ABSTRACT
This chapter examines the literature on mortgage lending discrimination. It aims to determine whether the findings of that literature suggest that discriminatory practices continue to exist among financial institutions engaged in the mortgage lending and administration process. The chapter looks at the three distinct stages of the lending process: the pre-application stage, the loan approval/rejection stage, and the loan administration stage. The pre-application stage includes the buyer's interaction with both the realtor and the lender. The realtor provides information on the location, availability, and pricing of housing units. The fair housing audit was developed to determine whether or not complaints of discrimination are valid. Auditing is used for both research and enforcement. Research auditing is designed to identify the existence of discrimination and requires a large number of tests to obtain statistically robust findings. The majority of the research on mortgage lending discrimination has employed statistical analysis in an attempt to document discrimination in mortgage lending behavior.
