Measuring Pricing Bias in Mortgages
Whether lenders discriminate against minority applicants is a long-standing question that has vexed regulators, bankers, and policymakers alike. The debate over this issue was fueled in the early 1990s by the findings of the socalled Boston Fed Study, which found that minority applicants in Boston were roughly 40 percent more likely to be rejected for mortgage loans than similarly situated whites. In the wake of this study, examiners at the Federal Reserve and other bank regulators began using advanced statistical techniques to help evaluate whether minority applicants face discrimination in home lending.
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