Redlining: A Retired or Refined Practice?

Black couple concerned about redlining while buying their home

Redlining is a term used to describe racial discrimination of any kind in mortgage lending. The term originated from government maps that outlined areas where Black residents lived, consequently deeming potential mortgages as risky investments. This practice began in the 1930s, backed by the federal government. For decades it denied mortgages to people, mainly POCs, preventing them from purchasing a home. Even though this practice began almost a country ago, remnants of redlining may still occur to this day.

What is Redlining?

In the early to mid 1900s, agencies ranked neighborhoods from least risky (A) to most risky (D).

“A” was the lowest risk to investors and government agencies funding housing programs. “D” neighborhoods were supposedly the riskiest and where property values were most likely to decrease. By design, most of the “D” areas were neighborhoods where Black residents lived. Agencies marked these areas on maps with red ink, hence the term “redlining”. The maps were internal documents, not publicized. However, the practice influenced who received a mortgage, disproportionately impacting Black homebuyers who, due to segregation, were all but forced to live within these D communities.

Home ownership is one of the most basic ways to build generational wealth for your family. Without the ability to purchase a home, Black homebuyers were stuck in expensive rentals, thereby contributing to the cycle of poverty.

Does Redlining Still Occur?

Officially and legally, no. The federal government outlawed redlining with the 1968 Fair Housing Act and the 1977 Community Reinvestment Act (CRA). These acts put bans on discrimination based on someone’s race when the person is trying to buy a home. The CRA also mandated lenders to report how often they approve or deny loans to low-income households. The CRA also outlaws the imposing of predatory interest rate or fees. While these acts were a step in the right direction, redlining does still occur on some level, just not in the same way or to the same degree. Some banks still practice predatory lending in the same neighborhoods once marked red. This is how given rise to a new form of redlining called “reverse redlining.” Reverse redlining is the practice of targeting neighborhoods (mostly non-white ones) for higher housing prices or lending on unfair terms.

Remnants of Redlining

Now with the rise of reverse redlining, some institutions have revived remnants of original redlining practices. Lenders have found what seems to be a loophole in the laws. While redlining neighborhoods or regions based off race is illegal, lenders may take economic factors into account when making loans. Income, though, is still intrinsically tied to race, allowing lenders to extrapolate a buyer’s race simply using their economic situation. Although redlining is no longer a widespread phenomenon, many buyers still suffer from its effects decades later.

MWA Stands Against Discriminatory Behaviors

MWA’s Racial and Economic Justice attorneys bring action against entities and institutions whose policies harm people of color. Our team of attorneys is a voice for our community, speaking out against injustices that harm our neighbors. Our team believes that everyone deserves an equal opportunity and should not be denied based off color, race, ethnicity, ability, religion, or any other protected class.

To arrange a free consultation with our caring team of attorneys, contact McCune Wright Arevalo by completing the form or calling (909) 345-8110 today!

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