Evidence Shows Banks Still Deny Loans to African Americans Just As They Did 50 Years Ago
There are only so many things having a Black President can change, and redlining has not been one of them. The practice of restricting loans from certain neighborhoods or outright denying home loans to Black borrowers all together continues today despite the Fair Housing Act of 1968. Studies and legal cases show redlining still happening today in Wisconsin, Minnesota, Illinois, California, New York and more. In fact, the history of redlining has been noted as relevant to the current unrest in Ferguson and Baltimore, and it is likely that the practice continues there.
Redlining takes on several different forms, including denying mortgages to people of color who show a mid-level income but live in or are trying to buy a home in neighborhoods that are predominantly non-white, predatory lending practices targeting people of color for refinancing their mortgages at interest rates that cause them to default and gentrification policies by which both landlords and mortgage companies find ways to push people of color out in favor of moving white people into a neighborhood. All of these practices have been shown to still occur in 2015 despite being illegal. Gentrification efforts are the most controversial and stealthy, often fueled by government grants intended to help the neighborhood improve but used instead to bring in businesses that cater to middle class white clientele who then are also systematically moved into the neighborhood, displacing the families who have lived there for decades.
Through predatory lending mortgage companies talk relatively stable homeowners into refinancing their mortgages without clearly disclosing the terms of the new loan in ways the homeowners can understand. One of the most common tactics is to prey first on a respected member of the community by offering financial incentives to them to convince their friends and family to refinance, sometimes pressuring for a quick decision so homeowners don’t take the time to thoroughly make sense of the paperwork. Many homeowners find themselves paying so much in interest on their new loan they can not touch the principle or maintain the payments for long before defaulting and losing their home. This then makes those homes available for cheap purchase by gentrifiers who may even believe they are moving into a diverse neighborhood and not realize they are being used to force that diversity out.
Although some banks are being taken to court and city governments are vowing to address these practices, the courts move slowly and banks and mortgage companies sometimes settle without having admitted wrongdoing. They are able to walk out of court and right back to their offices to continue business as usual just as they have since the 1930s with minimal changes to their methods.
Redlining: Still a thing| The Washington Post
Redlining: Banks Still Restricting Home Loans In “Non-White” Areas| The Uptake
A Tax on Blackness| Slate