is not able to give them money to help buy a house or help pay for their education, so they end up with student debt. They have to buy a car to get back and forth to work and you end up in a lot of debt and nobody taught you how to handle that. While you are in college, what also happens, you get inundated with credit cards, and here's a young person who does not understand how the financial services industry works, saying, 'Oh, I got money. I can go out and buy things,' and not realizing that's taking them down the wrong path."

Davis said lending laws don't accommodate for that built-in disadvantage.

"It's set up in an automated underwriting system and it's designed for you, not for me," he said. "It's designed for your profile. My profile comes in and it's different."

Industry groups, like the American Bankers Association, say they support efforts to reduce lending disparities, but also say people cannot draw conclusions from the HMDA data that is publicly available.

"ABA firmly believes that discrimination has no place in the mortgage market. It is not just morally wrong but a violation of federal law. Many banks in Charlotte, and across the country, are in the business of making mortgage loans to creditworthy individuals, which is why they have every incentive to provide mortgages to those who qualify," the ABA said in a written statement. "ABA also firmly believes that any meaningful review of mortgage lending practices for possible discrimination, as regulators and the courts have made clear, cannot be based on HMDA data alone but must also consider individual factors such as a borrower's credit score, credit history, debt-to-income (DTI) and loan-to-value (LTV) ratios. These critical factors are not all included in the public HMDA data or are partially redacted for privacy reasons, yet they are the most common reasons for denial, especially credit score, credit history and DTI. Unfortunately, this means hardworking and deserving Americans seeking a mortgage may not all qualify under current rules. The banking industry remains committed to working with policymakers to reduce the structural barriers standing in the way of those borrowers, so they can eventually get the opportunity to obtain a mortgage appropriate for them. We will continue to advocate for policy changes that we believe can help reduce lending disparity rates and allow more people in this country to enjoy the many benefits that come from homeownership."

With a new administration in the White House, the federal agency that oversees the mortgage industry now calls racial equity a top priority. The Consumer Financial Protection Bureau began analyzing some of the same data we did because the agency believes a level playing field for home mortgages is critical. The CFPB's research teams are now tasked with looking at how consumer finance markets are contributing to racial inequities.

TAKE A LOOK: See how major banks and other lenders fare when it comes to denying Black applicants (or skip yourself to Chapter 10)

Rep. Alma Adams (D), NC-12 said her own family has experienced mortgage denials, recently too.

"It is still a problem and it shouldn't be," Rep. Adams said. "I think it's sad that we are still at this point."

Rep. Adams sits on the House Financial Services Committee, which plans to hold a hearing on March 10 on the topic:  “Justice for All: Achieving Racial Equity Through Fair Access to Housing and Financial Services.” 

RELATED: Charlotte Fair Housing Attorney warns new Trump regulation will make it harder to combat segregation

"We need to press this even more," Rep. Adams said. "We're on it, we know that it exists and we're going to try to do some things to fix it ... I am absolutely optimistic about it and hope that we don't have to have this same kind of conversation another four years from now."

Community Link president and CEO Floyd Davis, Jr. said systemic change in Washington, DC is long overdue.

"Our federal government has not made that a priority," Davis said. "It has to come from the federal level and force the system to adjust and change."

Advocates recognize the steps lenders are taking within the current constraints to try and help.

"They are trying and they do really care about this," advocate Irvin Henderson said.

However, he believes they can do more.

"When I see white denial rates much lower than black denial rates and black origination much lower than the population share, it says that the banks aren't trying hard enough to reach this marketplace," Henderson said. "It certainly indicates that there are disparities and we know that, but this is a marketplace that can be reached."

Henderson also believes lenders need to offer different products to reach Black customers.

"We need products that are developed for different aspects of the community," he said. "Someone in Charlotte with a household income of $300,000 needs a different kind of mortgage product than someone in Charlotte where the household income is $40,000, but they both can be homeowners."

The North Carolina Bankers Association shared a five-page list of just some of the initiatives area banks are taking part in, investing millions in special loan programs, down payment assistance grants, grants to reduce interest rates, homebuyer education and more. 

"North Carolina banks go to great lengths to help individuals and families achieve their financial dreams. Banks serving the Charlotte area have invested millions of dollars in special loan programs, down payment assistance grants, interest rate buy-down grants, homebuyer education, and financial support for Certified Depository Financial Institutions, Community Development Corporations and local non-profits that provide loans and services to homebuyers. Banks are also among Charlotte's largest employers, helping to lift the city's economy every day," the NCBA said in a statement. "An analysis of mortgage lending in Charlotte, or anywhere in the U.S., is incomplete without a thorough review of all factors involved in credit decisions and consideration of the significant efforts banks make in their communities to make homeownership possible for all credit-worthy borrowers. The NCBA is supportive of public policy changes that will reduce lending disparity rates and allow more Americans to enjoy the pride of homeownership."

Community Link president and CEO Floyd Davis, Jr. also knows lenders are working to change things.

"There are a lot of good people who believe in doing the right thing," he said.

However, he said it takes time and a presence in Black communities to rebuild trust, including the addition of new branches.

"They don't have a face in that community," Davis said. "Most people of color are afraid of banks because if they've had an experience with banks, it's been negative. 'I've been turned down or denied a checking account.'"

TAKE A LOOK: See how major banks and other lenders fare when it comes to denying Black applicants (or skip yourself to Chapter 10)

The North Carolina Bankers Association said while its members have locations in low-to-moderate income locations, they've also invested in online banking services.

"Banks of all sizes are proud to call Charlotte home and to provide a wide array of banking services to the community. In addition to being some of the region's biggest employers, banks operate multiple branches in this highly competitive market, including a number of locations in low- to moderate-income communities. Federal regulators also routinely test banks to verify they are serving their communities, unlike their nonbank competitors," NCBA said. "As the COVID-19 pandemic has taught us, visiting your bank today doesn't always require a trip to a branch. Charlotte banks have invested heavily in digital banking technologies, which allow customers to access their accounts and manage their finances from anywhere. Those innovations contribute to financial inclusion."

Lenders, especially banks, are subject to rigorous standards, which include internal and federal oversight. Regulators routinely evaluate banks for their ability to meet the credit needs of their communities. Those reviews are not based on race, but instead on income. The most recent federal performance reviews show the largest lenders received grades of "satisfactory" and "outstanding."

"The regulators are really trying," Henderson said. "The regulators need to be a little bit harder on the institutions that aren't trying hard and they need to reward the institutions that are trying."

While banks receive regular Community Reinvestment Act performance evaluations, mortgage companies and credit unions are not subjected to the same CRA reviews, which some argue needs to change.

TAKE A LOOK: See how major banks and other lenders fare when it comes to denying Black applicants (or skip yourself to Chapter 10)

Henderson said applicants need to do more too.

"Borrowers need to do better," he said. "Borrowers need to become more savvy about good credit practices. The borrowers need to have emergency savings."

That's where organizations like Community Link come into play.

"Blacks have been targeted by subprime lending and payday loans, title loans and therefore, no one really taught them really how to manage and how to navigate the financial services industries without getting trapped," Community Link president and CEO Floyd Davis, Jr. said. "That's where we come in as housing counseling agencies that can sit and work with them and help them clean up their credit report and also get them into a position, get their credit score up where they can qualify for a conventional mortgage."

Shay Myers said her realtor is the one who really helped her turn the corner, directing her to resources that could help. Thanks to Myers' hard work, commitment and refusal to take "No" for an answer, she is now able to afford a down payment on her own home. Still, she finds the industry-wide disparities "heartbreaking."

"I thought it was normal. You were supposed to work as many jobs," she said. "You don't look at it like is it a black and white thing, but sometimes you wonder 'Why? Why is it so easy and you have it so hard,' but then I feel like, 'Why am I complaining?' I should just do better if I want better."

A recent Urban Institute study reported in 2018 the Black-white homeownership gap "reached 30.5 percentage points, its highest level in 50 years and a 4.1 percentage point increase since 1960." In addition, the study noted it took more than a decade for Black homeownership to begin recovering after declining following the 2008 housing collapse.

In addition to interview requests with the ABA and Mortgage Bankers Association in January, WCNC Charlotte offered on-camera interviews to a dozen of the top lenders in the Charlotte market nearly two weeks before this story published. None of those lenders agreed to an on-camera interview. Instead, the vast majority offered written responses.

Federal data show the average Black denial percentage in 2018 and 2019 for the Charlotte-Concord-Gastonia market was 23.80% compared to 14.16% for white applicants. Here is a breakdown of how major lenders performed in the area.

Atlantic Bay Mortgage Company

Federal records show while Atlantic Bay Mortgage Company has the lowest two-year denial percentage for Black applicants among the largest lenders in the Charlotte market. The company's denial disparity rate between Black and white applicants is the highest. The numbers show the company denied Black applicants more than three times as much as white applicants.

HMDA data show the company originated more than 3,000 home loans in 2018 and 2019 with nearly 500 (almost 16%) of those loans awarded to Black applicants. The company's two-year denial disparity rate was twice as high as the market average.

Atlantic Bay Mortgage Company did not respond to our multiple requests for comment, which began in January and included multiple emails and a phone call.

Bank of America

Bank of America remains one of the largest lenders in the Charlotte market with more than 10,000 originations in 2018 and 2019 with more than 1,000 (10%) of those home loans awarded to Black applicants. Its Black denial percentages exceeded 40% in both years. The bank's two-year denial disparity rate was below the market average.

Bank of America declined an on-camera interview, but shared this statement:

"At Bank of America, our primary mission is to prepare prospective homeowners for sustainable homeownership. Last June, Bank of America announced a $1 billion, four-year initiative to help advance racial equality and economic opportunity across the country.

The commitment focuses on creating opportunity for communities of color – jobs, small business, healthcare, and affordable housing – all through a lens of racial equity.

Currently, more than half of all of our mortgages nationwide are either in low-to-moderate income or multicultural communities or to low-to-moderate income or multicultural borrowers

In April 2019, we expanded existing affordable lending support with a $5 billion Community Homeownership Commitment. This month (February), we announced that we are tripling our commitment to affordable homeownership to $15 billion through 2025 and expect to be able to help approximately 60,000 people to buy homes through our programs. Through this commitment, our Down Payment Grant and Americas Home grants offer buyers up to $17,500 in assistance without requiring repayment. In Charlotte, we’ve provided nearly $138 million in low down payment loans and provided over $5 million in down payment and closing cost grants since April 2019.

Recently, it was announced Mecklenburg County would allocate $7.9 million for 326 new affordable-housing units outside of uptown. Funds will come from the county and Bank of America as a result of selling our land at the upcoming Seventh and Tryon development, and donating those funds."

Bank of America also recently announced it provided more than $40 million in financing for real estate solutions, which resulted in 180 units of "much needed: affordable housing for individuals, families, seniors, veterans, people with special needs and the formerly homeless.

The North Carolina Bankers Association touted these additional community initiatives undertaken by Bank of America:

• In early 2020, the bank launched the First-Time Homebuyer Online Edu-Series™ to educate borrowers on how to overcome barriers to affordable homeownership.
• Enhanced its online Real Estate Center, integrating a feature that lets users identify for-sale properties that are eligible for the Bank of America Down Payment Grant and America's Home Grant programs, including in the Charlotte Area.
• Works with community partners and HUD partners to provide neighborhood homebuying workshops.

CRA Performance Rating: Outstanding nationwide/Satisfactory in Charlotte

BB&T

BB&T and SunTrust merged to become Truist in late 2019. Federal records show BB&T's denial disparities were higher than Sun Trust's in 2018 and 2019. The numbers show BB&T denied Black applicants twice as much as white applicants.

HMDA data show the company originated more than 6,300 home loans in 2018 and 2019 with 314 (5%) of those loans awarded to Black applicants. Its Black denial percentages exceeded 40% in both years. The bank's two-year denial disparity rate was higher than the market average.

Truist declined an on-camera interview, but shared this statement:

 "Truist is committed to meeting the banking needs of the communities we serve and has a strong policy in place against discrimination of any form towards potential clients or credit applicants.

With regard to your assertion, we would respectfully challenge your in-house analysis, particularly the underlying focus to support a claim by only considering the applicant's race against the final outcome of the lending decision. As you may know, there are numerous factors that go into and impact lending decisions, including an applicant's debt-to-income ratio, credit score/credit history, loan term and down payment, to name just a few. It appears that these and other factors are excluded from your analysis, which negatively affects the final results.

Truist—and its heritage institutions—never consider an applicant's race, ethnicity, gender, marital status, familial status, religion, or any other factor protected under federal or state fair lending law, in the underwriting or pricing of any financial product or service. The equal and fair treatment of all credit applicants and existing clients is an integral part of Truist's fundamental mission to help our clients achieve economic success and financial security. Truist and our heritage institutions have maintained a robust fair banking analytics program to monitor mortgage and other lending programs, and we follow all applicable laws and regulations.

We're guided by our purpose to inspire and build better lives and communities, and believe everyone and every moment matters. This includes our intentional support of historically underserved communities. In 2020, Truist reinforced our commitment to addressing racial inequity, in an effort to make meaningful change in the communities we serve and build a stronger, more equitable company and society. Truist committed more than $78 million in grants to support social justice initiatives, investing in historically black colleges and universities and empowering historically underserved communities. Through our Truist Community Benefits Plan, we'll lend or invest $60 billion to borrowers who are low- and moderate-income (LMI) or minority and in communities which are LMI or minority from 2020 to 2022. Further, Truist made a $40 million initial donation to establish CornerSquare Community Capital, a new national nonprofit fund that will support selected community development financial institutions (CDFIs), where 100% of the funding is allocated to racially and ethnically diverse small business owners, women and individuals in LMI communities, with a particular emphasis on serving African American-owned small businesses."

Truist also cites its inclusivity efforts in its Charlotte Community Impact Report, which it published in December. (I have a copy we should attach) The bank has said the events of 2020 prompted Truist to do more, including "working to bridge our nation's economic equity gap." Truist reported more than 15,000 high school students participated in its Truist Financial Foundations financial literacy program and almost 650 client employees participated in its Truist Momentum adult financial literacy program in North Carolina.

The North Carolina Bankers Association touted these community initiatives undertaken by Truist:

• $7 million in total giving in metro Charlotte area
• $174 million in community development loans
• 686 affordable housing units created, retained, or improved through Truist support
• $47.4 million investment in affordable housing since Truist was formed in December 2019
• As the lead investor in the new Housing Impact Fund (HIF), Truist has committed $15 million to a $58 million initiative that aims to preserve 1,500 apartments as affordable housing by 2022.
• Truist has targeted $120 million for philanthropic giving in Charlotte over a three-year period.

CRA Performance Rating: Outstanding Nationwide/Outstanding in North Carolina

Eagle Home Mortgage

Federal records show Eagle Home Mortgage has one of the highest denial disparity rates among the largest Charlotte lenders despite denying Black applicants at a lower percentage than many of its competitors. The numbers show Eagle Home Mortgage denied Black applicants twice as much as their white counterparts.

HMDA data show the company originated more than 2,300 home loans in 2018 and 2019 with nearly 270 (11%) of those loans awarded to Black applicants. The company's two-year denial disparity rate was higher than the market average. 

Eagle Home Mortgage did not respond to our multiple requests for comment, which began in January and included multiple emails and a phone call.

Fairway Independent Mortgage Corporation

Federal records show Fairway Independent Mortgage Corporation denies Black applicants at a rate two times higher than white applicants, despite having a lower denial percentage than most of its competitors for Black applicants.

HMDA data show the company originated more than 5,400 home loans in 2018 and 2019 with nearly 530 (9.6%) of those loans awarded to Black applicants. The company's two-year denial disparity rate was higher than the market average. 

Fairway declined an on-camera interview, but shared this statement:

"Fairway believes in the importance of fair and equitable lending practices and we work at all times to serve all customers equally and consistently with the goal of affordable homeownership.

As part of Fairway's commitment to fair and equitable lending, we fully review our lending practices on an ongoing basis to ensure that we are treating all consumers fairly, regardless of race, ethnicity or other characteristics unrelated to creditworthiness. Fairway conducts statistical analyses of its lending practices to identify whether certain groups of borrowers may have been denied a loan or received a higher price on a loan at a greater rate. In those instances, Fairway will undertake an additional level of review to determine whether any identified disparities are attributable to legitimate credit characteristics.

While public HMDA data provides a preliminary observation regarding application acceptance and origination rates for certain prospective mortgage borrowers, it is important to recognize that the publicly available HMDA data does not account for any credit criteria or other legitimate factors commonly included in regression models and analyses by both lending institutions and government regulators to assess potential fair lending risk. Without using proper credit criteria, regression models and analyses, it is impossible to draw a meaningful conclusion regarding Fairway's treatment of similarly situated loan applicants from public HMDA data.

Fairway is confident that, for the time period you have referenced, we performed equally or better than our competitors in the Charlotte market with respect to outreach, applications, and originations in majority-minority geographic areas, including geographic areas with substantial African-American populations."

Fifth Third Bank

Federal records show Fifth Third Bank's Black denial percentages exceeded 40% in both years. The bank's two-year denial rate was slightly higher than the market average.

HMDA data show the company originated more than 2,600 home loans in 2018 and 2019 with nearly 160 (6%) of those loans awarded to Black applicants. 

Fifth Third declined an on-camera interview, but shared this statement:

"Fifth Third Bank is committed to fair and responsible banking by treating all individuals equitably wherever it conducts business. Fifth Third regularly conducts fair lending reviews of its mortgage lending operations to ensure that customers receive fair and equitable treatment.

As required by the Home Mortgage Disclosure Act (HMDA), Fifth Third annually publishes specific detailed information about its mortgage lending activities in the areas where it does business. This HMDA data includes the type of loan, whether there was a co-applicant, whether the loan was approved or denied, and the gender, ethnicity, race and income of the applicant(s). The publicly reported data does not, however, include significant information at an individual loan-level concerning creditworthiness that a lender would use to determine whether or not to approve an application (including an applicant's credit history, credit score, property appraisal and so on).

Examining denial rates across different race, ethnicity, and gender groups as reflected in HMDA data does little to explain why potential differences in those denial rates exist. However, examining differences in numbers of applications and in loan denial rates can still be valuable to lenders in evaluating their lending operations. To that end, Fifth Third is committed to regularly examining its data to ensure that credit decisions are being made based on credit characteristics as specified in its underwriting criteria, and not on race, ethnicity, or gender. Moreover, Fifth Third has implemented fair lending training and compliance programs to ensure that its underwriting criteria are applied fairly and consistently to all applicants.

Over the past five years, Fifth Third Bank has been engaged in a community commitment that focuses on affordable housing, economic development, and financial stability which has resulted in $39.2B+ in resources applied to support local communities. Within North Carolina, the bank applied $1.3B of those resources from the its commitment into the Tar Heel state, which included over $511.8MM+ in lending activities for affordable housing.

As you know, the new Fifth Third $2.8 billion investment over the next three years to accelerate racial equity, equality and inclusion is broader than our previous five-year Community Commitment. It focuses on four pillars that directly impact customer and communities in the areas of access to capital, strategic investments, financial inclusion and education, and social justice and advocacy. In addition, Fifth Third recently announced its three-year Accelerating Racial Equity, Equality and Inclusion Initiative.

Additionally, the bank has had longstanding community partnerships with several local supportive housing agencies to help improve mortgage lending. These include Charlotte-Mecklenburg-Housing-Partners ("CMHP"), Community Link, Prosperity Unlimited, and Inlivian (formerly the Charlotte Housing Authority) where the bank has conducted first-time home buying workshops and financial education classes for individuals in low-moderate-income areas who desire to purchase a home. The bank also offers the Down Payment Assistance Program for qualified low-income buyers or those purchasing a home in a low-income neighborhood.

I know you have a particular interest in the mortgage component. We believe the goal for the entire mortgage industry should be to eliminate any existing disparities in mortgage lending over time. This is a journey.

Critical elements of Fifth Third's three-year "Accelerating Racial Equity, Equality and Inclusion Initiative" include programs to educate potential Black homeowners and to remove barriers to homeownership for those borrowers."

The North Carolina Bankers Association touted Fifth Third Bank's support of these organizations that include housing, financial literacy and economic mobility for the communities that they serve.

• CHA- CORE Programs, Inc.
• Community Link
• DHIC, Inc.
• Habitat for Humanity Cabarrus County
• Habitat for Humanity of Charlotte
• Habitat for Humanity Lincoln County
• Inlivian
• North Carolina Housing Coalition
• Prosperity United, Inc.
• Roof Above
• Supportive Housing Communities, Inc.

CRA Performance Rating: Outstanding nationwide/Outstanding in North Carolina

First Citizens

HMDA data show First Citizens Bank and Trust originated more than 4,700 home loans in 2018 and 2019 with more than 320 (6.8%) of those loans awarded to Black applicants. The bank's two-year denial disparity rate was below the market average.

First Citizens declined an on-camera interview, but shared this statement:

"First Citizens has a long history of serving our communities and helping both consumers and businesses achieve their financial goals. We strive to lend in a fair and equitable manner, which is responsible to our customers and safe and sound for the bank. First Citizens is committed to routinely examining its lending to ensure credit decisions are based on specified credit criteria and not on any prohibited basis.

Please note that our own internal analysis of the 2018 and 2019 HMDA data has shown that the denial ratio (a common fair lending metric) for black applicants at First Citizens is lower than that of the overall industry in the Charlotte MSA ...

… We categorically disagree with your analysis because HMDA data, specifically, a review of simple denial rates, does little to explain why potential differences exist in those rates. Mortgage lending analysis as it relates to possible discrimination shouldn’t be based on HMDA data alone – it just doesn’t present a full picture of a complex issue.

As we’ve stated, fair lending reviews generally focus on the ratio between the protected class and the control group, which helps to normalize the underwriting action taken since underwriting standards are different across multiple institutions... 

... Charlotte is one of seven identified markets where we offer our Home Ownership Mortgage Express (HOME) program. It’s an in-house portfolio product with flexible criteria, such as no income limits and loan-to-value ratios based on specific minimum credit scores.”

The bank also just announced a $16 billion community investment plan aimed at continuing its work to reinvest in low- and moderate-income (LMI) communities.

The North Carolina Bankers Association touted First Citizens' Home Ownership Mortgage Express (HOME) program:

• This program is a defined Special Purpose Credit Product designed to appeal to diverse and minority applicants in select metropolitan/urban areas in N.C. and S.C. The Charlotte area is one of seven identified markets where this product is offered. This product is also offered as an in-house portfolio product, with no income limits with LTVs up to 100% with a minimum credit score of 680 and LTVs up to 97% with a minimum credit score of 660 available, along with other flexible criteria.

CRA Performance Rating:  Satisfactory nationwide/Satisfactory in Charlotte

Loan Depot

Federal records show Loan Depot is the only institution of the Charlotte market's lenders without a disparity. HMDA data show Black and white applicants are denied at almost identical rates.

The data show Loan Depot originated nearly 3,000 home loans in 2018 and 2019 with more than 660 (23.4%) of those loans awarded to Black applicants.

Loan Depot declined comment.

Movement Mortgage

Federal records show Movement Mortgage denies Black applicants at a rate roughly two times higher than white applicants, despite having a lower denial percentage than most of its competitors for Black applicants.

HMDA data show the company was one of the largest lenders in the market, originating more than 10,500 home loans in 2018 and 2019 with nearly 1,600 (15.3%) of those loans awarded to Black applicants. The company's two-year denial disparity rate was higher than the market average. 

Movement Mortgage declined an on-camera interview, but shared this statement:

"The racial disparity in homeownership, especially for Black Americans, is heartbreaking. While there is no evidence of widespread lender discrimination today, there is a gap in creditworthiness, income, wealth and homebuyer education in our country. Closing this gap is one of the most important tasks our industry faces, and it will require all of us — homebuyers, mortgage lenders, Realtors, government agencies and community advocates — working together to make meaningful progress. Movement Mortgage has been among the first in our industry to establish a Black American Homeownership Advisory Board, made up of Black loan officers, to help our organization identify its role and take action towards closing the gap. We know there is a lot of work left to do, but we're committed to loving and valuing our Black neighbors by helping them reach their dreams of homeownership."

Recent content Movement Mortgage has published on this topic:

• Grab the Key (Movement-funded PSA from summer 2020 on the history of homeownership for Black Americans)
• Black American Homeownership initiative landing page (campaign launched in 2019 to raise awareness of the gap in homeownership)
• Casey Crawford/Montell Watson Mortgage Impact Podcast episode on black homeownership (podcast for loan officers about Movement's initiatives)
• Our podcast with Alanna McCargo from Urban Institute (podcast for loan officers focusing on Black homeownership)
• Untriggered with Casey and Nicole Martin (Facebook livestream for our employees and our social media followers focused on the unconscious biases in the housing and mortgage marketplace)

Quicken Loans

Federal records show Quicken Loans originated more home loans than any other lender in the Charlotte market in 2018 and 2019, originating almost 12,500 home loans with nearly 1,100 (8.7%) of those loans awarded to Black applicants. The company's two-year denial disparity rate was below the market average.

Quicken Loans did not agree to an on-camera interview and did not provide a statement.

SouthState Bank

Federal records show SouthState Bank had one of the highest denial disparity rates in 2018 and 2019, on average, denying Black applicants three times as much as their white counterparts during that timeframe.

HMDA data show the bank originated nearly 2,500 home loans in 2018 and 2019 with 65 (2.65%) of those loans awarded to Black applicants. The bank's two-year denial disparity rate was higher than the market average.

SouthState Bank declined an on-camera interview and instead provided this statement:

"SouthState Bank expanded in the Charlotte market in 2018 following a merger with Park Sterling Bank. Since that time, SouthState has worked diligently to increase its presence and its mortgage lending in the Charlotte MSA. Those efforts take time in any large metropolitan market such as Charlotte, and while we have made some progress, we continue to have a small share (1%) of the mortgage market. Nevertheless, we are committed to supporting our communities and meeting the housing needs of our neighbors, including those in minority areas, and we will continue to work to expand our presence.

Between 2018 and 2020, we are proud to have originated 31 loans for $52.6 million for affordable housing and economic development. We have also invested nearly $13 million to provide more than 800 units of affordable housing to lower income residents throughout the Charlotte MSA. Our investments are more than just dollars; SouthState team members have volunteered in excess of 1,000 hours of their financial expertise to 25 organizations that provide affordable housing, community services and economic development activities to assist low-to-moderate income individuals and families. We continue to look for additional opportunities to expand these efforts as we grow our presence within the marketplace.

Additionally, we continuously analyze our HMDA data, including our denial rates, and our lending processes and outreach efforts are examined by banking regulators routinely. We use our analysis to inform our fair lending program and goals."

The North Carolina Bankers Association touted SouthState's record of receiving no complaints related to unfair or discriminatory mortgage lending from the Charlotte MSA since 2018.

CRA Performance Rating: Satisfactory nationwide/Satisfactory in Charlotte

State Employees Credit Union

Federal records show State Employees Credit Union denied Black applicants twice as much as their white counterparts in both 2018 and 2019.

HMDA data show the bank originated nearly 8,000 home loans in 2018 and 2019 with more than 1,500 (19.4%) of those loans awarded to Black applicants. The credit union's total originations for Black applicants was one of the highest in the market. The credit union's two-year denial disparity rate was higher than the market average. 

SECU declined an on-camera interview and instead provided this statement:

"As the Consumer Financial Protection Bureau notes in their analysis of the 2019 HMDA data, differences in denial rates among racial and ethnic groups 'stem, at least in part, from factors related to credit risk.' Factors related to credit risk include, for example, an applicant's debt to income ratio, employment history, credit history, and proposed collateral. Almost none of this information is publicly available HMDA data. HMDA data alone presents an incomplete picture of the lending decision.

We carefully review our lending data as a part of our fair lending program, including data relating to credit risk and other underwriting factors, to ensure we are treating all members in a fair and non-discriminatory manner.  These reviews have consistently indicated that we treat members fairly and without respect to race, sex, nationality or any other prohibited basis. 

We consider the ability and willingness to repay in the decision to grant credit, not a member's race, sex, national origin, or other prohibited basis. It is the right thing to do to ensure that all are given an equal chance to be a homeowner. Our rates of granting loans compare favorably with others in the marketplace and we have helped thousands of historically underserved individuals create wealth through homeownership. In 2018 and 2019, SECU originated the largest number of mortgage loans to African American borrowers both statewide and within the Charlotte Metropolitan Statistical Area. Our analysis of the HMDA data for 2018 and 2019 reflects that SECU consistently originates loans to individuals in protected classes at higher rates, and denies loans at lower rates, than most of our industry peers.  We encourage you to research this for your story.

Historic and persistent challenges of income inequality, low wealth, challenged credit ratings and other considerations in underserved communities have been, and continue to be, the biggest roadblocks to qualifying for home loans for these members. To provide more opportunities for homeownership, we offer products which increase access to loans for historically underserved populations—such as our 100% financing options and our 'First Time Homebuyer Loan' which finances 100% of home value plus up to $2,000 in closing costs. Additionally, we do not risk-base price our loans (charging a higher interest rate on loans to individuals with lower credit scores who can least afford those rates). All members get the same rate based on the loan-to-value ratio of the loan.

We hope this information is helpful.  We want to help ALL members and their families benefit from homeownership...

...As a credit union, SECU is also proud of our philosophy of 'People Helping People' and, while we originated the largest number of mortgage loans to African American borrowers in NC in 2018 and 2019, we have also demonstrated our support of underserved communities in North Carolina in other ways. Several examples of that include our work to help start and then continue to support Latino Community Credit Union, and our ongoing support of Greater Kinston Credit Union -- a minority focused credit union established in 1952 for the purpose of assisting the underserved. Also, our member-funded SECU Foundation focuses on affordable housing as one of four areas of priority, which has provided funding for many projects that directly benefit families in underserved communities."

SECU also touted its effort to support underserved communities in North Carolina, including helping to start and then continue to support Latino Community Credit Union, as well as ongoing support of Greater Kinston Credit Union -- a minority-focused credit union. In addition, SECU said its member-funded SECU Foundation focuses on affordable housing as one of four areas of priority, which has provided funding for projects that directly benefit families in underserved communities. 

Sun Trust

BB&T and Sun Trust merged to become Truist in late 2019. Federal records show Sun Trust's denial disparities were lower than BB&T's in 2018 and 2019. However, Sun Trust's Black applicant denial percentage in 2018 was the highest of all of the market's largest lenders during those two years.

HMDA data show the bank originated nearly 2,800 home loans in 2018 and 2019 with roughly 160 (5.7%) of those loans awarded to Black applicants. The bank's two-year denial disparity rate was below the market average.

Truist declined an on-camera interview, but shared this statement:

"Truist is committed to meeting the banking needs of the communities we serve and has a strong policy in place against discrimination of any form towards potential clients or credit applicants.

With regard to your assertion, we would respectfully challenge your in-house analysis, particularly the underlying focus to support a claim by only considering the applicant's race against the final outcome of the lending decision. As you may know, there are numerous factors that go into and impact lending decisions, including an applicant's debt-to-income ratio, credit score/credit history, loan term and down payment, to name just a few. It appears that these and other factors are excluded from your analysis, which negatively affects the final results.

Truist—and its heritage institutions—never consider an applicant's race, ethnicity, gender, marital status, familial status, religion, or any other factor protected under federal or state fair lending law, in the underwriting or pricing of any financial product or service. The equal and fair treatment of all credit applicants and existing clients is an integral part of Truist's fundamental mission to help our clients achieve economic success and financial security. Truist and our heritage institutions have maintained a robust fair banking analytics program to monitor mortgage and other lending programs, and we follow all applicable laws and regulations.

We're guided by our purpose to inspire and build better lives and communities, and believe everyone and every moment matters. This includes our intentional support of historically underserved communities. In 2020, Truist reinforced our commitment to addressing racial inequity, in an effort to make meaningful change in the communities we serve and build a stronger, more equitable company and society. Truist committed more than $78 million in grants to support social justice initiatives, investing in historically black colleges and universities and empowering historically underserved communities. Through our Truist Community Benefits Plan, we'll lend or invest $60 billion to borrowers who are low- and moderate-income (LMI) or minority and in communities which are LMI or minority from 2020 to 2022. Further, Truist made a $40 million initial donation to establish CornerSquare Community Capital, a new national nonprofit fund that will support selected community development financial institutions (CDFIs), where 100% of the funding is allocated to racially and ethnically diverse small business owners, women and individuals in LMI communities, with a particular emphasis on serving African American-owned small businesses."

Truist also cites its inclusivity efforts in its Charlotte Community Impact Report, which it published in December. (I have a copy we should attach) The bank has said the events of 2020 prompted Truist to do more, including "working to bridge our nation's economic equity gap." Truist reported more than 15,000 high school students participated in its Truist Financial Foundations financial literacy program and almost 650 client employees participated in its Truist Momentum adult financial literacy program in North Carolina.

The North Carolina Bankers Association touted these community initiatives undertaken by Truist:

• $7 million in total giving in metro Charlotte area
• $174 million in community development loans
• 686 affordable housing units created, retained, or improved through Truist support
• $47.4 million investment in affordable housing since Truist was formed in December 2019
• As the lead investor in the new Housing Impact Fund (HIF), Truist has committed $15 million to a $58 million initiative that aims to preserve 1,500 apartments as affordable housing by 2022.
• Truist has targeted $120 million for philanthropic giving in Charlotte over a three-year period.

CRA Performance Rating: Satisfactory nationwide/Satisfactory in Charlotte

Wells Fargo

Federal records show Wells Fargo originated among the largest number of home loans in 2018 and 2019, originating more than 10,100 loans with 721 (7.1%) of those loans awarded to Black applicants. HMDA data show Wells Fargo denied Black applicants twice as much as their white counterparts. The bank's two-year denial disparity rate was higher than the market average.

Wells Fargo declined an on-camera interview, but shared this information:

• Wells Fargo is deeply committed to helping create homeownership opportunities in underserved communities, and we continue to look for new and innovative ways to do even more. In the ten years spanning 2010 – 2019 (the most recent year for which full Home Mortgage Disclosure Act data is available), Wells Fargo originated almost as many mortgage loans to help minority borrowers purchase homes as the four other large bank lenders combined (nationally).
• In May 2020, Wells Fargo Bank N.A. received the highest possible national rating—"outstanding"—from the Office of the Comptroller of the Currency for its performance under the Community Reinvestment Act (CRA) for the 2012 – 2018 period. Wells Fargo also received "outstanding" CRA ratings for the state of North Carolina and the Charlotte MMSA. These ratings reflect the proven commitment to serving low- to moderate-income communities, and Home Lending played an integral role in helping Wells Fargo to receive this rating.
• We also have made considerable progress on two diverse lending commitments since their launch, working closely with partners like the National Association of Hispanic Real Estate Professionals (NAHREP), the National Association of Real Estate Brokers (NAREB), the NAACP, and others. As of the beginning of 2019, these efforts had helped 163,500 Hispanic families and 60,500 African American families become homeowners through roughly $56 billion in mortgage originations since the launch of the commitments in 2015 and 2017, respectively.
• The more than 60,500 Black homeowners helped over two years are part of Wells Fargo's pledge to create at least 250,000 Black homeowners in 10 years with $15.2 billion in mortgage financing.
• The bank reports it has also provided $16 million to support homebuyer education and counseling initiatives designed to expand Hispanic and Black homeownership through 2019.

The North Carolina Bankers Association touted several of Wells Fargo's community initiatives:

• Open for Business Fund: Wells Fargo donated approximately $400 million in processing fees from the Payroll Protection Program to help small businesses keep their doors open, retain employees and rebuild. Charlotte region CDFIs were invited to apply for funding to support low-interest loans, loan forgiveness, grants and technical assistance for minority-owned small businesses.
• A Way Home Housing Endowment: Wells Fargo was the first corporation to invest in this public-private initiative with a $1 million commitment. The endowment helps Charlotte-Mecklenburg's homeless and at-risk families move toward housing and financial independence by providing housing subsidies and supportive services.
• Wells Fargo Neighborhood LIFT Program: Wells Fargo brought two Neighborhood LIFT programs to Charlotte:
  • In 2013, $5.5 million in down payment assistance grants created 310 new homeowners in the city of Charlotte who were at 120% of AMI.
  • In 2018, $6 million in down payment assistance grants created more than 300 new homeowners in the region for those at 80% area median income with ability to go up to 100% for public service workers – including teachers, military members and veterans, and public safety officers.
• Mission Asset Fund: Wells Fargo provides funding to Mission Asset Fund, which recently selected Common Wealth Charlotte as a Charlotte nonprofit to offer financial stability to low-income families by facilitating zero-interest lending and simultaneous credit building. Their model links community members into rotating savings and credit associations and then reports this participation to credit bureaus to help their members establish or improve a credit score.

CRA Performance Rating: Outstanding nationwide/Outstanding in Charlotte