New York Attorney General Letitia James is calling on state lawmakers to tackle unfair credit and lending practices that fuel a staggering racial gap in homeownership and force New Yorkers of color to pay hundreds of millions more in interest compared to white owners.

A new report released Tuesday by James’s office finds that white residents are more than twice as likely to own their home as Black and Latino New Yorkers and 25% more likely than Asian New Yorkers. Meanwhile, homeowners of color often face an additional hurdle: high interest rates and fees that end up totaling $207 million more than their white counterparts, the report shows.

James said those high interest rates make it harder for people of color to buy homes in the first place, and highlight barriers to credit and loans for Black, Latino and Asian New Yorkers.

“Unequal access to affordable credit is still pervasive across our state, reinforcing the legacy of segregation, leading to a disparity in homeownership, and fueling the racial wealth gap,” James said in a statement accompanying the report.

Researchers reviewed mortgage application and loan data from 2018 to 2021 across the state and found Black, Latino and Asian applicants were denied mortgages at significantly higher rates than white applicants, even when controlling for credit score, income, loan size and other financial factors. In New York City, white applicants were 33% more likely to be approved than similar applicants of color.

Black, Latino and Asian homeowners were also far more likely to have their refinancing applications denied during the years reviewed by James’ office, locking them out of historically low interest rates during the COVID pandemic.

Researchers pinned the blame on limited lending options in communities of color, as well as entrenched discrimination — like the legacy of racist redlining and restrictive covenants that banned Black New Yorkers and other people of color from moving into certain areas. James said state actions have only worsened the divides.

“While discrimination by individual lenders explains some of these disparities, the problems reflect systemic failures that will require structural reforms,” researchers wrote in their report.

They also said the disproportionate use of higher-interest Federal Housing Administration, or FHA, loans by Black and Latino borrowers locked out of other financing options also contribute to the high costs.

They recommend New York subsidize down-payment assistance for first-time homebuyers, fund banks known as Community Development Financial Institutions that provide loans in low- and middle-income communities of color and establish a public bank to manage state and city cash and lend to local banks.

Racial disparities in homeownership persist across the country, but are even starker in New York.

James’ office said about two-thirds of white New Yorkers own their own homes, compared to about 72% of white Americans nationwide. But only 32% of Black New Yorkers own their homes, compared to 43% of Black households nationwide. And just 27% of Latino New Yorkers own their homes—about half the nationwide rate of 51% among Latinos, the report continued.

The report also finds that disproportionately fewer Black and Latino New Yorkers are applying for home loans compared to white and Asian residents.

James pinpointed the problem in Albany. The state capital is home to the nation’s second-largest gap between white and Black homeownership, trailing only Minneapolis, her office said.

The racial wealth and homeownership gaps are having huge consequences for New York City, said Sabrina Bazile, a senior program manager for the Black Homeownership Project at the Center for New York City Neighborhoods.

“Black New Yorkers pay more in interest, more in closing costs,” Bazile said. “It’s both the pathway to homeownership that’s being undermined, as well as the actual ability to stabilize Black homeownership and keep Black homeowners in their homes.”

The inequities are contributing to a larger exodus by Black and African American residents of the five boroughs, Bazile said. A Gothamist analysis of 2000 and 2020 Census data shows the number of non-Hispanic Black New York City residents declined by more than 6% — about 125,000 people — over the 10 year span.

Bazile’s group is organizing Black elected officials, advocacy groups and homeowners around several policy goals, including enforcing fair lending practices, increasing downpayment assistance and preventing predatory speculation and house-flipping.

“It’s about what kind of city are we looking to have,” Bazile said. “We need a city that’s diverse, multiracial, multicultural. That’s what makes New York.”