Housing segregation is still happening decades after redlining was ruled illegal, Biden’s CFPB says

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  • The CFPB just found fresh evidence of redlining, which has been illegal for over half a century.
  • It found housing discrimination that prevented minority neighborhoods from receiving financial services.
  • The Biden administration has taken other steps to increase homeownership for Black Americans.
  • See more stories on Insider’s business page.

Redlining, or housing discrimination by denying services to minority neighborhoods, has been illegal for over half a century. But it just keeps happening.

An agency within President Joe Biden’s administration just found evidence of the discriminatory practice still happening today.

The Consumer Financial Protection Bureau, which ensures consumers are financially protected, released a report on Tuesday that found evidence of lenders violating the Fair Housing Act of 1968, which banned housing discrimination. Specifically, examiners in the bureau found lenders engaged in practices that discouraged prospective applicants in minority communities from applying for credit and targeted marketing in majority-white neighborhoods.

The agency’s press release detailed that lenders located their offices in “almost exclusively” majority-white neighborhoods, only used pictures of white people in marketing campaigns, and published loan officer headshots of “almost exclusively” white people.

Initial analysis by the bureau found that one lender received significantly fewer applications from majority-minority and high-minority neighborhoods relative to other lenders, prompting a redlining examination that revealed lender prioritization of white neighborhoods. The bureau said the lender plans to undergo corrective actions regarding this violation.

The examination also “identified emails among mortgage loan officers containing racist and derogatory content,” according to the report.

The term “redlining” dates back to the New Deal. President Franklin Delano Roosevelt’s Home Owners’ Loan Act and the National Housing Act of the 1930s had the goals of making homeownership more affordable, but when determining which neighborhoods would get guaranteed mortgages, the Home Owners Loan Corporation denied Black people access to mortgage loan refinancing. Black neighborhoods were colored red on maps to indicate to appraisers that those neighborhoods were too risky for mortgages.

Although ruled illegal in the Fair Housing Act, housing discrimination occurring today is nothing new. Last month, the Indianapolis Star reported that the value of a Black woman’s home shot up by $149,000 when she had her white friend step in for her for an appraisal.

Insider previously reported that Black Americans lag behind white Americans on homeownership, with Black people being denied mortgages at higher rates than white people, even though many are credit-worthy.

Biden’s administration has been working to prevent housing discrimination through a series of new rules. Two weeks ago, for example, the Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) announced new calculations to determine mortgage assistance that would make it easier for people with student debt to buy a home – especially people of color.

“For people of color, especially Black people, homeownership is wealth,” HUD Secretary Marcia Fudge said. “It’s not only wealth to us, but it’s generational wealth.”

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A Black homeowner had her white friend represent her during an appraisal. The value of her home shot up by $149,000.

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  • The Indianapolis Star reported that appraisers undervalued a Black resident’s home because of her race.
  • This undervaluation dates back decades to when Black neighborhoods were deemed financially risky.
  • Lawmakers introduced legislation in recent months to combat racial disparities in homeownership.
  • See more stories on Insider’s business page.

With the pandemic-era ability to work from home, the desire for homeownership has been on the rise this past year, with a housing inventory crisis developing as a result.

But the Indianapolis Star reported last week that Black homeowners who want to put their houses on the market or seek lower mortgage rates are at a disadvantage just because of their race.

The Star spoke to Carlette Duffy, a Black homeowner who had sought three appraisals on her home to start the process of refinancing her current mortgage loan. The first two appraisers valued it at $125,000 and $110,000, respectively, but when she had a white friend stand in for her during a third appraiser’s visit, the value of her home shot up to $259,000. She had suspected the appraisers were lowballing her because of her race, and she was right.

“I had to go through all of that just to say that I was right and that this is what’s happening,” Duffy told the Star. “This is real.”

Duffy and the Fair Housing Center of Central Indiana filed complaints against the mortgage lenders and appraisers, accusing them of undervaluing her home because of race with the Department of Housing and Urban Development (HUD), and her case is now in the hands of the government.

Duffy’s situation is far from unique. A 2018 study from Brookings found that homes in Black neighborhoods are undervalued by $48,000 on average, amounting to $156 billion in cumulative losses.

“That metric shows there’s racism in the housing market,” Andre Perry, a fellow at the Brookings Institute, told Insider last year. “There’s something going on in the practices and policies of appraisals, real estate agent behavior, and lending.”

Insider previously reported that Black Americans lag behind white Americans on homeownership, with Black people being denied mortgages at higher rates than white people, even though many are credit-worthy.

And studies have shown that there’s a long history of structural racism is the housing market, significantly setting back Black homeowners. A study from the Center for American Progress (CAP) found that federal, state and local policies have prompted housing discrimination through tactics to prevent Black Americans and Americans of color from building wealth through homeownership.

For example, President Franklin Delano Roosevelt’s Home Owners’ Loan Act and the National Housing Act in the 1930s had the goals of making homeownership more affordable, but when determining which neighborhoods would get guaranteed mortgages, the Home Owners Loan Corporation denied Black people access to mortgage loan refinancing “while perpetuating the notion that residents of color were financially risky and a threat to local property values,” CAP said.

That’s why lawmakers, led by Rep. Emmanuel Cleaver II of Missouri, introduced the Real Estate Valuation Fairness and Improvement Act in April to combat disparities in the real estate appraisal industry.

“Homeownership has traditionally been the primary way that Americans accumulate wealth,” Cleaver said in a statement. “High-profile cases of homes owned by people of color being devalued in comparison to homes owned by their white neighbors have renewed calls for federal action.”

The bill would create task forces comprised of civil rights advocates and industry representatives to respond to racial disparities in real estate valuations, and it follows a March letter from 35 lawmakers calling on the Federal Financial Institutions Examination Council to take action on housing discrimination.

Duffy told the Star that she wants justice and hopes that HUD will address discriminatory housing practices.

“I’m excited, vindicated, relieved, angry, extremely peeved since I can’t say the other expletives that were running through me at that point in time – destroyed that I had to go through all of that,” she said. “This is real … just being able to prove it is the hard part.”

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HUD urges Congress to pass Biden’s $1.9 trillion stimulus to help struggling homeowners

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Banners against renters eviction reading “no job, no rent” is displayed on a controlled rent building in Washington, DC on August 9.

  • HUD is urging Congress to pass the American Rescue Plan to provide further aid to the housing market.
  • The $1.9 trillion stimulus has measures for emergency rental assistance and homeless relief, among others.
  • A HUD official says further extending eviction and foreclosure bans isn’t in the bill, but is on Biden’s radar.
  • Visit the Business section of Insider for more stories.

As passage of President Joe Biden’s $1.9 trillion stimulus approaches, the federal agency that is focused on housing is urging Congress to pass its measures for struggling homeowners.

The US Dept. of Housing and Urban Development, or HUD, expressed support on Thursday for the package’s funding for emergency rental assistance and homelessness prevention, among other things.

As one of his first executive orders, Biden extended the moratorium on evictions to help struggling renters, and more recently, he extended the moratorium on home foreclosures to provide homeowner relief.

According to the Center on Budget and Policy Priorities, one in five renters is behind on rent, and over 10 million Americans have fallen behind on mortgage payments since COVID-19 began.

While the expansion of foreclosure and forbearance programs were necessary for homeowners and renters, a fact sheet from HUD provided to Insider said, the housing provisions in Biden’s American Rescue Plan need to be passed to provide further financial aid.

“To bolster these efforts, it is critical that Congress pass the American Rescue Plan Act of 2021 to deliver more aid to people struggling to pay their rent or mortgage,” the fact sheet said. “The American Rescue Plan Act of 2021 includes a number of provisions to provide immediate and direct relief to help people across America remain stably housed during the pandemic.”

The stimulus may be necessary relief as eviction moratoriums are increasingly being challenged in court. On Thursday, a Texas judge blocked the Centers for Disease Control and Prevention’s eviction moratorium, saying in a statement that the federal government “cannot say that it has ever before invoked its power over interstate commerce to impose a residential eviction moratorium.” 

With regards to a further extension on the moratorium on evictions and foreclosures, a HUD administration official said in a press call on Thursday that an extension is not included in the bill itself, but that further extensions are still under consideration and would be driven by public health considerations. (This official did not comment on the ruling out of Texas.)

Per the HUD fact sheet, housing aid in Biden’s stimulus plan includes:

  • More than $20 billion in emergency rental assistance;
  • $5 billion for emergency housing vouchers for those experiencing homelessness;
  • $100 million in emergency assistance for rural housing;
  • $750 million in housing assistance for Native Americans and Native Hawaiians;
  • $100 million for grants to housing counseling providers;
  • $5 billion for homelessness assistance and supportive services programs;
  • $10 billion for homeowners behind on mortgage payments and to avoid foreclosures and evictions;
  • $39 million for very low-income borrowers to purchase and repair housing in rural areas;
  • And $20 million for fair housing programs.

The $900 billion stimulus package that Congress passed in December included $25 billion for rental assistance, but a White House fact sheet says American families still owe $25 billion in back rent and require further aid.

“Failing to take additional action will lead to a wave of evictions and foreclosures in the coming months, overwhelming emergency shelter capacity and increasing the likelihood of COVID-19 infections,” the White House fact sheet said. “And Americans of color, who have on average a fraction of the wealth available to white families, face higher risks of eviction and housing loss without critical assistance.”

The House is expected to vote on the American Rescue Plan on Friday, and it will then go to the Senate, where it will likely receive zero Republican votes. 

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