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52 | M REPORT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST DATA Black, Native American Borrowers Still Face Uneven Mortgage Playing Field An analysis of U.S. mortgage approvals reveals deep inequities in mortgage fairness over time. I n one of the most compre- hensive studies of dis- crimination in the American mortgage market, FairPlay has released the State of Mortgage Fairness Report. Research identi- fies trends in publicly available data to determine if mortgage fairness in the U.S. has changed over time. FairPlay's findings reveal that mortgage fairness for Black Americans is essentially no bet- ter today than it was 30 years ago, and for Native Americans, mortgage fairness has declined by more than 10%. These dis- couraging results are tempered by positive news for female and Hispanic mortgage applicants, who experienced a steady increase in mortgage fairness. FairPlay, billed as a "Fairness- as-a-Service solution," conducted a comprehensive study of more than 350 million mortgage applications from 1990-2021. The loan records were obtained from Federal public source data in the Home Mortgage Disclosure Act (HMDA). This is the most comprehensive publicly available data source that identifies race, ethnicity, and gender for mortgage applications. To measure fairness, Fairplay used the industry standard metric Adverse Impact Ratio (AIR), which compares the rate of approval for protected status applicants compared to a control group (typically white or male ap- plicants). For example, if protected class applicants had a 60% approv- al rate, while the control group had a 90% approval rate, the AIR would be 60/90 or 67%. An AIR of less than 80% is considered a statistically significant disparity. AIR does not control for risk. Key findings from the State of Mortgage Fairness Report include the following: • Native American mortgage applicants: In 1990, Native American homebuyers had an AIR of 94.8%. By 2021, AIR for Native American mortgage application approvals dropped to 81.9%. • Black mortgage applicants: In 1990, Black mortgage applicants obtained loan approvals at 78.4% the rate of white applicants. In 2019, the AIR remained un- changed. Only in 2020 and 2021, was there a modest increase in AIR for Black applicants, to 84.4%, likely attributable to massive government stimulus and other support programs de- signed to stabilize the housing market during the COVID-19 pandemic. » Black homebuyers endure deep and persistent dispari- ties in loan approvals in five states (Louisiana, Mississippi, South Carolina, Alabama, Arkansas) regardless of the macroeconomic environment. In 2021, Black homebuyers in these states were approved at 69% of white mortgage applicants. » Mortgage fairness for rural Black populations (AIR of 74% in 2021) consistently lags behind the fairness of urban populations (AIR of 83% in 2021). » FairPlay's study also found that mortgage fairness for Black applicants in a com- munity declines as the population of Black residents increases. » Mortgage fairness for Black women improved from 69.8% in 1990 to 86.3% in 2021. • Female mortgage applicants: The most positive trend seen in the HMDA data relates to mortgage fairness for women. Between 1990 and 2021, the AIR for mortgage applications filed by women rose from 91.8% to 99.2%, which is nearly on par with the control group (men). • Hispanic mortgage applicants: HMDA data on Hispanic applicants only dates back to 2008, so there is an incomplete picture for fairness trends for