Molly Tafoya

Director of Communications

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February 16, 2022

Analysis of 2020 Data Shows Ongoing Disparities; Largely Unregulated Fintech Lenders Dominate Market in Many Regions 

Contact: Molly Tafoya, The Greenlining Institute Communications Director, 808-256-7064

OAKLAND, CALIFORNIA – A new analysis of federal home mortgage data shows that Black, Latino, Native American and Pacific Islander Californians continue to lag behind White borrowers in their ability to access home purchase loans. And the numbers are getting worse. The disparity is particularly stark for women of color, who make up 30% of California’s population but receive only 8% of home purchase mortgages from the top 15 lenders in the state.

The Greenlining Institute report, Home Lending to Communities of Color in California 2020, is based on 2020 lending data reported under the federal Home Mortgage Disclosure Act.

“Homeownership is the bedrock to building wealth and achieving financial stability, but that remains out of reach of many Black and Brown potential buyers,” said report co-author Rawan Elhalaby, Greenlining’s Associate Director of Economic Equity. “We can’t have strong, resilient communities if the doors to homeownership are padlocked shut for some of us. The mortgage industry needs to do better. And government needs to make sure that all lenders, including fintech firms and credit unions are properly regulated. Otherwise, they’re just perpetuating the shameful legacy of redlining.”

Key findings and recommendations include:

  •         Communities of color living in California do not access home purchase loans at rates comparable to White communities. Latino households access 22% of the state’s home purchase loans, despite making up over 39% of the population, and Black households access 3% of home loans, while making up over 5% of the population. Pacific Islander and Native American communities also lag behind Whites.
  •   Largely unregulated, nonbank lenders, also known as fintechs, are more likely to make home loans to low-income borrowers than traditional banks and play an increasingly dominant role. Eight of California’s top 15 home purchase lenders are largely unregulated nonbanks that do not offer traditional banking services, operate largely online, and are not subject to the affirmative investment obligations through the Community Reinvestment Act. These online lenders, known as financial technologies or fintechs, have come to dominate the market in many regions.
  •         Women of color, 30% of the state’s population, receive just 8% of home purchase loans by the top 15 lenders in California. Women of color are also more likely to access a loan from a nonbank lender than from a traditional bank. The disproportionate caretaking burdens and responsibilities of women of color are compounded by a wage and wealth gap—all of which are compounded by an inability to access home loans. This inability to access home loans could exacerbate those gaps.

The report recommends strengthening and modernizing legislation designed to protect low- and moderate-income borrowers. Unlike traditional banks, nonbank lenders are not covered by the federal Community Reinvestment Act, despite offering similar products and services. Nonbank lenders should have the same mandate to serve low- and moderate-income communities as traditional bank lenders. A state CRA can expand beyond the limitations of the current federal law.

In addition, the federal government should modernize and strengthen the Home Mortgage Disclosure Act. This important law can be made more effective with easier-to-access data that is disaggregated by different racial and ethnic communities. California regulators should help lead this discussion with respect to nonbank lenders licensed by the state.

Because this is an analysis of 2020 data, the impacts of COVID-19 on home lending are yet to be fully realized as the pandemic and related data limitations continue. However, we do know that the racial wealth gap has only been exacerbated through the unequal financial toll of the pandemic.

With inflation at its highest in over forty years, the Federal Reserve Bank is considering raising the interest rate. That will make the average loan cost even higher for all borrowers, including Black and Latino borrowers who already have higher costs associated with their home purchase loans, on average.

“We can’t predict 2021 data trends, but it’s pretty clear that it won’t look good for communities of color,” concluded Elhalaby.

To learn more about The Greenlining Institute, visit

Molly Tafoya

Director of Communications

Read Bio