Mortgages, Minorities and Discrimination: A Bank-Specific Approach

The publication of the ‘Fed Boston Study’ drew considerable attention to the long-standing issue of discrimination of minorities in mortgage lending. Federal regulators have since stepped up their efforts to enforce greater compliance of banks with various fair-lending laws. Stengel & Glennon (1999), in their influential paper, offered the industry a statistical methodology that individual banks can use independently or in conjunction with traditional fair-lending enforcement procedures to self-address their compliance with the fair-lending laws. This paper reports the results of such an effort by a bank to illustrate and demonstrate that individual banks can and should conduct independent and statistically rigorous fair-lending examination for the dual purpose of self-assessment and compliance with federal fair-lending laws.