Unfair mortgage practices in Tampa targeted by justice officials

TAMPA, FL – A new effort to combat redlining, an illegal practice in which lenders deny loans to people based on their race or nationality, has been launched in Tampa.

The Department of Justice’s new anti-redlining initiative, announced Friday, represents the department’s most aggressive and coordinated law enforcement effort to combat redlining, officials said.

The term “redlining” dates back to the nation’s housing shortage in 1933, when the federal government began what amounted to state-sponsored segregation under the New Deal.

Zillow’s chief economist Svenja Gudell cited Tampa and Atlanta as examples where the impacts of redlining have persisted.

“The lasting impact of redlining is a vivid example of how the type of discrimination – financial and racial – codified almost a century ago continues to affect homeowners and entire communities today,” he said. Gudell said. “Redlining and other forms of systemic discrimination, from Jim Crow laws to racial pacts, have contributed to a serious divide in homeownership rates between whites and other groups, which has had devastating consequences. for both the financial wealth and the social health of non-white Americans. “

While urban renewal and gentrification of once impoverished neighborhoods brings urban areas back to life, homes in areas once marked in red are still worth less. In Tampa, a home in an area once marked in red is valued at $ 219,991, while a comparable home in another neighborhood is worth $ 482,141, Gudell said.

Redlining started in the 1930s

In his book “The Color of Law,” author Richard Rothstein documents how the Federal Housing Administration, founded in 1934, promoted segregation by refusing to insure mortgages in and near black neighborhoods, a policy known as name of “redlining”.

The term refers to the practice of lenders of delineating on a map in red ink the areas that they considered to have a high risk of default. The University of Richmond has digital versions of approximately 200 maps of the entire country with areas outlined in red ink.

At the same time, the FHA was subsidizing builders who were mass producing residential subdivisions with the requirement that none of the houses be sold to blacks.

The result has been the creation of government-funded substandard urban housing projects, or ghettos, which have become the primary housing for minorities across the country.


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According to Attorney General Merrick B. Garland, although the Fair Housing Act of 1968 and the Equal Credit Opportunity Act banned the practice, he said the upload continues today.

It still happens today

“People are always deliberately denied economic and housing opportunities because of their race, ethnicity or nationality,” he said.

According to the National Consumer Law Center, which filed a 2018 lawsuit against Liberty Bank alleging the company was highlighting the black and Latino neighborhoods of Hartford and New Haven, Connecticut, there is ample evidence that the setting evidence is still ongoing.

There are many cases of applicants being denied a home loan because of their race, said Nikitra Bailey, executive vice president of the Center for Responsible Lending. A 2018 survey by the advocacy group Reveal found that black, Latino and Asian applicants were denied loans at a higher rate than whites in many American cities.

That same year, Zillow conducted a Mapping Inequality analysis and found that there was a difference of almost $ 50,000 between homes in what were once considered red zones and those in neighboring neighborhoods. Zillow said that even today, long after the redlining ban, homes in those areas are worth 85 percent of the value of homes in surrounding areas.

“Lending discrimination goes against the fundamental promises of our economic system,” Garland said. “When people are denied credit simply because of their race or national origin, their ability to participate in the prosperity of our nation is virtually wiped out.”

Garland said the Justice Department plans to use its authority under the Fair Housing Act to rout and prosecute those involved in modern day redlining.

“We will spare no resources to ensure that federal fair loan laws are rigorously enforced and that financial institutions provide every American with an equal opportunity to obtain credit,” he said.

“Enforcement of our fair loan laws is essential to ensure that banks and lenders provide communities of color with equal access to lending opportunities. Equal and fair access to mortgage loan opportunities is the cornerstone on which families and communities can build wealth in our country, ”said Deputy Attorney General Kristen Clarke for the Civil Rights Division of the Department of Justice . “We are well aware that redlining is not a problem of a bygone era but a practice that remains ubiquitous in the lending industry today. Our new initiative should send a strong message to banks and lenders that we will keep them. accountable as we work to combat discrimination in lending practices based on race and national origin.

“Discriminatory practices such as redlining are tearing the fabric of our society apart by destroying one of our nation’s fundamental tenets – equal opportunity for all,” Interim Attorney Karin Hoppmann for the Middle District of Florida told Tampa.

Competition for housing can make the problem worse

As Americans enter the post-pandemic era, it’s an issue that becomes all the more troubling due to Tampa Bay’s growing attractiveness as a favorite place to live and work.

According to the Florida Office of Economic and Demographic Research, an estimated 329,717 new residents moved to Florida between April 2020 and April 2021. The EDR estimates that an average of 845 new residents will move to Florida each day through 2025.

As a result, Tampa Bay faces a severe housing shortage, which is pushing up home values ​​and excluding many low-income families from the market, according to the National Low Income Housing Coalition.

At the same time, the cost of rents is rising at a time when residents are struggling to recover from business closures during the pandemic.

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 terms of homeownership rates and net worth compared to white families, Garland mentioned.

“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,” he said. -he declares.

The Combating Redlining initiative will be led by the Housing and Civil Law Enforcement Section of the Civil Rights Division, in partnership with U.S. prosecutors’ offices.

Among its objectives, the United States attorney’s offices will expand their analysis of lending practices to include both depository and non-depository institutions. Non-depository lenders are not traditional banks and do not provide typical banking services, but engage in mortgages and provide the majority of mortgages in the country.

The initiative also plans to strengthen its partnerships with financial regulatory agencies to identify fair credit violations.

Residents who feel they have experienced loan discrimination should call the Department of Justice’s Housing Discrimination Hotline at 1-833-591-0291 or submit a report online.

About Teresa G. Wilson

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