We evaluate lender discrimination during the mortgage default process. A telephone survey was conducted to evaluate the extent of lender discrimination in defaults that lead to foreclosure in New Orleans, Louisiana between 1985-1990. We use these data to estimate the independent effects of race and neighborhood characteristics on the extent of lender assistance or forbearance during the foreclosure process. Our analysis indicates that the proportion of black residents in the neighborhood where the property was foreclosed is a more significant predictor of forbearance than the race of the borrower. This is a foreboding indication of the possibility that recent gains in black home buying may be partially offset by the persistence of residential segregation in U.S. cities