The story of Karapet Gyurjian and his battle to get a home loan shows how difficult it is for minorities to own property when taste-based and other forms of discrimination still play a role in lending practices today.

By ARINA OHANYAN 
EL NUEVO SOL

During his first home purchase, Karapet Gyurjian says he experienced racism and discrimination due to the origin of his last name. The bank made the issue sound as though it was income related. Gyurjian struggled to get the home, because of the issues the bank created and eventually had to find a new property and a new bank.

His story is only one of many that fall under the category of what analysts call “taste-based discrimination,” a term used for lender who have pre-conceived opinions of a minority group, which prevents them from working with the group or helping them. When lenders are prejudiced against minorities, they prefer not to interact with them, which leads to them trying to get rid of the minority as a customer.

When looking at data collected in a “Lending Tree Study” released in October on mortgage loans, it is evident that minorities have been suffering from discrimination in lending. African American and Mexican applicants are more likely to get denied loans and are offered a higher rate compared to White applicants, according to UC Berkeley researchers.

Loan officer Michelle Trujillo also gave personal examples to confirm there is discrimination. She worked with two different veterans and noticed the different treatment they received based on their name and how closely they related to White names versus Mexican names. The veteran with a Mexican last name was asked more questions and interviewed more thoroughly than the veteran with a White last name.

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AUDIO TRANSCRIPT:

Arina Ohanyan: I’m Arina Ohanyan and you are listening to El Nuevo Sol, a student multimedia platform of California State University, Northridge.

In 2014, Karapet Gyurjian decided it is time he gets his own place with the money he collected for a down payment. He did everything right by the book and applied for a mortgage loan with 20% down payment ready, which in mortgage talk is a good amount. The bank he applied to, however, was giving him a hard time. Everything was a problem.

When his loan officer asked what was wrong, the bank representative said they’ve been suspicious of anyone in the Glendale, Burbank area that makes a lot of money and has the Y-A-N last name.

He was referring to Armenians. The bank didn’t believe a minority could see a rise in their income.

Karapet Gyurjian: It was very weird. I kept waiting and waiting for an answer. I was asking my loan officer hey, is there any news I mean any updates? What’s my interest rate going to be? She just told me that we’re not at that stage yet and the bank is just giving us a hard time. I asked her what the issue is I mean.

What’s the problem I’m making clean money. I have good credit. She just told me that they have concerns about how I’m making my money, but that’s seemed pretty ridiculous, because is it not the end goal for me to own a business. I’ve been working hard for seven years and I’m finally able to make money and save up money to buy my own place. But now that I am that’s the concern. I mean, wouldn’t they be more worried if I wasn’t doing so well after all these years?

Arina Ohanyan: Eventually, Gyurjian had to reapply to different bank, because the current one gave him too much of a hard time.

Karapet Gyurjian: We fought back and forth back and forth with this bank, but they just kept finding ways to justify their concerns and ask for more different documents. And I just felt uncomfortable already. And so, I basically cancelled the purchase and had to find a different home and use a different bank.

Arina Ohanyan: What happened to him is a common case of taste-based discrimination. A form of discrimination in which lenders or people working for them are prejudiced against minorities and don’t want to work with them. They basically think they’re better than the group and try to get rid of customers who are part of the minority group.

In an industry that prides itself on equal opportunity lending, there’s been a longstanding discrimination faced by people of color in getting a home loan.

Michelle Trujillo:  I see discrimination happen often. It’s not a surprise.

Arina Ohanyan: Michelle Trujillo has been a loan officer for eight years. She says she has experienced discrimination with certain clients.

Michelle Trujillo: The problem isn’t that there’s discrimination. The problem is that these banks do it in such a smart, justifiable way that you don’t have much room to fight. Sometimes you get lucky, and there’s another person on the other side that tells you what you need. To do to avoid these issues, but other times you’re left working on the same loan with a couple different banks and its double work for everyone until something sticks.

Arina Ohanyan: A recent UC Berkeley study based on the analysis of almost 7 million mortgages shows that black and Latino applicants were charged a higher interest rate and more fees than white loan applicants.

In terms of numbers, this means a black homeowner would pay almost $700.00 more for a $430,000 loan than a white homeowner.

The number may seem less, but it adds up to millions more paid by all minorities.

Michelle Trujillo: Things like this really make you think if the system is fair or not, but you have to be able to identify the differences in each cases to come to this conclusion.

Arina Ohanyan: The study also shows that African Americans have the highest denial rate lenders deny mortgages for black applicants at a rate of 80% higher than white applicants, the discrimination has led to homeowners and buyers to hide their race.

Michelle Trujillo: I had a veteran client once. He was of Mexican descent and this was obvious because of his last name. This specific bank kept asking detailed questions an asking for more documentation to prove that he would qualify for the veteran program loan. At first, I thought they were just doing their due diligence, even though the only required form I had already given, but when.

I did another loan for his cousin, with a more Americanized sounding last name. The same bank had no issues. They didn’t ask for anything more than the piece of paper that says he’s a veteran with benefits that I had already provided.

If I had never done a veteran loan before in the past, I would think that this was normal protocol and would need more documents and to that client everything probably did feel normal because he’s used to people questioning his status and rights. But when you see how others are treated, you really feel the difference in both treatment and privilege.

Arina Ohanyan: Much like Trujillo’s clients, Akili Akridge back in August decided to refinance his home for a lower rate. Once he disclosed he is Black, loan officers started offering him a high rate. But when he did not disclose his race, his loan was approved at a lower rate.

Karapet Gyurjian: I mean I get it. Banks have doubts but if they’re so concerned about demographics doing better then why don’t they just go further into the past and see all these disadvantages that people had at 1st and how quickly their lives get better when they don’t have some of these disadvantages. Just look at that.

Arina Ohanyan: This story was reported and produced by me, Arina Ohanyan. Thanks for listening.

To learn more:

UC Berkley Study: Consumer-Lending Discrimination in the FinTech Era

Mortgage Lending Discrimination: A Review of Existing Evidence

CBS News: Disparity in home lending costs minorities millions, researchers find 

CNBC: A troubling tale of a Black man trying to refinance his mortgage

Tags:  Arina Ohanyan housing Karapet Gyurjian Michelle Trujillo taste-based discrimination