DOJ launches anti-redlining initiative in Massachusetts
BOSTON – The Massachusetts District Attorney’s Office announced Friday, October 29, the launch of the Combatting Redlining Initiative in Massachusetts to fight the illegal deprivation of mortgage services for communities of color.
Attorney General Merrick Garland announced the Department of Justice’s national initiative on October 22.
The Initiative, which is led by the Housing and Civil Law Enforcement Section of the Civil Rights Division of the Department of Justice in partnership with U.S. prosecutors’ offices, aims to make mortgage credit and home ownership to property accessible to all Americans under the same conditions, regardless of race or national origin and regardless of the neighborhood in which they live. The initiative:
- Use US prosecutors’ offices as force multipliers to ensure that equitable loan application is informed by local expertise in housing markets and the credit needs of local communities of color;
- Extend the analyzes of the Ministry of Justice on potential reclassification to depositary and non-depositary institutions. Non-depository lenders are not traditional banks and do not provide typical banking services, but engage in mortgages and now represent the majority of mortgage lenders in the country;
- Strengthen our partnership with financial regulators to ensure the identification and referral of fair loan violations to the Department of Justice;
- Increase coordination with state attorneys general on potential fair loan violations.
Redlining is an illegal practice in which lenders avoid providing services to people living in communities of color due to the race or national origin of the people who live in those communities. The new initiative represents the department’s most aggressive and coordinated enforcement effort to combat redlining, which is prohibited by the Fair Housing Act, passed in 1968, and the Equal Credit Opportunity Act, passed in 1974.
“Although housing discrimination is illegal under the Fair Housing Act, discriminatory redlining patterns and practices persist in parts of our community,” Acting US Attorney Nathaniel R. Mendell said. “We intend to stop the redline because it denies equality of access and opportunity in a profound way that negatively impacts almost every aspect of life. This office will continue to enforce the Fair Housing Act, and we are proud to join with the Department of Justice in launching the Combatting Redlining initiative to protect the rights of all tenants.
For American families, homeownership remains the primary means of creating wealth, and the deprivation of investment and access to mortgage services for communities of color has contributed to families of color. lags persistently in homeownership rates and net worth compared to white families. . The gap in homeownership rates between white and black families is larger today than it was in 1960, before the passage of the Fair Housing Act of 1968.
Origins of Redlining
In 1933, during the Great Depression, the Homeowners Loan Act established the Homeowner loan company [HOLC] to help those who are in default on their mortgages and in foreclosure. He created “Residential Security” zones to classify the risk by neighborhood. The criteria included the race and / or ethnicity of residents in the area. HOLC has created maps that color-code communities and neighborhoods from green for “best” to red for “dangerous”. This red color code became known as redlining.
The federal government created the Federal Housing Administration [FHA] in 1934, which insured mortgages. This institutionalized redlining, making it standard industry practice, using a methodology similar to HOLC. The result has been the systematic denial of credit to homebuyers in predominantly black neighborhoods. The FHA has also favored loans for new suburban construction over older urban properties.
In 1938, Congress created the Federal National Mortgage Association [Fannie Mae], which buys mortgages from local banks to increase their ability to increase their lending. Fannie Mae followed the guidelines of the FHA.
After the end of World War II, the government subsidized suburban development to provide affordable housing for veterans during a post-war housing shortage. The Department of Veterans Affairs [VA] and the FHA supported these initiatives, even though they included contracts that specifically limited the race of people eligible to purchase these homes.
Between 1934 and 1963, the federal government subsidized $ 120 billion for new housing. Two percent went to loans for non-whites. Some homes financed during this period sold to the first owner for as little as $ 10,000. The modern appraisal of some of these same homes can range from $ 250,000 to $ 500,000 today.
The Fair Housing Act, which is part of the Civil Rights Act of 1968, prohibited discrimination in the sale, rental and financing of housing based on race, religion, national origin, disability and family status. The law was later amended to include gender.
Despite the Fair Housing Act and other legal changes, in 2019, 42% of black households owned their house, compared to 73% of white households.