Volume 4, Number 1 - Urban Economic Development - Spring 2000

Title: The Production and Interpretation of Information in the Mortgage Loan Application Process

Author: Guy Stuart

Abstract: This paper proposes an alternative research and policy agenda to explain and reduce racial and ethnic disparities in denial rates. It departs from traditional approaches to disparities in loan denials, which focus on whether discrimination is the cause of the disparities, and focuses instead on the disparities as a problem in and of themselves. Loan denials are a failure of the loan application process, which is designed to generate loan approvals. In addition, loan denials are costly to all concerned. This paper adopts an ethnomethodological approach to the loan application process and analyzes the production and interpretation of information in the process. Specifically, using field data, it shows how the credit profile of the loan applicant is constructed through the process itself, and the way in which that information is interpreted. The paper concludes by arguing that further analysis of the process from an ethnomethodological perspective can generate valuable information that lenders can use to better manage their loan application process to decrease denial rate disparities. This paper proposes mechanisms by which lenders can be encouraged to do this.

About the Author: Guy Stuart is Lecturer in Public Policy at the John F. Kennedy School of Government. Dr. Stuart worked on community economic development issues in the nonprofit sector in Chicago for four years after receiving his Ph.D. in political science from the University of Chicago. Dr. Stuart is also the author of a study entitled Segregation in the Boston Metropolitan Area at the end of the 20th Century (2000).

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