As a mortgage processor, I actually know a bit about this week’s topic! For starters, the term ?redlining? in the context of mortgage lending refers to the act of refusing mortgage services to a prospective homeowner based on the overall racial demographics of an area. This is a topic that we cover annually in our compliance training courses, and it’s a big deal. Sometimes redlining can mean that a business is hiking the prices of their services in that particular area, knowing that the vast majority of the residents wouldn’t be able to afford the inflated price and acheiving the same result. This is a practice that has been illegal since 1968 when the Fair Housing Act made it so. Illegal though it may be, there are places where redlining is still practiced because sometimes banks are able to disguise it as something else. Associated Bank is accused of having redlined several districts in three states because of the unreasonably high denial rate for loans applied for by minorities, and HUD (the department of Housing and Urban Development, which is responsible for overseeing and regulating a huge amount of what we do in mortgage) has cracked down on Associated Bank by requiring them to provide reparations to those communities. [1] Such inequalities still exist today because unfortunately, there is still a lot of prejudice in this country that doesn’t go away by us refusing to talk about. Where there are people with biases, there are businesses run by those people who engage in unlawful discrimination practices that ultimately serve to further institutional racism and the disillusionment of minorities in this country who want, and in very many cases are qualified for, the ?American Dream? of homeownership, but who often are not afforded the chance to do so. There are national and regional programs in place everywhere which offer down payment assistance for low-income borrowers, and there are programs like the USDA loan (which offers 100% financing to low-income borrowers in rural areas) and the FHA loan (which offers a 97.5% loan, reducing the down payment requirement). However, in some cases, lenders fail to present these options because they would rather not deal with these particular borrowers…maybe that is because of deep-seeded racism, or because they have a classist worldview which tells them that a $75,000 loan is not worth their time when they’re paid on commission. Either way, redlining does still exist in this country, and the good news is that HUD and other regulatory bodies take these cases very seriously. I’m glad to work with a company who treats each borrower exactly the same, whether they plan to borrow $50,000 or a million dollars, but I know there are plenty of places out there that don’t approach their business that way. [1] Badger, E. (2015, May 28). Redlining: Still a thing.
