Working Paper 95-10
by Geoffrey M.B. Tootell

The existence of discrimination and/or redlining in mortgage lending has been debated intensively for years. Traditionally, the lender's role in credit availability has been scrutinized. Yet other institutions, specifically mortgage insurers, often help determine whether a mortgage is granted; if the behavior of the mortgage insurers is not accounted for, their actions could be attributed to the lenders. This paper examines the determinants of the private mortgage insurance decision. Specifically, the roles of the applicant's race and of the racial characteristics of the neighborhood in which the property is located are examined. The analysis includes the most complete data set extant of the variables in the information set of these insurers. Little evidence is found that discrimination is occurring among insurers, but there is some evidence that redlining is.

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