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Redlining: Still a thing
By Emily Badger May 28, 2015
"Redlining" just sounds like an an old-timey term, a practice that exists only in history and our re-tellings of it. The word has
particular roots in the 1930s, when the government-sponsored Home Owner's Loan Corporation first drafted maps of
American communities to sort through which ones were worthy of mortgage lending. Neighborhoods were ranked and colorcoded,
and the D-rated ones — shunned for their "inharmonious" racial groups — were typically outlined in red.
This government practice was swiftly adopted by private banks, too, during an era of massive homeownership expansion in the
U.S. And the visual language of the maps became a verb: To redline a community was to cut it off from essential capital. To be
redlined was something even worse.
The federal government eventually retreated from the practice, and it was outlawed by the Fair Housing Act in 1968. But black
communities have warned that it still exists in subtler and changed forms, in bank tactics that have targeted these same
neighborhoods for predatory lending, or in new patterns like "retail redlining." Some of the persistent redlining, though, still
looks an awful lot like the original.
Case in point: This week the Department of Housing and Urban Development settled with the largest bank headquartered in
Wisconsin over claims that it discriminated from 2008-2010 against black and Hispanic borrowers in Wisconsin, Illinois and
Minnesota. The bank, Associated Bank, denies wrongdoing in the settlement, but HUD itself is declaring victory in "one of the
largest redlining complaints" ever brought by the federal government against a mortgage lender.
HUD's analysis of Home Mortgage Disclosure Act data concluded that the bank disproportionately denied qualified loan
applicants in predominantly minority neighborhoods in Chicago, Milwaukee, and Minneapolis, compared to other lenders
operating in these same communities. Now Associated Bank has agreed to a long list of actions to make amends over the next
three years: It must finance nearly $200 million in home loans in majority-minority census tracts within these cities, and pay
nearly $10 million in down payment assistance to borrowers or in lower interest rates. It must also open four new offices in
minority neighborhoods in Chicago and Milwaukee, and invest $1.4 million in marketing loans in many of these same
underserved communities.
The case is not about doling out mortgages to minority households that wouldn't otherwise qualify for them — it's about
offering equal access to families that look just as eligible on paper as white homeowners nearby.
It is, however, a reality that historic redlining makes homeownership beyond reach for many families in these communities
today, regardless of how big banks behave now. If your family was denied a mortgage in the 1930s, or the 1950s, or the 1970s,
then you may not have the family wealth or down payment help to become a homeowner today. In that way, the consequences
of past redlining transcend time, even as new forms of it continue.
Emily Badger is a reporter for Wonkblog covering urban policy. She was previously a staff writer at The Atlantic
Cities.  Follow @emilymbadger