Hispanic mortgage gap isn't all explained by numbers

A new study from the University of Utah's Bureau of Economic and Business Research suggests Latinos in Salt Lake County are turned down for mortgages at twice the rate as whites.

Also, many of those who are granted loans are charged higher interest rates than their white counterparts.

The reasons behind those disparities were discussed Tuesday on TribTalk.

While the raw numbers show a clear disparity, they don't necessarily prove discrimination exists in lending, said James Wood, the bureau's director.

Missing from the study were credit scores, debt-to-income ratios and other information lenders use to judge loan applications.

Still, the disparities are troubling and worthy of further study, he said.

The study found that the overall mortgage denial rate for Latinos was 27.4 percent between 2006 and 2011 — a period that encompassed both the rise and rapid decline in the housing market. By way of comparison, only 14.2 percent of white mortgage loan applicants were turned down during that same time period.

Fredy Martinez, a real estate agent with Re/Max Masters in Salt Lake County, stopped short of attributing the mortgage funding gap to overt discrimination.

He suggests some of the disparity may be the result of cultural differences.

"Many Hispanics tend to deal in cash," Martinez said, suggesting that the history of bank failures in countries that include Argentina, Bolivia and Mexico has reinforced that behavior. But as a result, many do not have established credit lines that banks and other mortgage lenders examine to establish credit worthiness.

Many Hispanics are proud that they deal only in cash, are debt free and have a good income, he said. "Unfortunately, that works to their disadvantage," he said.

Martinez suggested that mortgage lenders can better serve the Hispanic community by increasing outreach and offering more education on what they are looking for on mortgage loan applications.

If those who are applying for loans know what banks are looking for it will go a long way toward improving those numbers, he said.