By Manny Otiko | IVN
Homeownership has usually been a popular way for Americans to move into the middle class and create generational wealth. However, this method has been blocked for African Americans through a process called redlining. Redlining is the process by which banks and other financial institutions refuse to lend to African-Americans living in Black neighborhoods.
Redlining is one reason Black homeownership and wealth lag behind whites.
“Over the last 40 years, per Redfin, homeowners in redlined neighborhoods have earned 52% less in home equity. In addition, Black individuals who own homes are 4.7 times more likely to own in a former ‘D’ graded (redlined) neighborhood than a formerly ‘A’ graded neighborhood. White individuals are only 1.5 times more likely to own a home in a formerly redlined area,” according to Business Insider.
This process became more common in the New Deal era when the government invested in home ownership. This enabled many white families to move forward, but Black families, who were restricted by housing discrimination and redlining, were left out. Unfortunately, this practice continues. And proof of that is seen in a recent agreement won by the Justice Department in which City National Bank agreed to pay $31 million because of redlining practices involving Black and Latino residents of Los Angeles. City National Bank is the largest bank headquartered in Los Angeles and one of the top 50 biggest banks in the United States.
According to court records, City National Bank refused to provide mortgages to Black and Latino residents of Los Angeles for a three-year period lasting from 2017 to 2020. A Department of Justice (DOJ) press release stated that City National Bank had only opened one branch in 20 years in majority black and Latino neighborhoods.
According to the DOJ, the settlement was part of Attorney General Merrick Garland’s Combating Redlining Initiative.
“Fifteen months after I vowed that the Justice Department would be aggressively stepping up our efforts to combat discriminatory practices in the housing market, we have today secured the largest redlining settlement in Department history,” said Garland. “So far, the Combating Redlining Initiative has secured over $75 million in relief for communities that have suffered from lending discrimination. The Justice Department will continue to build on our efforts to vigorously enforce federal fair lending laws and work to ensure that financial institutions provide equal opportunity for every American to obtain credit.”
According to Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division, this is the largest settlement involving redlining.
“Redlining is a practice from a bygone era, runs contrary to the principles of equity and justice, and has no place in our economy today. This settlement should send a strong message to the financial industry that we expect lenders to serve all members of the community and that they will be held accountable when they fail to do so,” said Clarke.
According to the DOJ press release, the settlement agreement comes with several requirements. City National Bank must invest about $30M in Black and Latino neighborhoods in Los Angeles County, open at least one branch in a Black and Latino neighborhood and have at least four loan officers assigned to that branch.
Inland Valley News coverage of local news in San Bernardino and Riverside Counties is supported by the Ethnic Media Sustainability Initiative, a program created by California Black Media and Ethnic Media Services to support minority-owned-and-operated community newspapers across California.
