More than half of black applicants are rejected, among worst odds in the nation

African-American households looking to buy a house in Gainesville were 4.5 times more likely than to be denied loans in 2016, a rate that is among the least favorable of any metropolitian area in the nation.

Housing advocates point to a lack of affordable houses for sale in Gainesville, which makes it particularly hard for black households since they are more likely to have lower incomes.

Reveal, a news team from The Center for Investigative Reporting, conducted a yearlong analysis of lending patterns based on data that banks are required to submit to the federal government. While the data is intended to assure people are not rejected for loans based on race, the study found African Americans and Latinos continue to be rejected at rates far higher than whites even after household income is factored out.

The analysis highlighed 61 cities where people of color were denied mortgages at signficantly higher rates than whites. Of those, only Mobile, Alabama, and Greenville, North Carolina, had worse odds for African Americans seeking a home mortgage than in Gainesville.

In Gainesville, 59.5 percent of the 195 black loan applicants in 2016 were denied. The same analysis showed no statistically significant challenge for other minority group, in some cases because the number of applicants was small.

Susan McQuillan, president of the Gainesville-Alachua County Association of Realtors, said she was surprised to hear about the high disparity because so many lenders take applications online, where they ask about income and debt-ratio but not about race or ethnicity.

“That doesn’t make much sense to me,” McQuillan said.

But while home prices have increased 11 percent since 2008, she said, incomes haven’t seen the same growth.

“That would make for a huge issue for someone to qualify,” she said.

Rodney Long, a real estate agent and former Gainesville city commissioner, said banking institutions would be smart to avoid discrimination in lending.

“People know now that it’s not a good policy to do that,” Long said. “If a bank was doing that, in this day and age, I don’t know how they would do that before being found out."

Reveal's data is adjusted for income but not credit score or the amount of down payment because banks do not provide that information to federal agencies.

Corey Harris, president of Gainesville’s Neighborhood Housing and Development Corp., said credit score is one of several reasons that could inherently or unintentionally lead to racial lending discrimination.

Other factors include lack of cash reserves for a down payment because of low income or high expenses, lack of education about the home-loan process and lack of credit in addition to bad credit. For instance, a good history of paying utility bills doesn't do much to imporve a credit score.

“Certain ethnic populations have not been trained in understanding banking,” Harris said. Individuals may favor keeping their money in their homes instead of in a bank or credit union.

The NHDC offers programs to assist low- and moderate-income individuals with housing opportunities.

Stephen Weeks, housing programs manager for Alachua County, said the area’s housing prices limit low-income buyers.

“We lack ‘affordable housing,’” Weeks said. For low-income families, “those homes simply don’t exist.”

Bridget Lee, diversity and inclusion manager at Gainesville's Office of Equal Opportunity, said records going back to 2012 showed no complaints of lending discrimination based on race.

Jean Chalmers, a former mayor who now sells real estate, noted that many houses that might be affordable don't qualify for VA and FHA loans because they don't meet standards for insulation and insurability.

"We are doing nothing in this town to upgrade these wonderful old houses," she said.

She also lamented that the state Legislature has consistently raided funds that were established to preserve affordable housing. And she noted that Gainesville is "one of the worst in the nation in the gap beetween rich and poor."

Not all lenders approve mortgages at the same rates. Florida Credit Union handled nearly 15 percent of all home loan applications in the Gainesville area in 2015 and 2016, and approved just 15 percent of those it handled, according to the Reveal data. The next most popular, Ameris Bank, handled 5 percent but approved 76 percent of those.

Black applicants at Florida Credit Union were denied 90 percent of the time. White applicants were denied 47 percent of the time.

Florida Credit Union is a nonprofit financial institution owned by its 84,000 members in 30 counties, most in North Central Florida. Anyone living or working within the communities it serves is eligible to join.

CEO Mark Starr said most of the institution’s mortgage loan applications are submitted to the Federal National Mortgage Association (Fannie Mae) for review by its underwriter program. That program considers applicants' debt-to-income ratio, employment history, income and other factors, but does not consider race.

Starr also noted that Florida Credit Union serves a higher rate of low-income families than the average lending institution; thus, its members have less chance of securing a home mortgage loan.

“Any form of intentional discrimination based on race, religion, ethnicity or any other commonly recognized prohibited basis would be antithetical to the (Florida) Credit Union’s mission and purpose as a cooperative community financial institution,” Starr wrote in a prepared statement.

To qualify for a Fannie Mae loan in 2015 and '16, applicants had to have a credit score of 620 or higher, and debt-to-income ratio of 45 percent or less, and also pay a 3 percent down payment.

“Our (Florida Credit Union members') household income is lower than most mortgage lenders',” Starr said. “This is a factor. In fact, we are designated a low-income credit union by our regulator, NCUA (National Credit Union Association). We also open accounts for members regardless of credit score.

“National banks have referred consumers to us by name when they would not open a particular account, further creating a larger lower-income pool of potential mortgage applicants" at Florida Credit Union, he said. “Also, we turn more inquiries into applications than many lenders do.”

Starr said federal law requires lenders to accept loan applications from all people who insist on applying, regardless of their credit standing.

“Many mortgage originators will screen people and not take applications they do not think will go anywhere,” he said. That might explain why Florida Credit Union handled a plurality of Marion County's applications for site-built homes in 2015 and 2016.

“When we take an application and it cannot be approved, our staff is trained to counsel the member as to what they need to do to be able to get a mortgage loan,” Starr said. “Unfortunately, many consumers have no idea how the mortgage process works. Many will heed our advice and later are able to position themselves to get a mortgage loan. Our goal is to keep improving the lives of our members. This is why we make it a point to not discourage anyone from applying, although it affects approval rates because our numerator is much larger with this approach.”

Joe Callahan, staff writer at The Ocala Star-Banner, contributed to this story.