Why fear, mistrust, and lack of education, not just credit, drive the denial divide
Despite ongoing conversations about equity and inclusion, minority borrowers in North America continue to face higher denial rates, fewer options, and lower trust in the mortgage system. According to industry professionals, the challenge isn’t just awareness, it’s the lack of consistent strategies to address borrowers’ needs. Broker Roxanne Chung of The Loan Pros Team Inc. sees this as a central barrier.
“Minorities are typically afraid to apply,” she said. “Some have been rejected with a blanket ‘you don’t make enough,’ but no one digs into their full situation.”
From awareness to action
Chung describes one potential solution as a “playbook” - a structured approach to help underserved borrowers understand their options. “It’s about making a plan,” she said. “Even if they’re not ready today, they should leave with a clear path for tomorrow.”
That situation often includes nontraditional income streams or multi-generational household support. "They might have Social Security income, foster care income, or a spouse and an aunt living with them. Together they can make it work. It’s about providing options and making a plan."
Representation and the trust gap
According to a working paper from the National Bureau of Economic Research, minority borrowers are significantly more likely to complete and be approved for loans when paired with loan officers of similar racial or ethnic backgrounds. Representation is widely seen as a crucial factor. Chung emphasizes that it must be paired with education and training. "Lenders need to actively target minorities to be in this space and educate them adequately," she said. "Training is key."
She points to a common misconception around employment history: "You don’t need two years of work if you just graduated from nursing school and have a job contract." But many first points of contact - especially realtors - don’t have this knowledge. "If a realtor says, 'I don’t think you can buy anything,' that person may never even speak to a loan officer."
Building trust requires education across the ecosystem, including mentorship and empathy. "Nobody wants to divulge their entire life story to a stranger," she said. "It has to start with people who have borrowers’ best interests at heart."
Where technology fits in
Technology’s role in lending remains debated. Chung is cautious about over-reliance on tech in the lending process. "This purchase is too emotional and too large to be completely streamlined," she said. AI tools can speed up processing and prequalification, but they can’t interpret nuance.
"AI can’t decide what’s the right fit for a family. That’s where education comes in, where you say: 'Not today, but let’s build a plan for six months from now.' People prefer that."
Breaking cycles through education
Disparities in denial rates, Chung says, are often rooted in a lack of access to information. "Many don’t know their rights or the programs available," she said. "There are county and state down payment assistance programs, mortgage credit certificates that offer tax advantages, and they don’t even know these exist."
That lack of awareness, she adds, isn’t confined to borrowers. Realtors and other first points of contact often don’t understand lending criteria well enough to guide clients effectively.
Her perspective is informed by personal experience. She recalls buying her first home before she was fully prepared and having to repeat the process. For her, that misstep highlighted the need for clearer borrower education and planning. “Even if they’re not ready today, they should leave with a clear path for tomorrow,” she said.
The message extends beyond borrowers themselves. Chung argues financial literacy must start earlier: "I’ve had to teach my own kids because schools don’t. I want to write a book for teenagers covering contracts, interest, credit, protecting data."
She also believes loan officers and lenders need to step into community spaces, offering education where it’s most accessible. "Run free events, educate realtors and borrowers where they are," she said.
Generational wealth and homeownership
Homeownership has long been a cornerstone of building generational wealth, yet many minority families face systemic hurdles that limit access. Historic redlining, unequal access to credit, and reduced intergenerational savings have left ownership rates significantly lower among Black and Hispanic households compared to white households. These gaps ripple across generations, influencing both financial stability and opportunity.
Chung stresses why addressing these disparities matters: “Beyond the price, the feeling of ownership is priceless. No one can take it away.”
The challenges she highlights mirror the realities many borrowers encounter - whether it’s navigating complex requirements, limited savings, or cultural and structural biases. Single mothers, for example, often face the process alone, compounding the barriers they already carry. “A Caucasian woman can’t tell a Black single mother how she feels. A Caucasian man can’t tell a Hispanic woman what it’s like to work three jobs and still try to qualify,” she said.
Her perspective reflects a broader concern shared by housing advocates: without more consistent guidance and targeted support, minority families risk being locked out of homeownership and the wealth-building opportunities it provides for generations to come.
