NJ home to a hot-spot for discriminatory mortgage redlining
Racial discrimination in lending was banned decades ago, but African-Americans and Latinos in New Jersey and across the country continue to be denied conventional mortgage loans at rates far higher than whites, an analysis of housing data shows.
A yearlong analysis by Reveal, from the Center for Investigative Reporting, found evidence of "modern-day redlining" in 61 metropolitan areas when controlling for nine economic and social factors.
In the Camden metro area, which was identified as one of the nation's hot spots, black applicants in 2016 were 2.6 times more likely to be denied a mortgage than white applicants, the report found.
Reveal analyzed 31 million records made available through the Home Mortgage Disclosure Act, and relied on techniques from leading academics and the federal government to identify lending disparities.
Loan applicants nationwide told Reveal similar stories of their uphill battle with loan officers who they said "seemed to be fishing for a reason to say no."
"In urban areas where banks take deposits but they don't make loans, redlining continues to be a problem and something that we've seen increase as the ability to utilize the Community Reinvestment Act has waned over time," said Staci Berger, president and CEO of the Housing and Community Development Network of New Jersey.
The CRA, a 40-year-old law designed to reverse redlining, requires that each insured depository institution be evaluated periodically on its efforts to meet the credit needs of the surrounding community.
During President Donald Trump's first year in office, Reveal noted, the Justice Department did not sue a single lender for racial discrimination.
"It seems to me that they are not looking very hard," Berger said.
Referring to a home as the biggest investment most families make, Berger said this discriminatory practice has a huge impact on one's ability to participate fully in the economic system.
"For them to not be able to do that, simply because of their race, is something we should be doing away with," she said.
The term "redlining" dates back to maps drawn by government officials in the 1930s. Surveyors with the federal Home Owners' Loan Corporation drew lines and colored some neighborhoods red, deeming them "hazardous" for bank lending.
That practice has been outlawed for 50 years. But the report showed black mortgage applicants in 2015 and 2016 were turned away at "significantly higher rates" than whites in 48 cities, Latinos in 25, Asians in nine and Native Americans in three.
In a statement to Reveal, the chief economist at the Mortgage Bankers Association said the records analyzed for their report "do not include sufficient data to make a determination regarding fair lending." The American Bankers Association told Reveal that the lack of federal enforcement proves discrimination is not rampant.
According to Reveal's report, New Jersey-based TD Bank denied a higher proportion of black and Latino applicants than any other major lender. The institution said it makes credit decisions based on a customer's credit profile, not their race or ethnicity.