For years, research and reporting has found that mortgage lenders overall deny people of color more often than White applicants. The industry’s longtime argument is that the lending gap can be explained by financial differences among individual applicants.

But a statistical analysis by The Markup, which included some of those key factors, found that dozens of lenders were more likely to deny applicants of color than similarly qualified White applicants. One was 160 percent more likely to deny Black applicants than their White counterparts.

Three of the lenders with the largest disparities had an unusual market in common. They were the mortgage companies affiliated with the nation’s three largest home builders: DHI Mortgage finances homes built by D.R. Horton, Lennar Mortgage finances homes built by Lennar Corp., and Pulte Mortgage finances homes built by PulteGroup Inc.

The disparities for individual lenders mirror those uncovered by The Markup’s analysis of federal mortgage data overall. We found that in 2019, the U.S. mortgage industry was 40 to 80 percent more likely to deny people of color than similarly qualified White applicants, despite various federal laws that forbid discriminatory lending practices. Black applicants faced the biggest disparities.

These discrepancies persisted even though the analysis included two out of three factors that the mortgage industry had argued would explain away disproportionate denial rates: debt-to-income ratio and combined loan-to-value ratio. The third, credit scores, is still stripped from public federal mortgage data reported under the Home Mortgage Disclosure Act (HMDA)—but an analysis by government regulators found that accounting for credit scores does not erase disparities either.

More than 5,500 banks, credit unions, and independent mortgage companies reported data to the federal government in 2019 for every loan application they processed. Only the top one percent of lenders processed enough applications for a statistical analysis of their individual practices.

Among those, The Markup found more than two dozen companies that showed statistically significant lending disparities. Seven of those lenders had the worst track records. These were all at least 100 percent more likely to deny Black and Latino applicants and received more than 1,000 applications from each of those two racial and ethnic groups. For Asian/Pacific Islander applicants, the likelihood of denial did not meet The Markup’s threshold for a disparity, and there were not enough Native American applications to make a definitive conclusion.

The lenders with the largest disparities also all faced criticism from at least one government agency in recent years for their business practices. While scrutiny from a government agency is not uncommon, repeat offenses and multiple kinds of offenses can raise flags.

“When you start seeing different kinds of violations, you begin to worry about the lender’s operations as a whole,” said Sara Pratt, a lawyer with Relman Colfax. She previously oversaw the U.S. Department of Housing and Urban Development’s civil rights enforcement unit. 

Six of the lenders with the biggest disparities are independent mortgage companies, and the seventh is a credit union. They are governed by fewer federal lending rules than banks. They are still subject to the Fair Housing Act, but independent mortgage companies and credit unions are not regulated by the Community Reinvestment Act of 1977, which requires banks to make an effort to lend in disadvantaged neighborhoods.

In 2019, the six independent mortgage companies on our list dedicated at least 80 percent of their conventional loans to upper- and middle-class communities, our analysis shows. 

Here are the lenders that showed the largest disparities in denials between White applicants and similar Black and Latino applicants in 2019, ranked from largest to smallest disparities.

This Texas-based lender produced the widest disparity: It was 160 percent more likely to deny Black applicants and 100 percent more likely to deny Latino applicants than comparable White applicants.

DHI Mortgage’s top markets include Dallas, Houston, and Austin. The independent mortgage company finances many of the homes built by its parent organization, D.R. Horton, which identifies itself as the nation’s largest home builder. The company also has its own affiliated title and insurance companies.

Craig Pizer, a senior vice president and compliance officer at DHI Mortgage, said the company’s mission is to provide excellent customer service when buying a home and is “deeply committed to providing equal opportunity to every member of our community to achieve the dream of homeownership.” He did not take issue with The Markup’s analysis.

In 2013 and again in 2017, California’s Department of Business Oversight found that the company charged borrowers too much daily interest, and DHI Mortgage agreed to pay an $18,000 administrative penalty to settle those claims.

DHI Mortgage paid the U.S. Department of Housing and Urban Development $180,000 in 2016 to settle claims that the company submitted “false statements” involving loans insured by the U.S. Federal Housing Administration, including stating that it was not affiliated with its parent company D.R. Horton. DHI did not admit wrongdoing.

In an emailed statement, Pizer said the company “resolved the matter” in these cases through settlement agreements.

“For the California matter, (DHI Mortgage) ultimately enhanced our policies and procedures to ensure compliance with all applicable California financial codes,” he said.

The Markup’s analysis of federal mortgage data showed that this independent mortgage company was 130 percent more likely to deny Black applicants and 110 percent more likely to deny Latino applicants than their White counterparts.

Headquartered in Miami, Lennar Mortgage, as it is currently known, has changed its name multiple times since it was created in 1981 by Lennar Corporation, which was the nation’s second largest home builder by revenue in 2020, according to the National Association of Home Builders. In 2019—the period of The Markup’s analysis—it went by Eagle Home Mortgage and primarily served the Houston and Phoenix metros areas, where it made more than 1,000 loans to each region.

The company said its approval rates for Black and Latino borrowers and its share of Black and Latino applicants are both higher than the national averages but did not refute The Markup’s findings.

“Our underwriting practices are applied consistently, fairly, and in a non-discriminatory manner,” Lennar spokesperson Aaron Curtiss said. “We support initiatives to address macroeconomic and societal disparities and actively focus on originating loans to underserved communities.”

The company agreed to pay $13.2 million in 2018 to settle allegations brought by the U.S. Department of Justice that it “knowingly” submitted mortgages to be insured by the Federal Housing Administration when the loans did not meet federal standards and “knowingly failed to perform quality control reviews.” The alleged violations were reported by a whistleblower and took place between 2006 and 2011, when the mortgage company was called Universal American Mortgage Company.

Lennar Mortgage did not respond to requests for comment about its federal settlement.

In 2019, this independent mortgage lender was 120 percent more likely to deny Latino applicants than comparable White applicants. Freedom Mortgage did not report enough applications from Black borrowers in 2019 for this analysis to return a reliable conclusion for those.

Headquartered in Mount Laurel, N.J., Freedom Mortgage made loans in 47 different states that year, with a quarter of those going to New York State’s Nassau and Suffolk counties and the New York City metropolitan area. The company was founded in 1990.

In a written statement, Freedom Mortgage said it presents different types of loan products to its customers and then determines which product best fits customers’ needs.

“Freedom Mortgage is reducing the homeownership gap in underserved communities through [government-insured loans], down payment assistance programs, manual underwriting of loans, and many other tools,” said Ellen Longo, vice president of public relations, in an email. The company did not mention finding any flaws in The Markup’s analysis.

The Consumer Financial Protection Bureau fined the company $1.75 million in 2019 after it found that Freedom Mortgage incorrectly recorded “race, ethnicity, and sex” information for applicants, including identifying borrowers as White when the borrower didn’t specify race in the application. The agency characterized this as “intentional.”

A statement released by the company at the time said that Freedom Mortgage took the issues brought by the CFPB seriously and cooperated with the agency and that no consumers were harmed by these reporting inaccuracies.

Three years earlier, Freedom Mortgage agreed to pay a $2 million administrative penalty to the Massachusetts Division of Banks after the agency alleged that Freedom Mortgage did not comply with state and federal regulations for lending. That same year, Freedom Mortgage agreed to pay the U.S. Department of Justice $113 million after it was accused of writing loans that didn’t meet the standards to be insured by the U.S. Federal Housing Authority.

In 2014, the company settled with the U.S. Department of Housing and Urban Development for $104,000 over discrimination claims. The agency alleged that Freedom Mortgage required 69 applicants with disabilities to show documentation relating to their disability. As part of the settlement, the money would be used to pay damages to those affected.

Freedom Mortgage did not return emailed requests for comment on the government actions.

Pulte Mortgage was 120 percent more likely to deny Latino applicants than White applicants with similar financial characteristics in 2019. Pulte Mortgage did not have enough applications from Black borrowers in 2019 for a reliable conclusion. 

Based in Englewood, Colo., this company made its largest share of loans in Phoenix. It is owned by PulteGroup Inc., the third-largest home builder in the country by revenue in 2020, according to the National Association of Home Builders. On its website, PulteGroup says it operates under its “overarching principle of ‘do the right thing’ ” in all aspects of its business, including its financial services.

Pulte Mortgage and Pulte Home Corporation agreed to pay $1.18 million in 2010 to settle allegations brought by the Arizona Attorney General’s Office that the company was using its oral prequalification process to determine how much potential customers could afford to spend “and to promote Pulte Mortgage,” its lender. It did not admit wrongdoing.

The attorney general further alleged that the company did not provide the same resources to its Spanish-speaking customers. The company’s Spanish-language website, for example, only outlined the potential benefits of its loans without detailing their potential risks, whereas the English website had both. It also did not provide any translators or contracts in Spanish.

Its Spanish-language website has since been taken down.

The company acknowledged that it received an email containing The Markup’s findings and did not refute any of them, but did not respond to requests seeking comment, including about the 2010 allegations.

This lender was 110 percent more likely to reject both Black and Latino applicants than similarly qualified White ones.

Movement Mortgage was founded in 2008, the same year many financial institutions began to fail because of the housing crash. More than 10 years later, the company now has 650 offices in 50 states. It’s based in South Carolina and made more than 10 percent of its 2019 loans in the Charlotte metro area, which includes counties in both North and South Carolina.

Adam O’Daniel, the director of marketing and communications at Movement Mortgage, said the company believes federal mortgage data can lead to misleading and damaging findings because the data is incomplete.

“HMDA data does not account for borrower credit scores, which is among the most significant factors in credit decisions by mortgage lenders,” O’Daniel said in a written statement. “Without that information, it is impossible for a third party to determine that a lender is disproportionately denying a protected class of borrowers.”

Movement Mortgage paid $1.1 million in penalties in 2017, after California’s Department of Business Oversight found that the company overcharged its customers and “serviced loans” without a California license. As part of those penalties, Movement had to refund more than $140,000 to more than 1,300 customers. This was the second time in a span of five years that the state agency found that Movement Mortgage was overcharging customers.

Movement Mortgage did not respond to emailed requests for comment on the California actions.

Fairway was 110 percent more likely to deny Black applicants than similar White applicants in 2019. The likelihood of denial for Latino applicants did not meet The Markup’s threshold of a statistically significant disparity for this analysis.

The company was founded in 1996 and is the country’s largest provider of U.S. Department of Agriculture’s Guaranteed Rural Housing program loans in 2021 by volume. It is headquartered in Madison, Wis., and Carrollton, Texas, and has offices in every state except West Virginia and Alaska. Its largest lending market is Phoenix.

Kirby Bradley, Fairway’s chief content officer, said in an email that the company believes HMDA data cannot provide meaningful conclusions regarding its lending behavior because the data lacks applicants’ credit scores.

The company said that it conducts its own analyses on how Fairway Independent lends, which didn’t show any disparities between White applicants and those of color. The company didn’t provide details about its findings.

Fairway agreed to a $162,000 settlement with the Massachusetts Division of Banks in 2011 after the agency alleged that Fairway didn’t adequately retain documents and worked with loan originators that were not licensed.

The company did not return emailed requests for comment about the Massachusetts action.

Navy Federal was 110 percent more likely to deny Black applicants than comparable White applicants. The likelihood of denial for Latino applicants was not high enough to meet The Markup’s threshold of a significant disparity.

The credit union exclusively serves active and retired members of the military, their families, and U.S. Department of Defense civilian employees. It says it was founded at the end of the Great Depression, in 1933, by seven ​​employees of the Navy “who wanted to help themselves and their co-workers reach their financial goals.”

It didn’t report a location on a quarter of its applications, but for those that did contain a location, its top market was the Washington, D.C., metro area.

Navy Federal Credit Union said in an email that The Markup’s findings do not accurately reflect the company’s lending practices, but declined to specify any inaccuracies.

“Navy Federal Credit Union is committed to equal and equitable lending practices and strict adherence to all fair lending laws,” said Brian K. Parker, assistant vice president of corporate communications. “Helping our members reach their financial goals remains our top priority.”

The CFPB fined the credit union $28.5 million over its debt collection practices in 2016. According to the CFPB investigation, Navy Federal Credit Union falsely threatened to sue, garnish wages, and contact commanding officers for any members who became late on their loans. The credit union also limited tardy borrowers’ access to their debit cards, ATMs, and online checking. The only option Navy Federal Credit Union offered them online was to pay back the delinquent portion of their loans, according to the CFPB. 

Navy Federal Credit Union declined to answer The Markup’s questions about those claims. The credit union told Reuters in 2016 that it cooperated with the federal agency and made the necessary changes.

The Markup investigative reporter Lauren Kirchner contributed to this report.