Dear Hilary – Racial Distribution
September 2014

Dear Hilary,

I have questions about the Fair Lending module, specifically the Pricing Discrimination Report. I believe the report is inaccurate in the racial distribution, as it is showing over half of our members are white, but in our area, we actually have mostly Hispanic or Brazilian members.
As well, I have two members with the same last name – but one is showing as white, but the other is showing as Hispanic. This does not make sense to me, so I am hoping you can help clarify this for me.

Brazilian Lending


Brazilian Lending,

Thanks for reaching with questions on our Fair Lending model, specifically regarding VE’s calculation of expected race.

One thing that is important to remember is that our expected race calculation influenced by both the racial distribution of a given last name, as well as a given census tract. In the case of Batista and Costa, the borrowers each resided in different census tracts, each with differing demographics. Therefore, two borrowers have different race likelihoods, even though they share the same last name.

In conducting this research I noticed two obvious trends in the provided examples; 1) The borrower’s last names are very likely Brazilian (or Portuguese), and 2) the ‘pct white’ field we pull from the census was much higher than one might think. These observations led my research elsewhere.

In the area your institution is located, there have seen a heavy influx of Brazilians immigrants over the last twenty years. Many of these immigrants come from Southern Brazil (a city called Governador Valadares in particular). Many people in Southern Brazil are of European descent (at least partially). Consequently, Brazilians have a difficult time reporting their race, and often put ‘white’ for census purposes. A paper from the Umass Lowell said the following:

“…Brazilians do not usually identify themselves as Latino or
Hispanic unless they understand and accept the official Census classification
definitions for race and ethnicity…

…when asked to respond to questions on race and ethnicity
in U.S. Census forms, a group of Brazilian immigrant teenagers interviewed by
Siqueira did not know how to fit their racial and ethnic identity within the
categories available in those forms. Despite having gone to high school in the U.S.
–the generation Rumbaut called the the 1.5 generation- they still do not see
themselves as Hispanics or Latinos. In fact, most Brazilians in the U.S. self-identify
as white or “moreno” (mulatto) following Brazilian standards to classify
skin color and may thus choose to mark “Other race” in the census forms. Brazilian
immigrants seem to have a great deal of difficulty to understand U.S. racial and
ethnic categories…”

For full details see:

The bottom line is that Brazilians are very likely to appear and identify as whites. At the very least, they are probably not Hispanics. Thinking of them as ‘non-white’ borrowers is probably a flawed approach.

I hope that clears up of the confusion. Please let us know if you have any more questions.

Happy Friday!

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