Study: Redlining Alive and Well

indexBy Free Radical

The Fair Housing Act, passed 50 years ago, along with subsequent local, state, and federal laws should have effectively ended mortgage redlining. However, a new study by The Center for Investigative Reporting shows that discriminatory lending practices are alive and well, even in the age of rampant gentrification.

The nonprofit analyzed data from more than 31 million government mortgage records and found that people of color disproportionately faced denials in 61 metropolitan areas such as Atlanta, Detroit, Washington DC, and St. Louis.

The analysis which was independently reviewed and confirmed by the Associated Press, showed that Black loan applicants were denied at significantly higher rates than Whites in 48 cities, Latinos in 25, Asians in 9, and Native Americans in 3.The data remained consistent even when researchers controlled for nine factors such as applicants’ income, loan amount, and the type of lender.

Credit scores were not included because lenders have successively fought long and hard to keep this information under wraps. Though they argue it is to protect the privacy of borrowers, critics say that the publication of that data would only reinforce existing evidence of discrimination.

In St. Louis, African-Americans were 2.5 times more likely to be denied for loans than Whites. And of the 41 metro areas in St. Louis where banks denied every request for a loan, all were located in majority African-American neighborhoods.

Though the data showed rampant discrimination in lending, many of the governmental mechanisms in place to prevent it have been weakened. The Community Reinvestment Act, passed under the Carter administration, instituted additional protections for borrowers. However the Trump administration has reduced or eliminated provisions that banks must follow to show they are issuing loans fairly. After one year in office, Trump’s Justice Department has not sued one lender for discrimination.

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