Fees are higher for comparable US homebuyers than at traditional banks, and Latino and Black customers pay even more, a Bloomberg analysis found.
Racial and Ethnic Penalties
As noted in this article, there was a racial and ethnic penalty. myIDFi avoids these pitfalls.
myIDFi is an open-bid, ‘zero-knowledge*’ mortgage marketplace.
*What is ‘Zero-Knowledge? In this context, zero-knowledge is where a consumer does not disclose their Personal Identifiable Information (PII). Using these protocols shields the consumer against discrimination in housing and data theft or misuse.
“A Bloomberg News analysis of more than 38 million mortgages originated from 2018 through 2022 found that homebuyers with comparable incomes and loan sizes paid about $300 more in total upfront fees on average if they borrowed from nonbank lenders instead of traditional banks. There was a racial and ethnic penalty too: Latino homebuyers who used nonbanks to get the most common type of mortgage paid $230 more on average than comparable White nonbank borrowers, and Black borrowers paid $150 more, the analysis found. That disparity was smaller for Latino bank customers, about $40, and nonexistent for Black homebuyers who got loans from banks.”
They also point out how difficult it has been to comparison shop for mortgages. myIDFi also solves this problem for consumers through our proprietary technology. Our open-bid marketplace allows consumers to comparison shop efficiently.
“Alexei Alexandrov, a senior adviser at the Urban Institute and a former chief economist for the Federal Housing Finance Agency who also reviewed Bloomberg’s work, says consumers are at a disadvantage when it comes to what is typically the largest and most stressful expense in their lives. “Mortgages are extremely hard to shop for because consumers don’t do the complicated math in their heads,” Alexandrov says. “I don’t know how anyone can expect people to do it.”