James N. Conklin, Kristopher Gerardi, and Lauren Lambie-Hanson
Working Paper 2022-17
November 2022

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An oft-touted benefit of homeownership is the ability to build and access equity, and in recent years the amount of “tappable” home equity held by US homeowners has reached historic levels. But more than one-quarter of recent applications for mortgage equity withdrawal (MEW) loan products were denied. Black and Hispanic homeowners’ applications were denied at even higher rates: 44 percent and 32 percent, respectively. These racial disparities in denials are larger than those associated with purchase and rate/term refinance mortgage applications. Controlling for loan and borrower characteristics commonly used in the underwriting process significantly reduces the MEW disparities, with the Black-White denial rate gap falling by approximately 83 percent, and the Hispanic-White gap falling by 73 percent. In other words, seemingly race-neutral underwriting criteria in the MEW product space explain large differences in the extent to which minority homeowners can access their home equity.

JEL classification: G21, G51, J15

Key words: housing wealth, mortgage, home equity, racial disparities


The authors thank Stephanie Sezen for excellent research assistance and Bob Avery for sharing his Home Mortgage Disclosure Act lender file. They are also grateful to Neil Bhutta, Julie Cheney, Hajime Hadeishi, Bob Hunt, Tesia Lemelle, Dubravka Ritter, Amanda Roberts, and Anna Tranfaglia for providing helpful comments and suggestions. The views expressed here are those of the authors and not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. Any remaining errors are the authors’ responsibility.

James Conklin is an associate professor of real estate at the University of Georgia Terry College of Business. Lauren Lambie-Hanson is a senior adviser in the Consumer Finance Institute at the Federal Reserve Bank of Philadelphia. Please address questions regarding content to Kristopher Gerardi, Federal Reserve Bank of Atlanta, 1000 Peachtree Street NE, Atlanta, GA 30309, kristopher.gerardi@atl.frb.org.

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