Redlining Was Outlawed More than 50 Years Ago – Does It Still Continue?
In recent years, there has been a resurgence of interest in 20th-century African-American composer Florence Price's contributions to classical music. Born in Little Rock, Arkansas in 1887, Price started piano lessons at age four with her mother, who was a music teacher.
Price’s family moved to New Jersey, hoping to escape increasing racial tensions in the South. Price graduated from high school as valedictorian when she was 14, and at 15, she enrolled in New England Conservatory (NEC). Although NEC was one of the few conservatories that admitted African-American students, to avoid discrimination, Price initially indicated she was Mexican, listing her hometown as Pueblo, Mexico.
At NEC, she honed her skills in piano and organ performance, as well as in composition, under the tutelage of renowned instructors like George Whitefield Chadwick and Frederick Converse. Price's compositions intricately blended classical music with African-American spirituals, creating a unique and compelling musical narrative.
In a period where African-American and female composers were marginalized, Florence Price emerged as a pioneering figure who broke through gender and racial barriers in the classical music industry. In the 1920s, Price moved to Chicago, and amidst the vibrant cultural scene of the Chicago Renaissance, her work began to gain recognition.
Perhaps Price's crowning achievement came in 1933 when the Chicago Symphony Orchestra premiered her Symphony in E minor--she was the first African-American woman whose composition was performed by a major orchestra. Price’s symphony was lauded for its masterful integration of traditional African-American musical forms, such as spirituals and folk tunes, with the classical symphonic form.
Price's extensive body of work, consisting of more than 300 compositions, including symphonies, choral works, art songs, and piano pieces, continues to be celebrated and performed worldwide. Her compositions have been increasingly featured in concert halls, and her impact as a trailblazer for African-American women in the classical music scene is more recognized and celebrated than ever.
Despite her extraordinary accomplishments, Price still would have faced racial discrimination had she sought home ownership. Although the Fair Housing Act outlawed racial discrimination in housing in 1968, recent settlements indicate that more than 50 years later, racial discrimination continues. This article discusses those recent cases and racial discrimination in home mortgages.
Historical Obstacles to Minority Homeownership
Recently, my son took an online college course about social justice in the as-built environment. One topic in the class was redlining – a practice that limited the availability of affordable home loans for minorities.
From the required course reading, my son said his course materials indicated that it was mortgage companies that had engaged in redlining to discriminate against minorities seeking homeownership. I told him that was only half of the story--that the US government was complicit in perpetuating segregation and stifling African American’s efforts to purchase homes.
The Federal Housing Administration (FHA), now part of the Department of Housing and Urban Development (HUD), created the maps that rated areas from A to D based on desirability, with D being the least desirable. Most areas rated "D" were predominately occupied by African Americans.
Those maps, now called redlining maps, were used to determine which properties were eligible for government-insured mortgage financing. Properties in the D-rated areas weren’t eligible for this attractive mortgage financing option. So, it was more challenging for people to purchase homes in those areas.
The obvious solution might have been for African Americans to buy homes in higher-rated areas. However, deed restrictions presented additional challenges to African American homeownership. Restrictive covenants in the county real estate records often prohibited African Americans, and sometimes also Asians or Jews, from owning or renting homes in certain areas. As with redlining, those deed restrictions were most prevalent in areas where favorable mortgage financing was available.
Deed restrictions weren’t outlawed nationally until 1968. But outlawing the restrictive covenants didn’t remove the deed restrictions already in the real estate records – it only made the existing restrictions unenforceable. It’s beyond the scope of this article to explain why the restrictions weren't removed from county records. However, many people still own real estate subject to deed restrictions based on race, ethnicity, or national origin, albeit unenforceable ones.
Recent Cases Allege Systemic Redlining
Ameris Bank
In October 2023, the Justice Department (DOJ) announced that Ameris Bank (Ameris) had agreed to pay $9 Million to resolve allegations it had redlined to avoid making mortgage loans for properties in predominately Black and Hispanic neighborhoods in Jacksonville. This settlement was one of a total of $107 Million in payments since the Combatting Redlining Initiative (Combatting Redlining) was established in 2021. At the time, DOJ indicated it still had more than two dozen active redlining investigations.
In Ameris, the DOJ noted that the bank's Community Reinvestment Act (CRA) assessment area covers several counties in the Jacksonville area. According to DOJ, the bank's operational decisions, notably its branch locations and closure strategies, revealed a pattern amounting to redlining.
In support of its Complaint, DOJ noted that during the period evaluated, Ameris established no branches in majority-Black and Hispanic census tracts, even though these groups represented a substantial portion of the population in that area. Further, in 2019, the bank closed two branches, one of which was a high-performing branch in the downtown area close to the urban core with a dense minority population.
DOJ alleged that Ameris' marketing and outreach approach also indicated redlining. The bank's advertising, including billboard and mail campaigns, was predominantly focused on majority-white neighborhoods. According to DOJ, this strategy, combined with unsupervised mortgage banker discretion to choose their areas of operation, led to a significant underrepresentation in minority neighborhoods. DOJ also noted that when Ameris appointed a CRA mortgage banker, the selected individual lacked relevant experience and connections in the minority communities.
As further support for its complaint, DOJ pointed to internal reports and analyses from Ameris, which demonstrated a lack of lending in high-minority areas. Compared to its peers, Ameris generated significantly fewer loan applications from minority neighborhoods. According to DOJ, this disparity indicated a systematic avoidance of lending to minorities. Further, DOJ alleged that Ameris did not attempt to correct this disparity despite internal recommendations and evidence of redlining risk.
DOJ alleged Ameris’ practices and policies led to disproportionately low home loan applications and originations in majority-Black and Hispanic Jacksonville neighborhoods. According to DOJ, this pattern indicated systemic redlining and failure to provide equitable access to banking and credit services to all, regardless of their race or ethnicity.
The Consent Order required Ameris to:
Invest $7.5 million in a loan subsidy fund available to individuals seeking credit in majority-Black and Hispanic neighborhoods.
Invest in advertising and outreach targeted toward the residents of majority Black and Hispanic neighborhoods.
Develop community partnerships to provide services that increase access to residential mortgage credit.
Open a new branch in a majority-Black and Hispanic neighborhood in Jacksonville.
Dedicate at least three mortgage loan officers to serve majority Black and Hispanic neighborhoods.
Employ a consultant to assess the bank’s compliance management system regarding redlining risk.
Employ a Director of Community Lending to oversee continued development of lending in majority Black and Hispanic neighborhoods.
The Washington Trust Company
A month earlier, in September 2023, DOJ entered into a similar $9 Million Consent Order with The Washington Trust Company (Washington Trust), a Rhode Island banking institution and the oldest community bank in the United States. The Washington Trust Complaint alleged a pattern of behavior remarkably similar to that in which DOJ alleged Ameris engaged.
DOJ alleged that Washington Trust never opened a branch in a majority-Black and Hispanic neighborhood despite the bank’s concerted effort to expand throughout Rhode Island. Further, Washington Trust's primary source of loan applications came from mortgage loan officers working only out of majority-white areas.
According to the Complaint, like Ameris, Washington Trust failed to address this disparity. According to the DOJ Complaint, during the period evaluated, other banks received nearly four times as many loan applications from majority-Black and Hispanic neighborhoods in Rhode Island as Washington Trust. Further, according to DOJ, loan applications Washington Trust generated from majority-Black and Hispanic areas involved mostly white borrowers.
The Washington Trust Consent Order also was similar to that in Ameris. Washington Trust agreed to invest in a loan subsidy fund to increase access to home financing for residents of majority Black and Hispanic neighborhoods. The bank agreed to invest in community partnerships to increase residential mortgage credit access in majority-minority areas. Also, the bank was to invest in advertising, outreach, financial education, and credit counseling focused on majority Black and Hispanic neighborhoods.
Like Ameris, Washington Trust agreed to open branches in majority Black and Hispanic neighborhoods and to dedicate mortgage loan officers to serving residents of those neighborhoods. Finally, like Ameris, Washington Trust was to hire a Director of Community Lender focused on developing lending in those neighborhoods.
Park National Bank
In February 2023, DOJ entered into another Consent Order, involving Park National Bank (Park National), headquartered in Newark, Ohio. Similar to the Ameris and Washington Trust Complaints, DOJ alleged all of Park National’s Central Ohio branches and mortgage lenders were concentrated in majority-white neighborhoods and that the bank failed to meaningfully compensate for the lack of physical presence in majority-Black and Hispanic communities.
Like the Ameris and Washington Trust, Park National agreed to a consent order for $9 Million. Like the other two Consent Orders, Park National was to invest in a loan subsidy fund to increase access to credit for mortgage and other loans in majority-Black and Hispanic neighborhoods. Park National also agreed to open a branch and a mortgage loan production office in Black and Hispanic neighborhoods and to ensure that four mortgage lenders were dedicated to serving those populations. Further, Park National agreed to invest in outreach, advertising, consumer financial education, credit counseling, and community partnerships to expand access to mortgage loans to residents of majority-Black and Hispanic areas.
Takeaway From the Cases
These three cases all relied on similar factual allegations, which according to DOJ, supported systemic redlining:
Absence of branches in majority-minority neighborhoods
Lack of mortgage brokers dedicated to those neighborhoods
Significant disparity in loan applications from minority applicants as compared to other lending institutions
The banks failed to address the disparity when they learned of it
These were just three of many redlining cases DOJ pursued and resolved with mortgage lenders
These were just three of many redlining cases DOJ pursued and resolved with mortgage lenders.
These cases were just three of many similar ones DOJ recently has pursued and resolved with mortgage lenders. It’s unclear whether the similarities were due to DOJ’s enforcement focus or issues inherent in the banking industry. Nevertheless, the identified issues support concerns about systemic redlining and indifference to lending disparities.
Conclusion
Florence Price was remarkable in her talent and her ability to overcome race and gender discrimination of her time. Yet, I was never introduced to her music during my classical music education.
Fortunately, the classical music industry is making meaningful efforts to address its historic focus on white, male European composers. In recent years, I have attended several concerts featuring Price’s compositions.
There are no laws prohibiting discrimination when selecting classical music for performance. So, it isn’t legal imperative that those composers’ work be represented. So, musicians have driven the industry’s focus on bringing music by talented composers from underrepresented groups to audiences. Having been exposed to this wonderful music, audiences want to hear more of this long-overlooked music.
In contrast, there is a 50+ year old law prohibiting redlining. If redlining continues to be as widespread as recent DOJ cases tend to indicate, much of the banking industry is indifferent to eliminating this long-outlawed practice.
DOJ’s attempt to eliminate unlawful redlining is admirable and may incentivize legal compliance throughout the industry. However, it would be far more effective if the mortgage lending industry followed the example of the classical music industry and effected change from within.
© 2024 by Elizabeth A. Whitman
Any references clients and their legal situations have been modified to protect client confidentiality
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