Perspectives on Mortgage Lending and Redlining

Abstract

In the 1970s lending disinvestment in American urban neighborhoods became a significant issue. Though the issue received less attention in the early 1980s, several recent studies indicate that systematic racial bias in lending behavior may be widespread, though no longer so obvious. Using several different models, we attempt to uncover the determinants of mortgage lending in Detroit. Our results suggest that normal economic determinants of mortgage lending predominate in the market, that there is no significant race effect, and that model estimation considerations are terribly important in interpreting and evaluating results.