Newly created dataset helps show structural racism persists in mortgage lending

This National Community Reinvestment Coalition (NCRC) report examines the legacy of redlining, the discriminatory practice of denying mortgage loans to neighborhoods based on racial demographics, and its lasting impact on mortgage lending patterns across the US. The report authors introduced a new resource created for the longitudinal study of mortgage lending, the HDMA Longitudinal Dataset (HLD), which harmonizes mortgage lending data reported under the Home Mortgage Disclosure Act (HMDA) between 1981 and 2021. The NCRC researchers, partnering with researchers at the University of Michigan’s Institute for Social Research, released this new dataset via ICPSR last month in the study, National Neighborhood Data Archive (NaNDA): Home Mortgage Disclosure Act Longitudinal Dataset by Census Tract, United States, 1981-2021. It contains HMDA aggregated data by census tract for each decade, and by census tract for individual years. The study normalizes the data in multiple ways, in order to address challenges posed by shifts in reporting guidelines and geographic boundaries over the years. Items for analysis include borrower income values, mortgages by loan type, and mortgages by borrower race and gender. For the analysis conducted in this report, the authors used the HLD dataset and assessed redlining using the Historic Redlining Indicator (HRI), a measure that quantifies the extent to which census tracts were influenced by the discriminatory neighborhood grading system used by the Home Owners’ Loan Corporation (HOLC) in the 1930s. Mitchell et al. found a clear and persistent pattern. Neighborhoods that were graded as “Hazardous” (redlined) by the HOLC continue to receive significantly fewer mortgage originations compared to areas graded as “Best,” even after accounting for factors like housing availability and age. The report concludes that lenders have perpetuated structural racism by under-serving formerly redlined areas for the past four decades, continuing the cycle of disinvestment and hindering wealth accumulation for marginalized communities. It calls for stronger enforcement of fair lending laws to mitigate redlining’s continued impact on residential segregation.