Known as the melting pot, America is comprised of individuals of ethnic backgrounds that scatter the globe. People swarm here, as Elian Gonzalez' mother did, in search of freedom, security, income and a nice home -- in short, the American dream.
Known as the melting pot, America is comprised of individuals of ethnic backgrounds that scatter the globe. People swarm here, as Elian Gonzalez' mother did, in search of freedom, security, income and a nice home -- in short, the American dream.
But the American dream doesn't turn out the same for everyone. Nowhere is there a greater example of this than in the purchase of a home. Dick Lepre, publisher of Homeowners.com, reports that African-Americans are turned down for mortgages twice as often as whites. In fact, blacks earning $60,000 a year are turned down more often than whites earning $50,000 a year. Lepre further reports that whites are turned down for mortgages twice as often as Asians.
Lepre says that one of the culprits behind these aggregate statistics is credit. One's credit score -- an important element in determining loan eligibility -- reflects such things as income level, which in turn is related to college education. And since Asians, for example, are more likely to have gone to college, they also are more likely to have higher incomes, and hence, better credit scores. Thus, when credit scores are averaged across groups, they tend to reflect differences in socio-economic backgrounds.
While one's individual credit score is essentially colorblind -- reflecting a rating of purely raw data, without any regard to race or gender -- this has not always been true of mortgage lenders.
Eric Cunliffe, president and chief operating officer of Homespace.com, says personal prejudices can filter into the decision-making process of mortgage officers. And color and gender are not the only prejudices. He relays a story about a lender who approved a mortgage for a truck driver and his wife who eventually defaulted on the loan. "Never again did this officer approve another truck driver," says Cunliffe, adding that not so long ago, "lending decisions used to be at the sole discretion of the underwriter."
Currently, 1.5 percent of home buyers receive their mortgages online, comprising $20 billion in loans in 1999 alone. That number is expected to increase to 15 percent over the next five years, culminating in more than $250 billion worth of mortgages originating online. These mortgage applications not only offer blind objectivity, but also convenience and cost-saving advantages.
Cunliffe says that home buyers approved for mortgages through Homespace.com average savings between $2,500 to $3,000. The full-service site offers everything from finding a real estate agent to mortgage shopping to providing interstate moving services.
The top 10 in overall rankings were:
Incidentally, of the top 20 ranked online mortgage companies, 13 have hit the nationwide market in just the last eight months. Mortgagebot.com -- a virtual veteran, having launched in 1998 -- reprints testimonials from its clients on its Web site, like this report from one couple: "We would not hesitate to recommend them to anyone curious about treading the new waters of online mortgaging. We just love what they've made possible for us and want to take this unique opportunity to pass the word!"
Is the couple white, black, Asian or something elser? The Internet doesn't let us know. And that's the point.
[an error occurred while processing this directive]
Personal Finance: The Archive
[an error occurred while processing this directive]