Modern Redlining: How Banks Keep People Of Color From Buying Homes

On Wednesday, we took a look at how homes in many black neighborhoods have lost significant value in recent years.

Now, let's turn to another question: what if you're not yet a homeowner, but you'd like to be?

According to new reporting from the public radio program Reveal, banks are often far less likely to give people of color a mortgage loan than their white peers, even if they're in good financial standing.

It turns out, several of the nation's most discriminatory markets are right here in North Carolina, including Greensboro-High Point.

WFDD's Sean Bueter spoke with Reveal reporter Aaron Glantz to find out more about their series, "Kept Out."

Interview Highlights

How did North Carolina fare? What about the Triad?

We found that in Greensboro-High Point, African-Americans were 2.2 times more likely to get turned down on a conventional mortgage than whites, and Latinos were 1.9 times – so almost twice as likely – to get turned down on a conventional mortgage application than whites. [That's] even after you considered how much money they were making...

This has huge implications for wealth and the ability to leave this world a better place for your children than you came into it. In America, most people have their wealth tied up in their home. I certainly do. I own my house out here in San Francisco. I'm a journalist mostly making money paycheck to paycheck. But every month when I make my mortgage payment I'm adding a little bit more to my wealth. And we found that in dozens of cities across the country that was way more difficult for people of color than whites. And that was true in Greensboro, Rocky Mount, and Greenville in North Carolina.

What would you say to someone arguing there are already laws in place to stop this practice?

Well, they'd be exactly right. It's been 50 years since Congress passed the Fair Housing Act. It made housing discrimination illegal. Then in 1977 Congress came back again and they passed this other law called the Community Reinvestment Act. It was signed into law by President Jimmy Carter. And it said that banks have an affirmative obligation to lend in low income communities and to low income people.

What we found in our reporting is that because this law was written back in the 1970s and didn't anticipate gentrification, what banks have been able to do is get Community Reinvestment Act credit for lending to white gentrifiers in historically black communities. In other words, they're able to get credit for lending to hard-hit, historically redlined areas without actually lending to the community that lived there before.

Checking in on lending in Winston-Salem using Reveal's "Modern-Day Redlining" map:

If you look at Winston-Salem, you can see that the two largest banks there – in terms of helping people buy homes – are the State Employees Federal Credit Union (SEFCU) and Branch Banking and Trust Corporation (BB&T). And these two companies do not behave the same.

[SEFCU] made 1,000 loans and made about 100 of them to African-Americans. So, they were 10-to-1 lending to whites over African-Americans. But [out of 775 loans granted by BB&T] only 13 loans [were made] to African-Americans in the Winston-Salem area.

So, [using this tool] you can go into your community. You can check different banks. You can see how they behave against each other. You can see who's getting loans in your neighborhood and who's not.

(Ed. note: this interview has been lightly edited for clarity.)