15% of black homebuyers turned down mortgages in Colorado

COMMERCE CITY, Colo. – A recently released Zillow analysis found that 15% of black mortgage applicants are denied loans in Colorado.

“Overall, black mortgage applicants were turned down 84% more times than white applicants. In Colorado specifically, that number was 67%,” said Nicole Bachaud, economics researcher at Zillow.

Bachaud said the main reasons for loan denials were lack of credit or a bad credit history, but the reason for these credit issues goes back decades.

“It really comes down to redlining,” Bachaud said. “When black and brown communities were really blocked from accessing traditional financial institutions, they were really blocked from accessing credit.”

Bachaud said the research also revealed issues with down payments.

“Black candidates paid smaller installments. Overall, the down payment amount was 3.5% — it was the same rate in Colorado — compared to about 8% or 9% nationally as the typical down payment for all applicants. So it also stems from inequalities and income disparities,” Bachaud said.

Zaneta Vaughn recently closed her home in Commerce City.

“I’ve never been outright denied a mortgage, but I’ve experienced what I would perceive as predatory lending,” Vaughn said.

For months before closing, Vaughn said his mortgage lender would not cut his interest rate.

“Interest rates have been at historic lows, you know, during the pandemic. But I get different excuses as to why I can’t get a lower interest rate,” Vaughn said. “Some of the reasons have been no credit or poor credit history and fluctuating income, although my income has steadily increased over the past 20 years. »

Vaughn realtor April Denmon, owner of Denmon Realty has sold 111 homes in the past two years. She said the majority of her clients are black and many have been turned down due to credit issues.

“I have a client I’ve been working with for at least a year. We boosted his credit, he got a secured credit card, he missed a payment and it knocked his credit down by 150 points. The lender tells him it will take him two years to rebuild his credit,” Denmon said.

Tanaia Smith, a loan officer, said every day she saw the legacy of discrimination in buying a home.

“I know I’d say I’m crazy if I said, ‘Oh, no, that never happens.’ I know it’s happening there,” Smith said.

Smith said the best way to fight discrimination, as well as denied loans, is through education.

“I think sometimes within our community there is a lack of understanding of what credit is, how it affects you in the long run and how it affects, you know, the potential purchase of a home” , Smith said. “I think the assumption is, ‘let me fix my credit so I can buy a house,’ without necessarily knowing the ins and outs of credit to know what to fix.”

To learn more about credit repair, down payment assistance, and buying a home, click here.