The Federal Reserve Bank of Philadelphia performed a study and discovered higher rates of denial for Small-Dollar Mortgages in Pennsylvania, New Jersey, and Delaware.
Mortgages valued at $100,000 or less can aid people with limited income and savings to purchase lower-cost homes. But a recent report uncovers that applicants for these loans in Pennsylvania, New Jersey, and Delaware were about twice as likely to be rejected as mortgage applicants.
The study finds:
• Credit history was a more common reason for denial on small-dollar applications than on applications overall.
• Banks originated a larger share of these mortgages than mortgages overall.
• Most borrowers had low or moderate incomes: 75 percent in Pennsylvania, 81 percent in New Jersey, and 63 percent in Delaware.
Discovering ways to lower lender origination expenses and address problems related to assessing an applicant’s credit history could expand access to small-dollar home loans.
CLICK HERE to view the in-depth report on the higher rates of denial for small-dollar mortgages in PA, NJ, and DE.
