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Oakland Study: Mortgage discrimination is still alive and well across California

Quinci LeGardye | California Black Media

There is no silver lining it seems when it comes to redlining.

Redlining describes the illegal practice when government agencies or private institutions systematically exclude certain groups of people -- or selectively raise the prices of goods and services for them. The most notable example is how the United States government and private banks intentionally denied African Americans home loans based on race through much of the 1900s.

A new study by Oakland-based policy institute The Greenlining Institute has found that Black, Latino and Native American borrowers still receive fewer home purchase loans than white borrowers. White borrowers receive more mortgage loans than Black and Brown borrowers, regardless of population or income.

The report, Home Lending to Communities of Color in California, is based on data reported under the federal Home Mortgage Disclosure Act in 2019. It found that home purchase loans owned by Black and Latino homeowners were about 60 % of what would be expected based on their percentage of California’s population. This discrepancy was consistent both with high-income and low-income communities.

Across the state, women of color make up 30 % of the population, but received only 8 % of home loans.

The pattern also held in regional breakdowns. In the Los Angeles/Long Beach/Glendale Metropolitan Area, the Black community makes up 7.8 % of the population, but received 4 % of home purchase loans in 2019. In the San Francisco/San Mateo/Redwood City region, the Black community makes up 3.6 % of the population, but only received 0.7 % of home purchase loans.

Inequity in homeownership among communities of color continues to contribute to the wealth gap since wealth cannot be easily built incrementally from generation to generation without the inheritance of property. Today Black communities in particular are still feeling the financial effects of decades of redlining, or discriminatory mortgage-lending policies.

“In our society, homeownership remains critical to building wealth and financial stability,” said report author Rawan Elhalaby, Greenlining’s Senior Economic Equity Program Manager.  “The racial discrepancies we see can’t be explained simply by differences in income. It will take a concerted effort by banks, non-bank lenders and financial regulators to overcome the systemic disadvantages that Black, Latino and Indigenous borrowers still face.”

In California, mortgage discrimination only compounds the twin crises of homelessness and the lack of affordable housing. Across the state, those problems are the worst in the country by all indicators, and they affect African Americans, who make up nearly 40 % of the state’s homeless population, in disproportionate numbers. Across the state, as of January 2019, there were an estimated 151,278 homeless people. Of that number, there are more than 60,000 unsheltered Black people, according to the U.S. Department of Housing and Urban Development. The Homeless Policy Research Institute at the University of Southern California reports that there is a shortage of 1.4 million affordable homes in California.

The concerted efforts that banks must take, as recommended in the report, include increasing their branch presence in communities of color and extending access to more loan products to lower-income and immigrant communities.

There is also evidence that culturally competent banks and well-funded nonprofits led by people of color can lead to better loan rates for communities of color. First-time buyers can also seek out homeownership counseling, where they are advised through the basics of loan rates and advised away from predatory rates.


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