Redlining

Redlining is a form of housing discrimination that occurs when a lender denies a loan to a potential borrower based on the borrower's race or ethnicity. The term "redlining" comes from the practice of lenders drawing red lines on maps to indicate neighborhoods that they would not lend to. These neighborhoods were often minority neighborhoods, and the practice of redlining had a devastating impact on the ability of people of color to build wealth and achieve homeownership.

Redlining is illegal under federal law, but it continues to occur today. In 2018, the Consumer Financial Protection Bureau (CFPB) found that lenders were more likely to deny loans to borrowers in minority neighborhoods than in white neighborhoods. The CFPB also found that lenders were more likely to charge higher interest rates to borrowers in minority neighborhoods.

Redlining has a number of negative consequences. It makes it more difficult for people of color to buy homes, which can lead to lower rates of homeownership and wealth accumulation. It can also lead to segregation, as people of color are forced to live in neighborhoods with fewer resources and lower property values.

There are a number of things that can be done to address redlining. One important step is to increase enforcement of the Fair Housing Act, which prohibits discrimination in housing. The CFPB is also working to address redlining through its Home Mortgage Disclosure Act (HMDA) data collection and reporting requirements. HMDA data provides information on the race, ethnicity, and gender of mortgage applicants, as well as the outcomes of their applications. This data can help to identify lenders who are engaging in redlining and take action to stop them.

Another important step is to provide more affordable housing options in minority neighborhoods. This can be done through government-sponsored programs such as the Low Income Housing Tax Credit (LIHTC) and the Home Affordable Modification Program (HAMP). These programs can help to make homeownership more affordable for people of color and reduce the concentration of poverty in minority neighborhoods.

Redlining is a serious problem that has a long history in the United States. However, there are a number of things that can be done to address it. By increasing enforcement of the Fair Housing Act, collecting and using HMDA data, and providing more affordable housing options, we can help to create a more equitable housing market for all.