Lenders that have many upper-level minority employees are likely to have higher approval rates for minority home loan applicants, according to two researchers from the University of Wisconsin-Milwaukee.

They also found that thrifts, with their greater emphasis on mortgage lending, are likely to reject fewer minority applicants than do other types of institutions. The size of an institution was also found to affect the likelihood of approval significantly, though it depended somewhat on how size was measured.

The two researchers are Sunwoong Kim, associate professor of economics, and Gregory D. Squires, professor of sociology. Their findings were described in the Journal of Housing Research, published by the Federal National Mortgage Association.

"Because thrifts focus more on mortgage lending than do commercial banks, which are involved in a variety of commercial and consumer activities as well as residential lending and investment, a higher proportion of thrifts' professional employ(ees) are involved in mortgage lending," the article said.

"The evidence from this study strongly suggests that the proportion of African-American professional employees in thrifts significantly affects the probability of approval for African-American applicants."

The study also found the likelihood that a minority application would be approved rose in proportion to the institution's number of employees and the number of loan applications it received.

The authors warned that information about important applicant characteristics was missing from the study, including wealth, loan-to-value ratio, credit record, and employment history.

They also said their model did not address the possibility that African- Americans might be discouraged from even applying for a loan at an institution with few African-American employees.

The article noted that further research on lender characteristics is needed. "The clearest need is for replication of the present study in more communities in all regions of the nation," it said.

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