The Fair Housing Act of 1968, designed to outlaw racially motivated redlining, prohibits racial discrimination in the housing industry and the practice of denying people access to credit based on where they live.

In short, redlining occurs when mortgage lenders draw red lines around portions of a map to indicate areas or neighborhoods in which they may not want to fund loans. Digital real estate companies can also program their algorithms to skew toward certain racial and economic demographics.

In a recent action against one Florida lender, the Department of Justice (DOJ) alleged that between 2016 and 2021, only 2.7 percent of Ameris Bank’s loans were made to residents of majority-Black and Hispanic census tracts in an area where competitors did 9.5 percent of their lending in those tracts – or about 3.5 times that rate.

Additionally, a recent study by the University of Michigan examining the housing market in ‘marginalized’ and ‘nonmarginalized’ neighborhoods that share a border revealed that residential properties “just inside the boundary of redlined zones” sold at a much lower price when compared to houses “in higher-graded zones” on the other side of the border. 

In the Ameris Bank settlement, the lender agreed to invest more than $9 million in loan subsidy funds and outreach in minority neighborhoods and to employ at least three mortgage loan officers dedicated to serving majority Black and Hispanic neighborhoods.

But the practice persists. Since announcing a Combating Redlining Initiative in October 2021, the DOJ has reached settlements with 10 lenders alleged to have engaged in discriminatory redlining across the country amounting to more than $107 million in fines.

Redlining, noted by U.S. Attorney General Merrick Garland, has had a lasting negative impact for American families. Homeownership, he said, remains a principal means of building wealth – and the deprivation of investment in and access to mortgage lending services for communities of color have contributed to families of color persistently lagging behind in homeownership rates and net worth compared to white families.

Doubling down on the effort to restrict the practice of redlining, the DOJ has vowed to coordinate with State Attorney Generals on potential fair lending violations and to strengthen its partnership with financial regulatory agencies so that more lending violations are identified and referred to the Department of Justice.

As an agent, you are in unique position to help make homeownership a reality for a new generation. Having knowledge of what’s happened in the past is part of the solution of making sure history doesn’t repeat itself. Individuals may report lending discrimination by submitting a report online at civilrights.justice.gov, or by contacting the Justice Department’s Housing Discrimination Tip Line.

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This material is meant for general illustration and/or informational purposes only. Although the information has been gathered from sources believed to be reliable, no representation is made as to its accuracy. This material is not intended to be construed as legal, tax or investment advice. You are encouraged to consult your legal, tax or investment professional for specific advice.

About Bobbi Pronin

Bobbi Pronin is an award-winning writer based in Orange County, Calif. A former news editor with more than 30 years of experience in journalism and corporate communications, she has specialized in real estate topics for over a decade.

Bobbi is not an employee of Anywhere Integrated Services or affiliated with its title companies.