A Bank of America ATM along Massachusetts Avenue in Cambridge. (Photo: Marc Levy)

Cambridge prides itself as a city that welcomes racial diversity and values equity. Yet federal mortgage lending records show persistent disparity in who gets housing loans, with banks, credit unions and other lenders denying mortgages and refinancing loans to black applicants at more than twice the rate of rejections of white and Asian applicants.

The numbers themselves don’t prove discrimination. Lending decisions depend on many variables that weren’t included in the latest analysis of federal mortgage data prepared for the Partnership for Racial Equity, a Massachusetts group of bankers, community representatives and government officials “dedicated to closing racial wealth gaps and improving the financial futures of low- and moderate-income households,” its website says. Yet the figures do show that relatively few black people apply for and are granted loans to buy or refinance Cambridge properties.

The Partnership, formerly called the Massachusetts Community & Banking Council, has issued annual reports on mortgage lending by race and ethnicity in Massachusetts for more than 25 years. The most recent analysis shows that in Cambridge, lenders denied 19 percent of mortgage and refinancing applications from black applicants in 2021 while white applicants had 7 percent of their applications rejected. Lenders denied 8 percent of applications from Asians. The disparities held true whether lenders were banks and credit unions, mortgage companies, or other types.

Another telling figure: Only 16 black people received a loan to buy a one- to four-family home in Cambridge to live in during 2021. The number includes condo purchases. There were 192 mortgages to Asian homebuyers and 368 mortgages to white people.

The homeownership rate in Cambridge varies by race, according to U.S. Census data. The report said 16 percent of black households own, while 26 percent of Asians and 40 percent of white residents are homeowners.

The disparities are not that different from the pattern statewide and across the United States, though statewide loan denial rates are higher than the rates in Cambridge for every racial and ethnic group. The report is based on detailed loan data reported by lenders to the Consumer Protection Finance Board under the federal Home Mortgage Disclosure Act, adopted in 1975 to combat redlining. Redlining originated during the Depression when a government agency that refinanced loans to homeowners in financial trouble developed color-coded maps that designated areas where black households lived as red, then blocked loans in red areas.

Bias felt by former city official

Ken Reeves, president of Cambridge’s NAACP chapter and a former city councillor and mayor, said he hears less from constituents about mortgages and refinancing being denied and more about people losing their homes from foreclosures and simply being priced out. “The Cambridge market is essentially closed to minorities – well, black and brown minorities,” he said Tuesday.

Yet Reeves has his own anecdote from a 2022 refinancing of his home in Mid-Cambridge, one of a few over 28 years of ownership with his partner, Gregory Johnson. “I called up to do a refi and the bank decided that they’d like a new appraisal.” When the bank’s chosen appraiser arrived, “he was just quizzical, like, ‘How in the hell could you own this house?’ And suddenly he wanted to know, ‘Is this house legal?’” Reeves said. The appraiser had arrived knowing that Reeves’ certificate of occupancy had been misplaced at Inspectional Services, and decades worth of business with his bank didn’t matter, even during an appeal to its mortgage department head, Reeves said.

The couple wound up switching banks, Reeves said, and “the next time we ask for a loan, I send Greg,” who is white.

Johnson confirmed the anecdote: After that refinancing incident, “we made sure that I was present as the owner and he wasn’t there.”

No recent complaints to commission

Cambridge’s Human Rights Commission presented a Zoom webinar on June 14 to tell residents about mortgage and appraisal discrimination and their rights if they believe they’re a victim of bias. Appraisal bias refers to professional appraisers undervaluing homes owned by nonwhite applicants. Several news reports, none from Massachusetts, have described how black loan applicants or sellers who believed they received an unjustified low appraisal got a much higher value after removing items such as family photos from their homes and replacing them with possessions indicating white people lived in the home; like Reeves and Johnson, they also arranged for white people to meet the appraiser.

The commission, which enforces a city fair housing regulation, can investigate, mediate and decide if there is “probable cause” to believe illegal housing discrimination has occurred. It can file a complaint in court, investigate complaints with the U.S. Department of Housing and Urban Renewal, and refer a probable cause determination to the Massachusetts Commission Against Discrimination. The city agency can also assess fines.

Human Rights Commission attorney Carolina Almonte, who investigates complaints, said 16 people registered for the webinar. She referred a question about the number of mortgage and appraisal discrimination complaints to the city’s public records office, which said there were no such complaints in the 2021-2022 and in the 2022-2023 fiscal years. Asked how well-informed residents are about mortgage and appraisal bias, Almonte said: “In terms of outreach, we have a lot of programming throughout the year aimed at informing the public about our agency and the types of cases that we accept for filing.”

During the webinar, Almonte said that racial disparity in loan approval rates is one thing to “watch out for” to identify possible discrimination. “Even if you’re not sure, I would encourage you to reach out to us,” she said.

Borrowers who identify as Latino or Hispanic can be of any race. The Partnership for Financial Equity report showed that in Cambridge, Latino borrowers also had a higher loan rejection rate than did white and Asian borrowers: 17 percent for Latino applicants versus 8 percent for Asians and 7 percent for white applicants.