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Credit scoring changes may smooth path to homeownership for black Americans

This article is reprinted by permission from NerdWallet.

Imagine mortgage credit standards as a roadway, connecting lenders with potential borrowers who dream of owning a home. What in the mid-2000s was a wide-open superhighway with few barriers became, after the 2008 housing crash, a one-lane path open only to the most credit-qualified.

As loan defaults multiplied and banks collapsed, lenders abruptly lost their appetite for risk and abandoned their former “if you breathe, you qualify” loan standards. The Urban Institute says lenders would have issued an additional 6.3 million mortgages between 2009 and 2015 “if lending standards had been more reasonable” — for example, like the pre-housing-crisis home loan requirements of 2001.

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