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Open Access Publications from the University of California

The Color of Money in Greater Boston: Patterns of Mortgage Lending and Residential Segregation at the Beginning of the New Century


The findings of this paper underline the need for “modernization” of Community Reinvestment Act (CRA), which now applies only to banks and covers only lending in areas where the banks have branches. In the Boston NECTA during the 2000-2002 period, 70% of home-purchase lending was done by out-of-state banks or by mortgage companies not affiliated with Massachusetts banks. These lenders, not covered by CRA, perform significantly worse than covered lenders in lending to borrowers and neighborhoods of color. Pending Massachusetts legislation would bring the state’s CRA into line with the transformed nature of the mortgage lending industry by imposing CRA-type obligations and evaluations on all types of mortgage lenders. This could make a significant contribution to reducing the current racial/ethnic disparities in mortgage lending that are documented in this paper.

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